The Securities and Exchange Board of India (Sebi) on Tuesday said that foreign portfolio investors (FPIs) from Mauritius would continue to be eligible for FPI registration with increased monitoring as per Financial Action Task Force (FATF) norms.
The clarification comes after market participants expressed their apprehensions about whether the inclusion of Mauritius on the FATF’s grey list would affect the registration of FPIs from the island nation.
The FATF is an inter-governmental body, established in 1989 by the ministers of its member jurisdictions. It monitors the progress of its members in implementing necessary measures, reviews money laundering and terrorist financing techniques and counter-measures, and promotes the adoption and implementation of appropriate measures globally.
On February 21, FATF had placed Mauritius in the list of ‘jurisdictions under increased monitoring’, commonly referred to as the grey list.
Sebi observed that according to the FATF website, when a jurisdiction is placed under increased monitoring, it construes that the country has committed to resolve swiftly the identified strategic deficiencies within agreed timeframes and is subject to increased monitoring.
“The FATF does not call for the application of enhanced due diligence to be applied to these jurisdictions, but encourages its members to take into account this information in their risk analysis. The intermediaries should take note of the same,” the markets regulator indicated.
Mauritius is a tax haven used by FPIs to set up funds that bet on Indian stocks and bonds. As on January, Mauritius is the second largest country with FPI/FII assets under custody of Rs 4.36 lakh crore after the United States, according to data on NSDL. —FE