Foreign investors from Mauritius continue to be eligible for FPI registration: Sebi

Foreign portfolio investors (FPI) from Mauritius will continue to be eligible for FPI registration with increased monitoring as per Financial Action Task Force (FATF) norms, market regulator Sebi said on Tuesday.

FATF is an inter-governmental policy-making body setting anti-money laundering standards.

The market regulator said there has been uneasiness among market participants regarding whether the inclusion of Mauritius in the ‘grey list’ would have an effect on the registration of FPIs from Mauritius.

'Grey List' is meant to list each such jurisdiction that has committed to resolve identified strategic deficiencies within agreed timeframes and is subject to increased monitoring.

“It is noted from FATF website that 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,” Sebi said.

Additionally, the regulator also added that FATF identifies jurisdictions that have significant strategic deficiencies in their regimes to counter money laundering, terrorist financing, and financing of proliferation. For all such countries, the FATF calls on all members and urges all jurisdictions to apply enhanced due diligence, and in the most serious cases, countries are called upon to apply counter-measures to protect the international financial system. This list is often referred to as the “black list”.

Amid mounting concerns over money-laundering, FATF was established in the 1989 Paris summit of G7. In 2012 FATF further tightened its standards.

About 15% of FPIs invest in India via Mauritius while it is estimated 25% or more of the total inflow is through structures set up in the Indian Ocean island.