SEBI confirms Mauritius continue to be eligible for FPI registration
23/09/19
In brief
Mauritius is compliant with 35 out of the 40 recommendations by the FATF.
The Financial Action task Force (FATF) placed Mauritius in its list of ‘jurisdictions under increased monitoring’ - externally referred to as the ‘grey list’ on 21 February 2020. These jurisdictions are assessed by the FATF to have strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing.
Related content: Overview of current FPI Regime, FPI Regime simplified by the SEBI
Mauritius impact
The SEBI (Foreign Portfolio Investors) Regulations, 2019 inter-alia states that an applicant is eligible to become a Foreign Portfolio Investor (FPI) if it is not resident in the country identified in the list of High-Risk Jurisdictions subject to a Call for Action (commonly referred to as ‘black list’).
The Securities and Exchange Board of India (SEBI) has issued a press release on 25 February 2020 in order to clarify Mauritius investors’ eligibility for registration as FPI in India. In its communication, the SEBI clearly distinguishes between countries with strategic deficiencies, that is, Jurisdiction under Increased Monitoring with those having significant strategic deficiencies, that is High risk jurisdiction subject to a Call for Action, whereby the latter does not qualify for FPI.
Implications for FPI Investors
Mauritius, being a jurisdiction under increased monitoring as per FATF norms, and not within black listed jurisdictions by FATF, the SEBI confirms that investors may continue to use Mauritius to apply for FPI registration in India.
Mauritius, under the increased monitoring by FATF, has till latest September 2021 to work on the remaining 5 recommendations by the FATF to address the identified strategic deficiencies to improve technical compliance and effectiveness, including amending the legal framework to require legal persons and legal arrangements to disclose information on beneficial ownership and improving the processes of identifying and confiscating proceeds of crimes.
Mauritius has always worked towards being compliant with international standards and there is high level political commitment to ensure that the strategic deficiencies are addressed in the shortest delay. Any investment strategies proposed by FPI investors and Indian investors should not potentially be impacted further to the listing of Mauritius in the grey list.
About FATF
FATF is an inter-governmental body established in 1989 to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. The FATF 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.
