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Mutual Funds may have to press the pause button on investments from UAE investors as the G7 countries (now G-20 and India is a part of it) has added United Arab Emirates (UAE) to the ‘Grey List’.
In fact, Canara Robeco Mutual Fund has already stopped receiving inflows including SIPs from such clients. On its website, the fund house said, “By virtue of Financial Action Task Force (FATF) adding United Arab Emirates (UAE) to the “Grey List”, it has been decided to provisionally abstain from accepting investments including existing SIP/STPs from our investors from UAE. We are internally reviewing the processes to establish “enhanced due diligence” for the investment flows from UAE and we will revert to you shortly with the revised process. We sincerely regret the inconvenience caused in this regard and appeal to you to kindly bear with us.”
The fund house further said, “While assuring best of our services, we request you to appreciate that the proposed measures are necessitated purely due to regulatory compulsions.”
A senior MF official requesting anonymity told Cafemutual that fund houses may receive inflows from countries falling under grey list of FATF only if they do ‘enhanced due diligence’ of such clients. Remember that the responsibility of clients from grey list countries is on the fund house, said the official.
FATF was established in July 1989 by a Group of Seven (G-7) countries in a Summit held in Paris. The key objective of FATF was to examine and develop measures to combat money laundering, terror financing and human trafficking.
Countries which are considered as a safe haven for supporting terror funding and money laundering are included in this list.
The grey list has other countries too like Philippines, Turkey, Yemen and Morocco. However, the Indian MF industry has significant inflows from UAE based NRIs.
