Investments from UAE face tighter scrutiny (ET Article – 30 June 2022)

1] Equity investments coming into India from the UAE are facing enhanced scrutiny as the Middle Eastern nation has been placed under the so-called grey list of Financial Action Task Force (FATF) in March. 

2] Foreign funds – both new and existing – registered in the UAE are being subjected to tighter Know Your Client (KYC) documentations, while NRIs based out of Dubai and holding Indian demat accounts are getting queries from banks there seeking more documentation, including their politically exposed person (PEP) status.

3] The FATF grey listing of the UAE has only meant increased regulatory scrutiny, higher KYC norms and restrictions to be applicable on all sorts of UAE-based applicants/investors investing globally including in India.

4] Indian Designated Depository Participants are carrying out higher scrutiny, investments in NBFCs as per the Reserve Bank of India norms are facing additional strictures, certain Indian mutual funds and AIFs are putting additional restrictions while accepting investments from the UAE.

5] FPIs coming from the UAE will certainly face impediments since the country has now been put in FATF grey list. These funds will have to satisfy higher KYC thresholds and may also have to produce all the required documents upfront.

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