RBI imposes curbs on investments from FATF non-compliant jurisdictions

The Reserve Bank of India (RBI) has imposed limits on new businesses from FATF non-compliant jurisdictions. Such jurisdictions have a weak anti-money laundering and anti-terrorist financing legal regime. The new circular limits businesses from such jurisdictions to invest in payments system operators (PSOs).

The Financial Action Task Force (FATF) names nations with insufficient anti-money laundering and anti-terrorist financing policies on a regular basis. FATF-compliant jurisdictions are those that do not fall into the ‘high-risk’ or ‘enhanced surveillance’ categories.

The Reserve Bank of India (RBI) stated that ‘investments in PSOs from FATF non-compliant jurisdictions shall not be treated on the same footing with those from compliant jurisdictions.’

As per the RBI, new investors from non-compliant FATF jurisdictions will be prohibited from acquiring significant influence’ in a PSO.  Fresh investments (directly or indirectly) from such jurisdictions shall in aggregate account for less than 20% of the voting power (including potential voting power) of the PSO.

Investors in the existing PSOs holding their shares prior to the classification of source or intermediary jurisdictions being classified as FATF non-compliant may keep their interests. It further stated that to ensure the continuation of business in India, such investors can bring in new investments in accordance with existing norms in order.

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Rajat Chawda

Rajat is a student at the Institute of Law, Nirma University. Since a young age, he was fascinated by the technological advancements and his fascination with gadgets has helped him develop a keen interest in TMT Laws in his journey as a law student. He is associated with Mylawrd to further engage himself and learn in this area.

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