RBI circular dated February 12, 2021 issued to Non-Banking Financial Companies (NBFCs) has provided instructions for Investment in NBFCs from non-compliant jurisdictions
The Financial Action Task Force (FATF) has identified jurisdictions with weak measures to combat money laundering and terrorist financing (AML/CFT) and has classified then into i) High-Risk Jurisdictions subject to a Call for Action, and ii) Jurisdictions under Increased Monitoring.
Investors in existing NBFCs holding their investments prior to the classification of the source or intermediate jurisdiction/s as FATF non-compliant, may continue with the investments or bring in additional investments as per extant regulations.
New investors from or through non-compliant FATF jurisdictions, whether in existing NBFCs or in companies seeking Certification of Registration (COR), should not be allowed to directly or indirectly acquire ‘significant influence’ in the investee (significant interest means more than 20% voting power).
The circular shall come into effect immediately.
