India Bars FDI in Countries on Financial Action Task Force Blacklist

India has aligned its outward foreign investment norms with Financial Action Task Force guidelines that prohibit funds transfer to select nations without proper scrutiny.

New Delhi (Sputnik) — In a bid to crack down on global terror financing, the Reserve Bank of India (RBI) has prohibited Indian entities from making direct investments in 'non co-operative countries and territories' identified by a US-backed inter-governmental body FATF.

The FATF currently comprises 35 countries and two regional organizations, representing several major financial centers in all parts of the globe.

"In order to align, the instructions with the objectives of FATF, it has been decided to prohibit an Indian party from making direct investments in an overseas entity located in the countries identified by the FATF as "non co-operative countries and territories" as per the list available on FATF website or as notified by the RBI from time to time," reads a notification released by RBI.

At present, there is no restriction on an Indian party with regard to the countries, where it can undertake Overseas Direct Investment.

According to FATF website, countries like Afghanistan, Iraq, Syria are high-risk and non-cooperative jurisdictions. The exercise to identify non-cooperative countries and territories began in 1998 to secure the adoption by all financial centers of international standards to prevent, detect and punish money laundering and thereby effectively cooperate internationally in the global fight against money laundering.