Canara Robeco MF halts inflows from UAE investors after nation's scrutiny

This was done after FATF added UAE to the Grey List

Canara Robeco Mutual Fund (MF) has stopped taking investments from investors in the United Arab Emirates (UAE) after the financial action task force (FATF) added UAE to the Grey List.

Top MF executives said their fund houses have turned cautious when it comes to flows from the Gulf nation, but haven’t stopped accepting investments from the UAE. Most said they will wait awhile before making a final decision.

Canara Robeco MF on its website stated that, “By virtue of FATF adding UAE to the Grey List, it has been decided to provisionally abstain from accepting investments, including existing systematic investment plan/systematic transfer plan from our investors from the UAE. We are internally reviewing the processes to establish enhanced due diligence for investment flows from the UAE and will revert shortly on the revised process.”

Senior executives in the MF industry say FAFT adding UAE to the Grey List is not a major concern as of now.

“If the Securities and Exchange Board of India or the government puts a mandatory ban on taking investments from the UAE, we might be forced to halt subscription. It’s a big market for us and we cannot prevent them from investing in India,” says a chief executive officer of a leading fund house.

While the exact number of investments from the UAE into MFs is not known, it can be ‘significant’, given the large Indian diaspora there.

“We sincerely regret the inconvenience caused in this regard and appeal to you to kindly bear with us. While assuring the best of our services, we request you to appreciate that the proposed measures are necessitated purely due to regulatory compulsions,” stated Canara Robeco MF.

NOT A ‘GREY’ AREA
 

Grey listing means FATF has placed a country under increased monitoring to check its progress on measures against money laundering and terrorism financing. The Grey List is also known as the ‘increased monitoring list’.