FATF removes offshore tax haven Cayman Islands from its 'grey list'

In its review published on October 27, FATF has added Bulgaria to the grey list

The Financial Action Task Force (FATF), an inter-governmental body that sets anti-money laundering standards, has removed offshore tax haven Cayman Islands from its ‘grey list’. Besides Cayman, Panama, Jordan, and Albania have been removed from the list, which requires jurisdictions to be placed under increased monitoring until the identified deficiencies are resolved in their framework.

In its review published on October 27, FATF has added Bulgaria in the grey list.

Such steps are taken to ensure that countries strengthen their anti-money laundering (AML), counter terrorism financing (CFT) and proliferation of financing systems.

Cayman was added to the grey list in 2021. The Caribbean Island was in the news during the probe into charges made by Hindenburg Research against the Adani group. Some foreign portfolio investors (FPIs) linked to the investigation were domiciled there.

 

“The Cayman Islands strengthened the effectiveness of its AML/CFT regime to meet the commitments in its action plan regarding the strategic deficiencies identified in February 2021,” FATF pointed out in its October review.

The National Securities Depository (NSDL) website shows 385 FPIs registered in India, which are based in the Cayman Islands and one based in Panama. Both the nations are not among the top 10 geographies for FPIs investing in India. However, Cayman is widely regarded as an important jurisdiction for both FPI and FDI flows into India.

Experts  say the removal from the grey list could lead to higher flows from the British Overseas Territory as it will help do away with the negative perception among large investors, who have restricted their investments from this jurisdiction over the past two years.

Meanwhile, no FPI from Bulgaria is registered in India.