The Investment Company Institute has opposed cross-border application of anti-money laundering rules and higher foreign investor license fees introduced by the Securities and Exchange Board of India. Many ICI members hold foreign institutional investors licenses in India and have brought their concerns to the ICI, said Robert Grohowski, senior counsel of international affairs at the ICI in Washington, D.C. In a comment letter, the ICI requested that the Board reconsider the direct application of the AML rules to foreign institutional investors. The rules, adopted earlier this year, require the filing of suspicious transaction reports and verifying clients’ identity.
The application of the rules to foreign institutional investors is inappropriate, the ICI stated in its letter. The institute argued that foreign investors do not have clients in India and do not act as intermediaries in the Indian market. India has become one of the only countries to impose AML rules on investors, said Grohowski. The ICI has recommended the Board treat foreign institutional investors as clients of local firms, rather than intermediaries, for the purpose of the AML rules. India has sought feedback from the ICI on means to improve its climate for foreign investment, Grohowski noted.
The ICI also condemned the raising of fees for foreign institutional client licenses--from $5,000 to $10,000. The regulator also raised fees for sub-account investments from $1,000 to $2,000. Grohowski said foreign institutional investors may have to pay hundreds of thousands of dollars every three years because there is a requirement for licenses to be renewed every three years. Other countries charge nominal fees to cover the processing of paper work for foreign investors, he said. Officials at the Board did not respond to messages.