The government is planning to scrutinise investments flowing in from tax havens such as Andora, Aruba, Bahamas, Costa Rica and Dominica where investor details remain confidential due to banking policies.
According to sources in the department of industrial policy and promotion (Dipp), the government is concerned about Indian residents parking money in the island nations to route them back for investments. There are also mounting fears of money being used for terror funding and laundering activities.
Investments in the nations do not get reported as the island countries maintain banking secrecy and do not reveal the nature of investments.
Intelligence agencies have expressed fears that funds from such places were flowing into the stock market through participatory notes issued by foreign institutional investors.
“We need to crack down on such investments. Intelligence authorities and National Security Council (NSC) would assist in tracking such investments,” a government source said, adding that most such funds flow into the real estate sector.
According to estimates, funds from such nations flowing into the real estate sector totaled $150 million. Although the money through the route may be a paltry amount compared to $2-billion FDI in 2007-08, the government fears this is just the beginning of an impending influx.
