The government is set to enhance its examination of investments emanating from tax havens, including Andorra, Aruba, Bahamas, Costa Rica, and Dominica, where confidentiality prevails due to strict banking regulations.
As per sources from the Department of Industrial Policy and Promotion (DIPP), there is growing concern regarding Indian residents who are allegedly utilizing these island nations to conceal money, which is then redirected back for investments. This has raised significant alarm over the potential for these funds being misappropriated for activities linked to terror financing and money laundering.
Investments made in these nations typically evade reporting requirements, as the island countries' policies grant complete banking secrecy and do not disclose specifics about the investments.
Furthermore, intelligence agencies have voiced apprehensions that funds from these regions might be surreptitiously entering the stock market via participatory notes distributed by foreign institutional investors.
A government official remarked, “We need to crack down on such investments. Intelligence authorities and the National Security Council (NSC) would assist in tracking such investments,” revealing that much of this capital is funneled into the real estate market.
Estimates indicate that investments flowing into the real estate sector from these nations reached approximately $150 million. Although this amount seems trivial compared to the staggering $2 billion foreign direct investment in 2007-08, the government remains vigilant, fearing that this marks merely the onset of a more significant influx.