SEBI has tightened AIF regulations in order to attract foreign investors. AIF can raise funds from foreign investors if all compliance requirements are met.
When onboarding investors, the manager of an AIF must ensure that the foreign investor is a resident of the country whose Security Market Regulator has an agreement with SEBI for information sharing.
Investors who contribute 25% or more of the corpus or have the power to exercise control should not be included on the United Nations Security Council Sanctions List. Investors should not be residents of the countries named in the Financial Action Task Force’s public statement.
Foreign investors should not come from jurisdictions with strategic anti-money laundering or counter-terrorism financing deficiencies that require countermeasures.
Investors should not come from jurisdictions that have not made sufficient progress in addressing deficiencies or have not committed to an action plan developed in collaboration with the Financial Action Task Force.
If an investor who has been on-boarded to an AIF scheme fails to meet the specified condition, the AIF manager shall not draw down any further capital contribution from such investor for making investment until the investor meets the said conditions again.