Update on foreign transactions – banned entities and individuals
When investing and transacting with overseas individuals and companies, you also need to be careful to follow regulations and guidelines in addition to FEMA. In India, you have UAPA (Unlawful Activities Prevention Act) with notifications from Ministry of Home Affairs and also from the Ministry of External Affairs.
Since most transactions are carried out in US dollars, US regulations apply to these transactions. OFAC of the US treasury department has a list of individuals and companies which are prohibited from transactions as they either violate US regulations or international ones. Before you start a transaction with a new individual or company, you need to make sure that you are not dealing with a sanctioned individual or company.
The United Nations has a similar resource where you can get the information in XML form to import into a database or save as a PDF file to maintain an audit trail.
If you transact in Euros or use a European bank, the European Union regulations and sanctions apply. The European Union has its own list which comprises the UN list and its own additional entries.
India replicates the UN sanctions lists at a number of different places. The latest notification is that of February 3, 2023 at Reserve Bank of India - Notifications (rbi.org.in) with a list of the sanctioned entities under Unlawful Activities Prevention Act (UAPA) at https://rbidocs.rbi.org.in/rdocs/content/pdfs/ISUAPA03022023_AN.pdf. The Ministry of Home Affairs and the Ministry of External Affairs have additional lists of banned organisations.
All of these need to be checked before you make investments or start doing business. Otherwise, you may yourself end up on one of these lists. For more information or advice contact us.