Concerned over extraterritoriality practiced by some nations impacting emerging markets, Sebi Chairman U K Sinha today said the issue seriously needs to be taken up at international forums on various counts, including the fight against money laundering menace.
Extraterritoriality refers to certain exemptions granted to foreign entities from the jurisdiction of local law, and post the 2008 global financial meltdown came to involve the derivatives trade, especially in the US and EU.
“In their enthusiasm to take action post global financial crisis some national and regional bodies have come out with legislations for enactment which have serious elements of extraterritoriality. They are not only applicable for them or the jurisdictions but also outside their jurisdictions and have been enforced as law,” Sinha said at an event here.
“The issue of extraterritoriality is not being discussed in the international forum,” he added.
Citing examples of derivative regulations in certain jurisdictions, Sinha said there are problems with emerging markets dealing with it.
“So we have to see are we guided by global standards mutually accepted upon or can national guidelines or regional guidelines have higher claim and one has to succumb under those things…which would be superimposed,” Sinha said.
He also said that anti-money laundering laws are not being guided by fair play as some countries have made alternate efforts to attract corporations to a particular jurisdiction.
“Those who are signatories to financial action task force have to follow certain common guidelines in relation to taxation and anti money laundering but we are seeing examples of superior or alternate efforts being made to attract corporations to a particular jurisdiction so how to come out with a predictable regime on global taxation is again not being guided by fair play. In some cases the effort is not only towards tax evasion,” Sinha said.
He was speaking at ‘Gateway of India Dialogue’.