The International Financial Services Centers Authority (IFSCA) has recently released a document presenting various Frequently Asked Questions (FAQs) on the IFSCA (Anti Money Laundering, Counter-Terrorist Financing, and Know Your Customer) Guidelines 2022.
The FAQs on the IFSCA (AML, CTF and KYC) Guidelines represent a practical guide for IFSCA-regulated entities in strengthening their AML framework and compliance requirements.
The critical aspects clarified in the FAQs are
1. Applicability of the IFSCA (AML, CTF, and KYC) Guidelines, 2022:
The FAQs elaborate on the applicability of the IFSCA (AML, CTF, and KYC) Guidelines 2022, clarifying that all the regulated entities licensed, recognised, or registered with IFSCA shall be subject to these Guidelines.
2. Appointment of Designated Director and Principal Officer:
A series of FAQs on this subject offer clarity on the appointment of the Designated Director and Principal Officer within regulated entities, delineating who can assume these positions and elucidating their respective responsibilities.
3. AML/CTF/KYC Policy:
The FAQs highlight the necessity of having business-specific AML/CFT policies that align with the IFSCA (AML, CTF, and KYC) Guidelines. Further, it stipulates that every IFSCA-regulated entity must get the AML/CFT policies approved by the governing body.
4. FIU-IND Registration and obligations thereunder:
This section of the FAQs clears up the registration process and reporting obligations concerning AML. It provides that all regulated entities, except Alternate Investment Funds of Fund Management Entities, must register on the FINGate 2.0 portal. Additionally, it enlists the various reporting obligations of the IFSCA-regulated entity to comply with the IFSCA (AML, CTF, and KYC) Guidelines and the Prevention of Money Laundering (Maintenance of Records) Rules, 2005.
5. Customer Due Diligence:
By way of detailed FAQs, the IFSCA explains how the verification of the identity of the customers can be carried out and provides clarity on the records to be considered as official valid documents (OVD) for different types of customers, basis the customer jurisdiction and the risks involved.
6. Fund Management Entity/ Alternate Investment Funds:
A part of the FAQs document discussed the roles and responsibilities of Fund Management Entities (FMEs) concerning risk assessment, customer due diligence and audit functions within Alternative Investment Funds.
7. Suspicious Transaction Report (STR):
The document also illuminates the process for filing STR, circumstances requiring STR, and disclosing information on suspicious transactions. Additionally, also outlines the protocol for reporting suspicious transactions and the responsible authority for such submissions.
8. Countering Terrorist Financing:
This section provides guidance on the actions regulated entities within IFSC must undertake if any customer’s particulars align with those listed in the designated sanction lists in accordance with the Unlawful Activities (Prevention) Act, 1967 (UAPA) and the Weapons of Mass Destruction and their Delivery Systems Act, 2002 (WMD Act). Additionally, the FAQs outline the circumstances requiring asset freezing and relevant reporting with the concerned authorities.
With such comprehensive clarifications regarding the IFSCA (AML, CTF, and KYC) Guidelines, the IFSCA aims to empower businesses with the knowledge and insights necessary for compliance and risk management.
