The IFSCA, by exercising its power under the International Financial Services Centres Authority Act 2019, recently released the International Financial Services Centres Authority (Book-keeping, Accounting, Taxation and Financial Crime Compliance Services) Regulations, 2024.
These regulations aim to establish a framework for the development, registration, and operation of Bookkeeping, Accounting, Taxation, and Financial Crime Compliance (BATF) Services within the International Financial Services Centre (IFSC).
The International Financial Services Centres Authority (BATF Services) Regulations, 2024, is divided into seven chapters and two schedules, which lay down the directives for the BATF.
The salient provisions of this IFSCA (BATF) Regulations are:
- Chapter 1 establishes the objectives of introducing the International Financial Services Centres Authority (BATF) Regulations, 2024. It also defines key terms for understanding the applicability of the regulations, the entities subject to these regulations, and compliance obligations, including clearly defining the services covered under each of the covered activities—Bookkeeping, Accounting, Taxation, and Financial Crime compliance services.
- The next chapter of the regulations outlines the requirements for registering entities intending to provide BATF services within the IFSC. It specifies the application process, eligibility criteria, and conditions under which registration may be granted or refused, including the legal structures permitted for a BATF service provider (a Company or a Limited Liability Partnership). Further, the regulations provide for the re-registration of the existing Ancillary Service Providers already registered in the IFSC, who are BATF service providers.
- Chapter 3 details the requirement for BATF service providers to have a “fit and proper” person appointed as the principal officers, directors/partners, and shareholders. Here, a “fit and proper person” has been defined as someone with a demonstrable history of fairness and integrity, including financial integrity, a good reputation, character, and honesty. The regulations also lay down conditions to prevent the fragmentation or transfer of business operations from mainland India to IFSCs. It prohibits transferring contracts or work arrangements from Group entities of BATF service providers in India to IFSC entities to ensure genuine establishment and operation within IFSCs.
- The regulations mandate that the BATF service providers have non-resident service recipients, but they ensure that such non-resident recipients are not from jurisdictions subject to a call for action by the FATF.
- The regulations have one chapter specifying the appointment of the Principal Officer and Compliance Officer of BATF service providers operating within IFSCs and the qualifications and experience required for such appointments (i.e., a person having professional qualifications, such as a Chartered Accountant (CA), Company Secretary (CS), Cost and Management Accountant (CMA), Certified Public Accountant (CPA), etc.).
- For the appointment of the Principal Officer of a Financial Crime Compliance service provider, the person should hold relevant qualifications from a reputed foreign or domestic institution in financial crime compliance.
- The regulations also provide for conditions related to minimum office space criteria, currency of operations, reporting obligations, etc.
Therefore, these regulations provide a comprehensive framework for establishing and operating BATF services providers in IFSC, ensuring compliance with international standards and safeguarding against financial crime.
Furthermore, the BATF Regulations provide a unique opportunity for specialised professionals to offer bookkeeping, accounting, taxation, and financial crime compliance services to non-resident clients efficiently and seamlessly from GIFT IFSC
