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IFSCA Guidelines on Anti Money Laundering Counter-Terrorist Financing and KYC.

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  • IFSCA Guidelines on Anti Money Laundering Counter-Terrorist Financing and KYC.

International Financial Services Centres Authority (IFSCA or Authority) vide ref no. IFSCA/2022-23/GN/GL001 dated October 28, 2022 has issued Guidelines on Anti Money Laundering, Counter-Terrorist Financing and Know Your Customer Guidelines, 2022 (“AML Guidelines”) which has come into effect from November 1, 2022.

The key highlights of the AML Guidelines are as follows:

  • The Guidelines shall be applicable to every Regulated Entity (“RE”) licensed and registered by IFSCA and shall also apply to a Financial Group of the Regulated Entity.
  • AML Guidelines prescribes certain definitions such as
  • Beneficiary Institution,
  • Common Reporting Standards
  • Cross-border wire transfer
  • International Organisation PEP
  • REs to devise an AML Policy comprising of internal risk management policies and procedures to cover the aspect and timelines to establish business relationship with customer and KYC Policy.
  • Risk-Based Approach (RBA)
  • Every RE to adopt RBA to identify and assess the Money Laundering (ML) and Terrorist Financing (TF) depending upon its nature of business
  • The outcome of the RBA to be documented and to ensure that ML/TF risk assessment information is made available to the Authority as and when required
  • Risk Assessment to be carried out at least once every two years or whenever any material trigger event occurs, whichever is earlier.
  • Customer Risk Assessment
  • Customer Risk Assessment is to be carried out for every customer in order to ascertain risk rating of customer as high, medium and low, proportionate to the ML/TF risks
  • While undertaking customer risk assessment following information may be obtained
  • Beneficial Owner
  • purpose and intended nature of the business relationship
  • Ownership, control structure, nature and business relationship with RE
  • country of origin, residence, nationality, place of incorporation or place of business
  • High, medium and low can be classified on the basis of customer risk, geographic risk product or service, transaction or any delivery channel risk
  • For High risk rated customers, Enhanced Due Diligence (EDD) is to be undertaken in addition to normal Customer Due Diligence (CDD), for low risk rated customers Simplified Due Diligence (SDD) to be carried out and for other customers normal CDD can be undertaken
  • Periodic updation of customer risk assessment to be carried out i.e. Annually- for high-risk customers, once in three years- for medium risk customer and once in every five years- for low-risk customers
  • CDD to be undertaken at the time of establishing business relationship except in cases where ongoing due diligence and scrutiny of transactions is undertaken throughout the course of business relationship
  • Parameters to be defined for identification and verification of customers identity, Beneficial Owners, related parties and Politically Exposed Persons (PEP)
  • Enhanced Due Diligence to be carried out wherein customer is identified as PEP or a close relatives of PEP
  • Simplified Due Diligence to be carried out, in case of low risk customer
  • Ongoing monitoring of all business transaction shall be carried out periodically.
  • An ongoing screening of customers to be done against United Nations Security Council sanctions lists , list by Ministry of Home Affairs or any other relevant list as prescribed under AML Guidelines. Consequent to the said screening compliance monitoring in terms of section 51A of Unlawful Activities (Prevention) Act 1967 (UAPA) and freezing of Assets as per UAPA order February 2, 2021 needs to be undertaken.
  • Additional measures such as providing acknowledgment to customer, updation of customer information at branch etc to be carried out.
  • Appropriate training to be imparted to employees with respect to applicability of AML Guidelines
  • All the necessary records with respect to AML shall be preserved for least six years
  • AML Guidelines also prescribes compliance monitoring in terms of section 51A of Unlawful Activities (Prevention) Act 1967 (UAPA) and freezing of Assets as per UAPA order February 2, 2021
  • Reporting requirement under Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standards (CRS) is also required to be adhered

Source category: IFSC Insurance Office

Attachments

  • /2022/106_IFSCAG~1.PDF

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