International Financial Services Authority (‘IFSCA’) vide Circular bearing reference number: F. No. 1110/IFSCA/Div. of AML & CFT/WMD Act/2023-24/01 dated October 20, 2023 notified the IFSC Insurance Office (IIO) that the order reference number: F. No- 12011/14/2022-ES Cell- DoR, dated September 01, 2023 (“Order”), on procedure for implementation of Section 12A of the Weapons of Mass Destruction and their Delivery Systems (Prohibition of Unlawful Activities) Act, 2005 (‘WMD Act’), issued by the Ministry of Finance, Department of Revenue shall be applicable to all regulated entities in International Financial Services Centre, GIFT City (‘IFSC’).
Key highlights as mentioned under the Order are as follows:
I. Procedure for implementation of Section 12A of WMD Act:
1. Section 12A of WMD Act inter-alia prohibits financing of weapons of mass destruction and their delivery systems and also lays down the powers of Central Government to freeze, seize or attach funds or other financial assets or economic resources.
2. Central Government has assigned Director, FIU-India, Department of Revenue, Ministry of Finance, as the authority to exercise powers under Section 12A of the Act and shall be referred as the Central Nodal Officer (CNO) for the purpose of this order.
3. The CNO shall undertake the following activities:
Ø forward the updated list of all Nodal Officers (i.e. State /UT wise & MHA division) to all Reporting Entities (RE);
Ø maintain the list of designated individuals and entities (designated list) on the portal of FIU- India
Ø make available designated list for all Nodal officers, the State Nodal Officers, and to the Registrars
4. The concerned Financial Regulators shall make available the updated designated list and RE shall maintain the same;
5. The RE including IIOs shall:
i. Verify, if the particulars of the entities/individual, party to the financial transactions, match with the particulars of designated list
ii. Run a check, on the given parameters, at the time of establishing a relation with a customer and on a periodic basis to verify whether individuals and entities in the designated list are holding any funds, financial assets or economic resources or related services, in the form of bank accounts, stocks, Insurance policies etc.
iii. In case there is a positive match or if there are reasons to believe beyond doubt that funds or asset held by a customer would fall under the purview of Section 12 of WMD Act, RE shall not carry out such transaction and immediately inform CNO, to State Nodal Officer, where the account/transaction is held, and to their respective Regulator with complete details, without delay.
6. The order has laid down provisions pertaining to Registrars performing the work of registration of immovable properties, Dealers of precious metals/stones (DPMS), Real estate agents, Registrar of Societies/ Firms/ Non-profit organisations, Casino, Members of ICAI & ICSI, and Designated Non-financial Businesses and Professions (DNFBPs).
7. The provisions of this Circular shall not be applicable to funds and economic resources that have been determined by the CNO to be:
a. necessary for basic expenses including payments for food, medicines, rent, insurance premium, utility charges etc., provided Ministry of External Affairs (MEA) has notified the UNSC or its Committee and no negative decision is received within 5 days of such notification.
b. necessary for extraordinary expenses , provided, these expenses are notified by MEA* to UNSC or its Committee and has been approved by UNSC or its Committee.
8. Any freezing action related to the designated list, should not prevent a designated individual or entity from making any payment due under a contract entered into prior to the listing of such individual or entity, provided that:
a. the CNO has determined that the contract is not related to any prohibited goods, services, technology or activities
b. the CNO has determined that the payment is not directly or indirectly received by an individual or entity in the designated list
c. MEA has notified the UNSC or its Committee, 10 working days prior to such authorisation.
9. Procedure for freezing and unfreezing of funds, financial assets or economic resources or related services of individuals/entities inadvertently affected by the freezing mechanism upon verification has also been laid down
II. Appointment of Nodal Officer :
“Mr. Ramachander S.S.R. Eranki, UAPA Nodal Officer & Head, AML & CFT Division” is appointed as nodal officer for implementation of the provisions of Section 12A of the Act.
Impact on the IIO:
1. To maintain updated designated list as shared by IFSCA, at all times.
2. To run a check and/or verify against the updated designated list at the time of booking a policy and on a periodic basis for any positive match.
3. In case of a positive match, inform CNO, to State Nodal Officer and IFSCA accordingly.
Source category: IFSC Insurance Office
Attachments
- /2023/296_DoR_order_Section_12A_WMD.PDF
- /2023/296_Procedure_for_implementation_of_Section_12A_of_The_WMD)_Act,_2005_IFSCA.PDF
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