Laws and sections by number or title, due dates, pages, and updates.
The International Financial Services Centres Authority issues guidance to modify the Anti Money Laundering, Counter-Terrorist Financing and Know Your Customer Guidelines, 2022 in accordance with recent amendments to the Prevention of Money-laundering Rules. Regulated entities must apply updated definitions for groups, non-profit organizations, controlling ownership interest, and beneficial owners of trusts. Regulated entities must also register non-profit organization clients on the DARPAN Portal and update client documents within thirty days. These requirements apply to all regulated entities licensed, recognized, registered, or authorized by the authority.
What you must do
Key dates
Law this touches
Who is affected
Thresholds
Exceptions
Ask about this circular
[Image omitted. See the official document.]
CIRCULAR
F. No. 939/IFSCA/FATF-C/PMLA/2023-24
23^rd^ May 2023
To
The Designated Directors/
Principal Officers
All Regulated Entities
GIFT-IFSC
Sub: Guidance to the International Financial Services Centres Authority (Anti Money Laundering, Counter-Terrorist Financing and Know Your Customer) Guidelines, 2022.
Sir/Madam,
A. Reference is drawn to the International Financial Services Centres Authority (Anti Money Laundering, Counter-Terrorist Financing and Know Your Customer) Guidelines, 2022 (hereinafter referred as ‘Guidelines’) issued vide notification IFSCA/2022-23/GN/GL001 dated October 28, 2022, by the International Financial Services Centres Authority (hereinafter referred as ‘Authority’), to all Regulated Entities licensed, recognised, registered, or authorised by the Authority.
B. Further vide Gazette notification dated 07^th^ March 2023 amendments to the Prevention of Money-laundering (Maintenance of Records) Rules, 2005, were notified. In furtherance to this the International Financial Services Centres Authority (Anti Money Laundering, Counter-Terrorist Financing and Know Your Customer) Guidelines, 2022 (“IFSCA Guidelines”), shall stand modified in accordance with these amendments.
For the purpose of clarity for Regulated Entities the following guidance is being issued:
| S. No | Amendment | Applicability |
|---|---|---|
| 1. | “group" shall have the same meaning assigned to it in clause (e) of sub-section (9) of section 286 of the Income-tax Act,1961 (43 of 1961); | Applicable and effective from March 07, 2023 |
| 2. | (cf) “Non-profit organization” means any entity or organisation, constituted for religious or charitable purposes referred to in clause (15) of section 2 of the Income-tax Act, 1961 (43 of 1961), that is registered as a trust or a society under the Societies Registration Act, 1860 (21 of 1860) or any similar State legislation or a Company registered under the section 8 of the Companies Act, 2013 (18 of 2013); | Applicable and effective from March 07, 2023 |
| 3. | (db) “Politically Exposed Persons” (PEPs) are individuals who have been entrusted with prominent public functions by a foreign country, including the heads of States or Governments, senior politicians, senior government or judicial or military officers, senior executives of state-owned corporations and important political party officials; | The definition of “Politically Exposed Persons” provided under the IFSCA Guidelines will continue to apply |
| 4. | (3A) Implementation of policies by groups. – Groups are required to implement group-wide policies for the purpose of discharging obligations under the provisions of Chapter IV of the Prevention of Money-laundering Act, 2002 (15 of 2003). | Refer to para 12.1 of the IFSCA Guidelines, which shall continue to apply |
| 5. | “Controlling ownership interest” means ownership of or entitlement to more than ten per cent. of shares or capital or profits of the company | Applicable and effective from March 07, 2023 |
| 6. | where the client is a trust, the identification of beneficial owner(s) shall include identification of the author of the trust, the trustee, the beneficiaries with ten per cent. or more interest in the trust and any other natural person exercising ultimate effective control over the trust through a chain of control or ownership; | Applicable and effective from March 07, 2023 |
| 7. | a resolution from the Board of Directors and power of attorney granted to its managers, officers or employees, as the case may be, to transact on its behalf; | Refer to Annexure – I (Part -II), which shall continue to apply |
| 8. | (vi) the names of the relevant persons holding senior management position; and (vii) the registered office and the principal place of its business, if it is different. | Refer to 5.4.2 (c), which shall continue to apply. |
| 9. | Permanent Account Number of the partnership firm; | Refer to Annexure – I (Part -II), which shall continue to apply |
| 10. | such documents as are required for an individual under sub-rule (4) relating to beneficial owner, managers, officers or employees, as the case may be, holding an attorney to transact on its behalf; and | Refer to Annexure – I (Part -II), which shall continue to apply |
| 11. | (v) the names of all the partners and address of the registered office, and the principal place of its business, if it is different | Refer to Annexure – I (Part -II), which shall continue to apply |
| 12. | (iii) Permanent Account Number or Form No.60 of the trust; | Refer to Annexure – I (Part -II) |
| 13. | “(v) the names of the beneficiaries, trustees, settlor and authors of the trust and the address of the registered office of the trust; and (vi) list of trustees and documents as are required for individuals under sub-rule (4) for those discharging role as trustee and authorised to transact on behalf of the trust.”; | Applicable and effective from March 07, 2023 |
| 14. | “Every Banking Company or Financial Institution or intermediary, as the case may be, shall register the details of a client, in case of client being a non-profit organisation, on the DARPAN Portal of NITI Aayog, if not already registered, and maintain such registration records for a period of five years after the business relationship between a client and a reporting entity has ended or the account has been closed, whichever is later | Applicable and effective from March 07, 2023 |
| 15. | (9B) Where the client has submitted any documents for the purpose of sub-rule (1), it shall submit to the reporting entity any update of such documents, for the purpose of updating the records mentioned under sub-rules (4), (5), (6), (7), (8) or (9), as the case may be, within 30 days of such updation. | Applicable and effective from March 07, 2023 |
| 16. | Where the client purports to act on behalf of juridical person or individual or trust, the reporting entity shall verify that any person purporting to act on behalf of such client is so authorized and verify the identity of that person. | Applicable and effective from March 07, 2023 |
C. The Ministry of Finance has also issued a notification vide S.O. 2135(E) dated May 3, 2023. In the said notification the Central Government notified that “the financial transactions carried out by a relevant person on behalf of his client, in the course of his or her profession, in relation to the following activities-
(i) buying and selling of any immovable property;
(ii) managing of client money, securities or other assets;
(iii) management of bank, savings or securities accounts;
(iv) organisation of contributions for the creation, operation or management of companies;
(v) creation, operation or management of companies, limited liability partnerships or trusts, and buying and selling of business entities,
shall be an activity for the purposes of said sub-section.
