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The Designated Director and Principal Officer shall be different individuals.
The Prevention of Money-laundering (Maintenance of Records) Amendment Rules, 2022 issued vide gazette notification dated 13th July 2022, stipulates that if the reporting entity is located in IFSC, Designated Director (DD) includes a person who is heading the reporting entity.
The head of the regulated entity in IFSC can be designated as Designated Director.
Chapter-VIII, clause 8.2 (c) & (f) of the Guidelines, stipulates that any person having necessary seniority and authority within the Regulated Entity and distinct from the internal audit and business line functions of RE shall be designated as Principal Officer (PO).
The Designated Director or Principal Officer shall be a natural person; no legal entity or any other juridical person can be designated as Designated Director or Principal Officer by Regulated Entity.
If the Principal Officer of an FME under the FM Regulations is the head of the Regulated Entity, in such case, by virtue of The Prevention of Money-laundering (Maintenance of Records) Amendment Rules, 2022 issued vide gazette notification dated 13th July 2022, such Principal Officer an FME under the FM Regulations can be designated as Designated Director.
Every unit/entity which has been granted license, recognition, registration, or authorization by the IFSCA shall formulate an AML-CFT-KYC policy which shall be duly approved by the Governing Body or by a committee to whom such power has been delegated by the Governing Body. (Refer clause 1.5 of the Guidelines)
In view of clause 1.3.20. of the Guidelines, Governing Body for the purpose of approval of AML/CTF/KYC policy of a Regulated Entity means:
As per clause 1.5 of Chapter-I of the Guidelines, every Regulated Entity shall formulate an AML CFT-KYC policy incorporating the key principles or elements of the Guidelines, which shall be duly approved by the Governing Body or by a committee to whom such power has been delegated by the Governing Body.
Thus, in case existing AML/CFT/KYC policy of the Regulated Entities already includes key principles or elements of the Guidelines the same may be continued without the need for formulating a new AML/CFT/KYC policy.
Alternatively, in case existing AML/CFT/KYC policy of the Regulated Entities does not includes key principles or elements of the Guidelines, the Regulated Entities shall incorporate the same and get approved by the Governing Body or by a committee to whom such power has been delegated by the Governing Body
All Regulated entities granted license, recognition, registration or authorization by the IFSCA except an Alternate Investment Fund (AIF) of an FME registered with IFSCA shall register on FIU-IND FINGate 2.O portal.
As per Clause 10.3 of the Guidelines, Regulated Entity shall furnish to the Director, Financial Intelligence Unit-India (FIU-IND), the required information referred to in rule-3 of the Prevention of Money laundering (Maintenance of Records) Rules, 2005 and in accordance with the terms of rule-7 thereof.
To comply with such reporting requirements, all Regulated Entities in IFSC are required to register on FIU-IND FINGate 2.0 portal.
Registration on FIU-IND FINGate 2.O portal is a two-step procedure. The first step is Regulated Entity registration, and second step is Designated Director and Principal Officer registration. (Link for registration: https://www.fingate.gov.in/proactive-re-registration, Link for Guidance video for registration: https://fiuindia.gov.in/videos/RE_Registration_Process.mp4)
The Regulated entity registering on FIU-IND FINGate 2.O portal shall select International Financial Services Centre (IFSC) in ‘RE type’ tab.
The Regulated entity registering on FIU-IND portal shall select International Financial Services Centre Authority (IFSCA) in ‘Regulator type’ tab.
The Business Facilitators shall be domiciled and regulated or registered in jurisdiction not identified in the public statement of FATF as ‘High Risk Jurisdictions’ subject to a ‘Call for Action’; or from any country specified by the Government of India by an order or by way of agreement or treaty with other sovereign governments can be authorised to act as business facilitator by Regulated Entity for the purpose of the IFSCA (AML/CFT/KYC) Guidelines, 2022 (Refer Point (4) of Guidance Note to Part III of Annexure-I of the IFSCA (AML/CFT/KYC) Guidelines, 2022)
As per clause 1.3.7 of the Guidelines, in case of non-resident individuals including Non-Resident Indians (NRIs), the certification may be carried out by a Lawyer (outside India).
As per fourth proviso to clause 1.3.30 of the Guidelines, in case the Officially Valid Document presented by a foreign national does not contain the details of address, in such case the documents issued by the Government departments of foreign jurisdictions and letter issued by the Foreign Embassy or Mission in India shall be accepted as proof of address.
Thus, in case of a foreign national categorized as Medium/ High risk customer, the latest utility bill or bank statement cannot be accepted as an address proof.
The IFSCA (AML/CFT/KYC) Guidelines, 2022 provides for V-CIP Procedure for onboarding Indian nationals only.
Click Here to read all the FAQs related to IFSCA Regulation
A Fund Management Entity (FME) is an entity registered with the Authority under one of the categories specified in regulation 3(4) of the IFSCA (Fund Management) Regulations, 2022 (“Regulations”), for undertaking the business of fund management in an International Financial Services Centre (IFSC). In order to have direct oversight over the fund manager and in line with the best in class global practices, the Fund Management Entity is registered with the Authority. This also facilitates the FME to undertake a host of activities related to fund management under a single registration.
An Authorised FME can pool money from accredited investors or investors investing USD 2,50,000 by way of private placement and invest in securities of start-ups, emerging or earlystage venture capital undertakings, which are mainly involved in new products, new services, technology or intellectual property right based activities or a new business model, through Venture Capital Schemes.
An Authorised FME can also manage Family Investment Funds which invest in securities, financial products, certain physical assets and such other asset classes as may be permitted by the Authority.
VC Schemes are such schemes that primarily invest in unlisted securities of start-ups, emerging or early-stage venture capital undertakings mainly involved in new products, new services, technology or intellectual property right based activities or a new business model or other schemes which invest in such entities and shall also include an Angel Fund.
An Angel Fund / Angel Scheme can be launched by a FME belonging to any of the 3 categories, i.e. Authorised FME, Registered FME (Non-Retail), Registered FME (Retail).
A Registered FME may launch a Restricted Scheme through private placement by filing of placement memorandum with the IFSCA along with the applicable fees, 21 working days before the launch of the scheme, subject to incorporation of comments, if any, of the Authority in the placement memorandum, prior to launch of the scheme.
Click Here to read all the FAQs related to SEZ Compliance
A unit in IFSC has to be a unit under the SEZ Act also and hence it is mandatory for every entity intending to setup a unit in IFSC, to obtain the Letter of Approval (LOA) under the SEZ Act, before obtaining the IFSCA approval.
Every SEZ is administered by a Development Commissioner under the SEZ Act who is overall in charge of the Special Economic Zone and exercises administrative control and supervision over the Zone. In order to provide a unified regulatory framework for IFSC units, the powers of the Development Commissioner for IFSC units have been vested with an officer of IFSCA designated as ‘Administrator (IFSCA)’ vide Section 12 (7) of the SEZ Act.
The Letter of Approval (LOA) is issued under SEZ Act to every unit for a specific set of operations authorized to be performed by it in the SEZ. The unit must provide only the services specified in the Authorized Operations and nothing beyond it.
IFSCA has launched the SWIT portal through which the applicants can submit their application for obtaining IFSCA Regulatory approval. In the SWIT portal, the applicant units are required to file a Common Application Form (CAF) for obtaining IFSCA Regulatory approval. Section-D of the CAF pertains to the application for obtaining the SEZ LOA. Once the CAF is submitted and signed using Digital Signature, the application for SEZ LOA is submitted automatically on the SEZ Online portal. Further processing of the application for LOA approval is done in the SEZ Online portal only and not in the SWIT portal.
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