AML Compliance In GIFT City,IFSC

Global Overview:


The modern history of AML efforts can be traced back to the 1970s when the international community began to recognize the need for coordinated action against money laundering. The United States was among the first to enact comprehensive anti-money laundering legislation. The Bank Secrecy Act of 1970 (BSA) required financial institutions to keep records and report certain transactions that could be indicative of money laundering.


AML efforts continue to evolve in response to emerging threats, including cybercrime, trade based money laundering, and evolving technologies. International cooperation remains a key element in the fight against money laundering, with ongoing efforts to harmonize AML standards and practices globally


Anti-money laundering in India:

The history of Anti-Money Laundering (AML) efforts in India is marked by a series of legislative and regulatory developments aimed at combating money laundering and related financial crimes.
The Prevention of Money Laundering Act was enacted in 2002 to address the growing concerns about money laundering in India. The FIU-IND was established in 2005 as the central national agency responsible for receiving, processing, analyzing, and disseminating information related to suspicious financial transactions and money laundering.
India continues to refine and update its AML framework to address emerging challenges. The authorities focus on international cooperation, technology adoption, and strengthening regulatory mechanisms to combat money laundering and related crimes. Overall, India’s AML efforts reflect a commitment to aligning with international standards and adapting to evolving financial landscapes to ensure the integrity of its financial systems


India has set up the International Financial Service Centre (IFSC) to develop India as the global investors’ hub, resulting in foreign investors setting up their business operations in IFSC. With IFSC entities’ global exposure in terms of business activities and customers, the risk of financial crime becomes more worrisome. Strong AML program implementation in IFSC entities must be ensured to overcome the risk of financial crimes. The IFSC-regulated entities must adhere to the AML/CFT regulations introduced by the authorities to safeguard the business and the economy against ML/FT vulnerabilities.


Due diligence under IFSC (AML/CFT & KYC) Guidelines, 2022:

  • Collect additional information about the customer  occupation, information available through public databases and internet (adverse media and social media search)
  • examine the financial position of the customer and beneficial owners source of wealth and source of funds using independent inquiry with client using credible database
  • understand and record the purpose of transaction and nature of business 03 relationship
  • obtain senior management approval
  • enhanced ongoing monitoring of the business relationship (customer profile and transaction)
  • first payment through customer’s own bank account following adequate 06 CDD procedures:

Objectives of AML/CFT Training and Awareness program:

The IFSCA (AML, CFT, & KYC) Guidelines, 2022, mandate the regulated entities to develop and implement a robust AML/CFT training program for all its relevant employees. The AML training must be designed considering the nature of the business, customers and products/services the entity deals with, the entity’s identified ML/FT risk and vulnerabilities, etc.

The AML/CFT training must ensure that all the core aspects necessary to identify and combat money laundering and terrorism financing are discussed, which enables the employees to:


  • understand the applicable AML/CFT regulatory landscape, specifically the IFSCA (AML, CF and KYC) Guidelines, 2022
  • grasp the internal AML/CFT policies, procedures, systems and controls developed and deployed by the entity, including its periodic amendments
  • Realize own roles and responsibilities around AML when dealing with customers or handling transactions which may be associated with financial crime typologies
  • thoroughly understand the red flags and ML/FT trends specific to the industry in which the entity operates
  • timely detection of suspicious activities that may involve proceeds of crime or any association with financial crime
  • responsibly report the observed risk indicators to the AML Principal Officer
  • evaluate and comprehend the international best practices that may enhance the effectiveness of the implemented AML program 
Employee contribution and engagement at all levels are significant for the efficacy of the AML measures. Hence, the training session must include the entity’s senior management, operational staff, employees who engage with customers or manages business relationship, and any other employee who is expected to encounter any potential financial crime risk during regular business activities. For new employees, the regulated entity must ensure that AML training and awareness session is conducted at the earliest possible post-joining

Reporting with FIU-IND Under PMLA:

Below mentioned transaction are reported with FIU-IND;
1.Cash Transaction Report:

For reporting all cash transactions of a value of more than INR 10 lakhs or its equivalent in foreign currency. Further, all the integrally connected transactions conducted in a month where the aggregate value exceeds INR 10 lakh or its equivalent in foreign currency must also be reported


2.Property Transaction Report (PTR):
For reporting the person and the transaction involving the purchase or sale of immovable property of INR 50 lakhs or more registered with the help of the reporting entity
3.Cross Border Wire Transfer Report (CBWTR):
For reporting the cross-border wire transfers of more than INR 5 lakhs or its equivalent in foreign currency, wherein the fund originated from or was destined for India.
4.Counterfeit Currency Report (CCR):
For reporting the person and the transactions where forged or counterfeit currency notes or bank notes are identified.
5.Non-Profit Organization Transaction Report (NTR):
For reporting the transactions involving receipts of value more than INR 10 lakhs, or its equivalent in foreign currency by a Non-Profit Organization.
6.Suspicious Transaction Report (STR):
For reporting the identified ML/FT red flags, providing details about the transaction or person suspected of involving crime proceeds or related to money laundering or terrorism financing

AML compliance Roadmap under IFSCA (AML, CFT & KYC) Guidelines:

01. Designating a competent AML principal officer
02.enterprise-wide ML/FT Risk assessment

03. compliance framework (policies, procedure, systems & control)

 04. customer due-diligence identify and verify kyc of customer sanctions screening customer risk assessment Enhanced customer due diligence for risk identification

05.on going customer due-diligence transaction monitoring ongoing sanctioned screening CDD update and periodic review

06. Identification of suspicious transaction (either to detect, ask, review or evaluate)

07. Reporting of suspicious transaction (STR with FIU-IND)

08. AML record keeping for minimum 6 years

09.Sharing KYC info with central KYC records registry (09 For Indian resident)

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