Anti-Money Laundering Compliance In IFSCA
WHAT IS MONEY LAUNDERING?
- These are such illicit activities where the legitimacy of the illegally obtained proceeds is proved.
- Money laundering has the potential to support criminal activities like drug trafficking and terrorism, posing significant threats to the global economy.
PHASES OF MONEY LAUNDERING :
Placement |
Illicit funds are discreetly inserted into the legitimate financial system. |
Layering |
Money undergoes a series of transactions to obfuscate its origin, often involving transfers through multiple accounts to generate confusion. |
Integrtion |
The funds are assimilated into the financial system through further transactions, making the dirty money appear legitimate. |
ANTI-MONEY LAUNDERING LEGISLATIONS IN INDIA :
- The IFSCA notified IFSCA (Anti-Money Laundering, Counter-Terrorist Financing and Know Your Customer) Guidelines, 2022 to ensure non occurrence of suspicious activity including money laundering and terrorist financing, such as securities fraud and market manipulation.
- Through these guidelines, the Banks are mandated by the Regulations to comply with AML/ CFT/ KYC regulations and guidelines as specified by the IFSCA, to prevent banks from being used to launder money or finance terrorism or any illegal activity.
- As per the latest 2024 notification of the Government of India, Financial crime compliance services have been brought under the ambit of financial services that can be provided from the IFSC.
- The services include services rendered in relation to compliance of AML/CFT measures and FATF recommendations and other related activities.
ANTI- MONEY LAUNDERING COMPLIANCE IN IFSCA :
- The IFSCA notified IFSCA (Anti-Money Laundering, Counter-Terrorist Financing and Know Your Customer) Guidelines, 2022 to ensure non occurrence of suspicious activity including money laundering and terrorist financing, such as securities fraud and market manipulation.
- Through these guidelines, the Banks are mandated by the Regulations to comply with AML/ CFT/ KYC regulations and guidelines as specified by the IFSCA, to prevent banks from being used to launder money or finance terrorism or any illegal activity.
- As per the latest 2024 notification of the Government of India, Financial crime compliance services have been brought under the ambit of financial services that can be provided from the IFSC.
- The services include services rendered in relation to compliance of AML/CFT measures and FATF recommendations and other related activities.
HOW TO COMPLY?
- Registration on FINGate, a platform established by the Financial Intelligence Unit for receiving, processing, analyzing, and disseminating information regarding suspicious transactions reported by regulated entities.
- Appointment of a principal officer and designated director who will oversee compliance with anti-money laundering (AML) regulations.
- Conducting an Enterprise Wide Risk Assessment evaluating all aspects of the company’s operations, including customer demographics, geographic locations, and onboarding processes. This assessment helps to determine the organization’s risk profile within the Indian economy.
- Drafting AML Compliance Framework policies, procedures, and control systems documenting the necessary measures to ensure compliance within the company.
- Performing Customer Due Diligence to verify the identities of customers (individuals or corporate entities) by requesting and verifying identification documents and addresses accurately.
- Performance of ongoing customer due diligence, screening of existing onboarded customers and their transactional monitoring.
- Identification and Reporting of suspicious transactions.
- AML policy procedures, enterprise assessment, assisted transactional data and other associated information for a minimum period of 6 years. Sharing KYC information with Central KYC Records Registry.
- AML Training for staff as well as periodic independent AML audit to be undertaken.
