Transforming Financial Services in IFSC

overview

• Vault Managers in GIFT City IFSC must ensure compliance with Customer Due Diligence (CDD) under the IFSCA KYC/AML-CFT Guidelines, 2022, and maintain Supply Chain Integrity as per the Bullion Guidelines dated August 25, 2021.
• These requirements apply to all entities involved in bullion operations within the IFSC ecosystem, including Vault Managers, Bullion Market Infrastructure Institutions, and Bullion Exchange participants.

CDD Responsibilities of Vault Managers

• Vault Managers must conduct due diligence on the ultimate beneficial owners (UBOs) of Bullion Depository Receipts (BDRs) as per IFSCA regulations.
• This obligation extends to customers across all jurisdictions, including those located overseas, within GIFT-IFSC, and in the Indian territory such as Qualified Jewellers or CEPA TRQ holders.
• Vault Managers can coordinate with the Bullion Depository for CDD records but must independently verify all customers.

Logistics Partner Agreements & CDD

• Vault Managers must ensure that their overseas logistics partners carry out Customer Due Diligence (CDD) in line with regulatory expectations.
• Their agreements with these partners must clearly state the obligation to comply with either the Financial Action Task Force (FATF) guidelines or the stricter of the applicable local laws.
• These agreements must include proper documentation and verification of bullion suppliers to ensure regulatory compliance and protect against financial crimes.

Maintaining Supply Chain Integrity

• Vault Managers are responsible for ensuring that bullion remains under proper custody throughout the entire supply chain, as outlined in the Bullion Guidelines.
• Bullion must remain in the custody of the Vault Manager or authorized logistics entities until safely vaulted, with the Vault Manager ensuring it doesn’t exit custody at any stage.
• Additionally, the Bullion Depository plays a critical role in ensuring compliance with these supply chain integrity requirements, overseeing the adherence to the guidelines.

CONCLUSION

• Vault Managers must prioritize effective Customer Due Diligence (CDD) and maintain a secure supply chain to ensure compliance with regulatory standards.
• Vault Managers must ensure bullion custody and work with logistics partners to prevent financial crimes through strict due diligence.
• Their commitment to these responsibilities fosters a trustworthy and transparent environment, while the Bullion Depository supports compliance across the supply chain.