The International Financial Services Centres Authority (IFSCA) on 28th October 2022, published the IFSCA (Anti Money Laundering, Counter-Terrorist Financing and Know Your Customer) Guidelines, 2022, which shall be applicable to every Regulated Entity which is licensed, recognised or registered by International Financial Services Centres Authority (IFSCA) and also to the Regulated Entities authorised by it, to the extent specified.
Every Regulated Entity shall formulate an AML-CFT 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. While formulating the AML-CFT policy, every Regulated Entity shall incorporate the key principles or elements of these Guidelines. Additionally, every Regulated Entity shall develop a KYC Policy which shall be the part of its AML-CFT policy.
Every member of Regulated Entity’s Senior Management shall be responsible for the Regulated Entity’s compliance under these Guidelines. While carrying out their responsibilities under these Guidelines every member of a Regulated Entity’s Senior Management shall exercise due skill, care, and diligence.
The primary thrust of these Guidelines is to enable a Regulated Entity to adopt Risk-Based Approach (RBA) to identify and assess the Money Laundering (ML) and Terrorist Financing (TF) risk to which the Regulated Entity is exposed, depending upon its nature of business and exposure to or involvement with certain types of clients, countries or geographic areas, products, services, transactions, or delivery channels, etc. and document the same.
One of the key reasons for undertaking the exercise of business risk assessment is that it will aid the Regulated Entity to better understand its exposure to ML/TF risks and then take appropriate measures to prevent its business being used for the purposes of ML/TF. The risk exposure of the Regulated Entity varies depending on several factors such as the nature of the business, the type of customers, the nature of the products, services offered, and transactions and delivery channels involved.