AML Obligations of Entities Exempted from IFSCA (AML CTF and KYC) Guidelines 2022
There are various entities in the International Financial Services Centre (IFSC) regulated by IFSCA to prevent Money Laundering, Terror financing, and other financial crimes. Some of these entities are exempted from the applicability of IFSCA (Anti Money Laundering, Counter-Terrorist Financing, and Know Your Customer) Guidelines, 2022. However, even exempted entities under IFSCA have certain obligations and responsibilities to ensure proper functioning and adherence to regulatory standards. This illustration discusses the AML obligations of entities exempted under IFSCA (Anti Money Laundering, Counter-Terrorist Financing and Know Your Customer) Guidelines, 2022.
Refer to our infographic to learn more about Exempted Entities.
The AML obligations of exempted entities include:
Transactions through an Account Maintained with a Banking Unit at IFSC
All regulated entities under IFSCA, including the exempted entities, are required to make transactions or receive funds, fees, or amounts only through an account that is maintained with a Banking Unit at IFSC.
Business Risk Assessment
While some notified entities are exempted from the AML compliance functions, they are still required to undertake Business Risk Assessment. This is because the Business Risk Assessment exercise can help businesses identify their Money Laundering and Terrorism Financing (ML/TF) risk exposure.
Documentation of Business Risk Assessment
When Business Risk Assessment is undertaken, exempted entities are also required to document this exercise and its outcomes.
As a best practice, exempted entities should also record and maintain the Business Risk Assessment for such time period that is ordinarily prescribed for non-exempted entities.
Compliance with Obligations under PMLA, 2002 and IFSCA Guidelines 2022 if ML/TF Risks are Envisaged
Upon conducting Business Risk Assessment, if the exempted entity sees any potential ML/TF risks, then the exempted entities must comply with the obligations stipulated in the Prevention of Money Laundering Act 2002 and its rules and the IFSCA (AML, CTF, and KYC) Guidelines, 2022
Inference from the AML obligations of Entities Exempted from IFSCA (AML CTF and KYC) Guidelines 2022
While IFSCA exempts certain entities from complying with the International Financial Services Centres Authority (Anti Money Laundering, Counter-Terrorist Financing and Know Your Customer) Guidelines, 2022, it still requires these entities to implement some preventive measures against money laundering and terrorism financing (ML/TF) risks. With this infographic, exempted entities can now become aware of their AML obligations.
