The International Financial Services Centres Authority (IFSCA) has issued Circular No. F. No. 887/IFSCA/UAPA/ 2023-24/03 dated 5th September 2023, addressing important modifications regarding the implementation of Section 51A of the Unlawful Activities (Prevention) Act, 1967. This circular impacts all regulated entities in the GIFT-IFSC jurisdiction.
Key Modifications:
A. The circular refers to Clause 11.2 of the International Financial Services Centres Authority (Anti Money Laundering, Counter-Terrorist Financing and Know Your Customer) Guidelines, 2022, issued by IFSCA. It highlights the importance of compliance obligations under international agreements and domestic laws.
B. Reference is made to the Corrigendum issued by the CFT Cell/CTCR Division of the Ministry of Home Affairs, Government of India, bearing File No. 14014/01/2019/CFT-83 dated 15th March, 2023. This Corrigendum is available here.
C. The circular informs about further modifications made to the Order dated 2nd February 2021, as amended by the Corrigendum No. 14014/01/2019/CFT-83 dated 15th March, 2023. These modifications are introduced through a Corrigendum dated 29th August 2023 by the CFT Cell/CTCR Division of the Ministry of Home Affairs, Government of India. The key modifications include:
(i) Expanding the scope of individuals/entities to “real-estate agents, dealers of precious metals/stones (DPMS), other Designated Non-Financial Businesses and Professions (DNFBPs) and any other person.”
(ii) Adding a new para (7(i)(a)) requiring DNFBPs to report transactions involving designated individuals/entities and freeze their assets when held.
(iii) Inserting a new para (7(ix)) mandating any person holding funds or assets of designated individuals/entities to immediately freeze related transactions and report to the nearest Police Station, which in turn informs the UAPA Nodal Officer.
D. The circular specifies that the above modifications to the Order dated 2nd February 2021 apply to Regulated Entities in IFSC, in accordance with the nature of their business, with immediate effect.
Accessing the Circular:
A copy of the circular is available on the IFSCA website here.
Conclusion:
In conclusion, the IFSCA circular dated 5th September 2023 outlines significant modifications regarding the implementation of Section 51A of the Unlawful Activities (Prevention) Act, 1967. Regulated entities in GIFT-IFSC are required to adhere to these modifications in accordance with their business nature. It is essential for all relevant entities to stay informed and compliant with these updates to ensure the smooth operation of financial services within the jurisdiction.
For any further inquiries or clarifications, you may contact Ramachander S.S.R. Eranki, UAPA Nodal Officer, and Head, AML & CFT Division, at [email protected].
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INTERNATIONAL FINANCIAL SERVICES CENTRES AUTHORITY
Circular No. F. No. 887/IFSCA/UAPA/ 2023-24/03 Dated: 05sth September 2023
To
The Designated Directors/Principal Officers
All Regulated Entities
GIFT-IFSC
Sub: Procedure for implementation of Section 51A of the Unlawful Activities (Prevention) Act, 1967- modification-regarding.
Sir/Madam,
A. Reference may be drawn to Clause 11.2 (Freezing of Assets under Section 51A of Unlawful Activities (Prevention) Act, 1967) of Chapter XI (Compliance Obligations Under International Agreements and Domestic Laws) of the International Financial Services Centres Authority (Anti Money Laundering, Counter-Terrorist Financing and Know Your Customer) Guidelines, 2022 (hereinafter referred as ‘Guidelines’) issued vide notification No. IFSCA/2022-23/GN/GL001 dated October 28, 2022, by the International Financial Services Centres Authority (hereinafter referred as ‘Authority’).
B. Reference may also be drawn to Corrigendum bearing File No. 14014/01/2019/CFT-83 dated 15th March, 2023 issued by CFT Cell/CTCR Division of the Ministry of Home Affairs, Government of India. (https://www.mha.gov.in/sites/default/files/2023-05/Procedure51Acorrigendum_04052023.pdf).
C. Please Note that the Order dated 2nd February 2021, as amended vide Corrigendum No. 14014/01/2019/CFT-83 dated 15″ March, 2023, is further modified to the following extent through a Corrigendum dated 29th August 2023 by the CFT Cell/CTCR Division of the Ministry of Home Affairs, Government of India:
(i) Para 7 of the MHA’s order dated 02.02.2021 may now be read as “Regarding the real-estate agents, dealers of precious metals/stones (DPMS), other Designated Non-Financial Businesses and Professions (DNFBPs) and any other person” instead of “Regarding the real-estate agents, dealers of precious metals/stones (DPMS) and other Designated Non-Financial Businesses and Professions (DNFBPs)”
(ii) Below Para 7 (i) of the MHA’s Order dated 02 02 2021, following para is inserted: “7(i)(a) The DNFBPs are required to ensure that if any designated individual/entity approaches them for a transaction or relationship or attempts to undertake such transactions, the dealer should not carry out such transactions and, without delay inform the UAPA Nodal officer of the State/UT with details of the funds/assets held and the details of the transaction, who in turn would follow the same procedure as in para 6.2 to 6.6 above. Further, if the dealers hold any assets or funds of the designated individual/entity, either directly or indirectly, they shall freeze the same without delay and inform the UAPA Nodal officer of the State/UT”
(iii) Below Para 7 (viii) of the MHA’s Order dated 02 02 2021, following para is inserted:
“7(ix) Any person, either directly or indirectly, holding any funds or other assets of designated individuals or entities, shall, without delay and without prior notice, cause to freeze any transaction in relation to such funds or assets, by immediately informing the nearest Police Station, which shall, in turn, inform the concerned UAPA Nodal Officer of the State/UT along with details of the funds/assets held. The concerned UAPA Nodal Officer of the State/ UT, would follow the same procedure as in para 6.2 to 6.6 above.”
D. The above modification to the Order dated 2nd February 2021, shall apply to the Regulated Entities as per their nature of business in IFSC with immediate effect.
E. Copy of the circular is available on the IFSCA website at https://ifsca.gov.in/Pages/Contents/UNSC-Sanctions-Committee-List .
Ramachander S.S.R. Eranki,
UAPA Nodal Officer
& Head, AML & CFT Division
[email protected]
