🛡️ AML, CFT & KYC Compliance in GIFT City IFSC: 2025 FAQs for Regulated Entities

🌐 Introduction: Why AML-CFT-KYC Compliance Is Critical in GIFT City IFSC

To align with global best practices and FATF standards, the International Financial Services Centers Authority (IFSCA) issued comprehensive AML, CFT & KYC Guidelines in 2022. These guidelines apply to all financial service providers operating within GIFT City IFSC, including banks, fund managers, leasing companies, fintech's, brokers, and other regulated entities.

This FAQ-based guide simplifies the IFSCA requirements, helping you stay compliant while operating in India’s most globally integrated financial zone.

Fintech professionals analyze risk data on a digital compliance dashboard, highlighting KYC profiles and AML alerts, set against a backdrop of GIFT City buildings

✅ Q1. Who must comply with IFSCA's AML-CFT-KYC Guidelines?

All Regulated Entities (REs) licensed, registered, or authorized by IFSCA, including:

• Fund Management Entities (FMEs)

• Finance Companies (FCs) and Finance Units (FUs)

• Banking Units

• Brokers, Insurers, Exchanges, etc.
  

These guidelines also apply to the Financial Group of an RE.

🧑‍💼 Q2. Who can be the Designated Director and Principal Officer?

• Designated Director: Head of the IFSC entity (must be a natural person)

• Principal Officer (PO): Senior official with authority; must be independent of internal audit or business lines
  

🛑 One person cannot hold both roles

🚫 Q3. Can the Designated Director or PO be from the Indian parent company?

No. They must be based in the IFSC unit and possess the authority within the RE itself.

🛠️ Q4. Is a separate AML-CFT-KYC policy required?

Yes — every RE must have a policy approved by its Governing Body, which could be:

• Board of Directors (company)

• Partners (LLP or firm)

• Trustees (trust)

• Branch-level committee (authorized by parent)
  

📌 Existing AML policies must be updated to reflect IFSCA Guidelines

🔐 Q5. What is required under FIU-IND registration?

REs must register on the FIU-IND FINGate 2.0 portal, including:

• Entity registration

• Designated Director & Principal Officer registration
  

Even branches or REs with multiple licenses must register separately.

📌 Select “IFSC” in ‘RE type’ and “IFSCA” as the regulator.

💻 Q6. What reports must be filed with FIU-IND?

REs must report:

• Suspicious Transactions (STR)

• Cross-border wire transfers over ₹5 lakh (or equivalent FX)

• Immovable property transactions over ₹50 lakh

• Non-profit organization receipts above ₹10 lakh
  

The PO is responsible for timely submission.

🔍 Q7. What counts as a cross-border transaction?

Any transaction where either:

• Sender or receiver is in GIFT-IFSC, and

• The counterparty is outside IFSC
  

is treated as a cross-border transfer, regardless of being within India.

🧾 Q8. What are acceptable methods for Customer Due Diligence (CDD)?

IFSCA allows:

1. Offline Verification — including certification by lawyers, public accountants, notaries, banks, and embassies outside India

2. Video-based Customer Identification (V-CIP) — only for Indian nationals

3. Third-party verification or databases (with conditions for low/medium-risk clients)
   

📬 Q9. What documents are valid as address proof?

For Low-Risk Customers:

• Utility bills (≤ 2 months old)

• Property or municipal tax receipts

• Pension orders

• Bank/postal statements

• Accommodation letters from employers
  

For High-Risk Customers (foreign nationals):

Only:

• Documents from foreign government departments

• Letters from foreign embassies/missions in India
  

📌 Bank statements are NOT valid address proof for high-risk foreign clients

🧑‍⚖️ Q10. Can a foreign lawyer certify documents?

Yes. Lawyers based outside India can certify documents such as passports and identity proofs.

🏦 Q11. What’s required from AIFs and FMEs?

• FMEs must conduct risk assessments for AIFs they manage

• CDD can be outsourced to third parties (as per Clause 6.1)

• Audit functions for AML/KYC can be outsourced

• FMEs must handle customer risk grading directly — not delegable
  

🚨 Q12. How is a Suspicious Transaction Report (STR) filed?

• Must be filed by the Principal Officer

• No fixed timeframe — file as soon as suspicion is confirmed

• Submit to:

  • FIU-IND

  • FIU-IND Website
    

☢️ Q13. What if a customer matches a sanctions list?

If a customer matches the UAPA or WMD sanctions lists:

• Immediately inform:

  • Central Nodal Officer

  • IFSCA

  • FIU-IND

  • State Nodal Officer

• Freeze all accounts/assets within 24 hours

• Prevent all financial transactions
  

🧊 Q14. How to unfreeze wrongly frozen accounts?

If someone is wrongly flagged:

• Submit an application with evidence to RE, IFSCA, or Nodal Officer

• RE must forward it to Chief Nodal Officer (CNO) within 2 days

• CNO investigates and issues unfreezing order
  

If the applicant is delisted by UN or verified to be wrongly blocked, CNO must unfreeze without delay.

📌 Conclusion: IFSCA’s AML-CFT-KYC Framework Ensures Global-Grade Compliance

IFSCA’s guidelines are designed to ensure that GIFT City REs remain globally credible, FATF-aligned, and proactive in detecting and preventing financial crimes. Whether you're onboarding clients, reporting transactions, or freezing assets, robust compliance is non-negotiable.

📩 Need help implementing your AML-CFT-KYC framework or FIU-IND setup? Connect with GIFT CFO — your trusted partner in IFSC regulatory, licensing, and compliance support.