Strengthening Financial Integrity: A Detailed Guide to IFSCA’s Latest Amendments in AML, CTF, and KYC Guidelines

INTRODUCTION

In the dynamic world of international finance, regulatory clarity and robust customer due diligence are essential for trust and market stability. The International Financial Services Centres Authority (IFSCA) acts as India’s single-point regulator for financial institutions operating in GIFT City and other IFSCs. With global risks in money laundering and terrorist financing on the rise, the IFSCA has released significant updates to its Anti Money Laundering (AML), Counter-Terrorist Financing (CTF), and Know Your Customer (KYC) Guidelines effective June 2025.

This blog provides a professional, detailed, and easy-to-understand explanation of these modifications and what they mean for regulated entities and clients alike.

Digital innovation in global finance: A secure blockchain network integrates advanced KYC verification with a digital fingerprint and ID card.

Understanding the Background

· Legal Basis: The updated circular draws its authority from the International Financial Services Centres Authority (AML, CTF, and KYC) Guidelines, 2022, and incorporates changes notified in the Prevention of Money-laundering (Maintenance of Records) Rules, July 2024.

· Scope: The modifications target all IFSCA-regulated entities, such as banks, payment service providers, brokers, insurers, fund managers, clearing members, and advisors operating in an IFSC framework.

Key Changes Introduced

1. Stricter Proof of Address Norms

· City council tax receipts are NO LONGER accepted as valid proof of address.

· Limited proof of address via any document (other than a bank or post office statement) is only temporarily allowed. The client must submit an “Officially Valid Document” (OVD) or its most recent e-document showing the current address within three months of using such alternatives.

· Explanation: Bank or post office account statements (including foreign banks) can be used as address proof but only for select customers under simplified KYC.

2. Streamlined KYC Document Handling

· Entities must obtain or retrieve the KYC Identifier from the Central KYC Records Registry (CKYCR) when available.

· Once the KYC Identifier is used to pull KYC records:

· The entity should not ask the customer to submit KYC documents again unless:

· The customer’s data has changed;

· Downloaded record is incomplete or not current by today’s KYC norms;

· Validity of old documents has expired;

· Or enhanced due diligence/risk management justifies fresh verification.

3. Timely KYC Updates and Sharing

· If an entity collects new or updated KYC data:

· Update must be uploaded to CKYCR within seven days (or as further notified).

· CKYCR will inform all financial institutions connected to that customer electronically.

· Each institution is obliged to retrieve and align their records with the updated CKYCR file—ensuring industry-wide consistency and up-to-date compliance.

4. Explicit Coverage for IFSC Firms

Entities required to comply with the new KYC record sharing and update process include:

·       Payment Service Providers

·       Core Financing Companies

·       IFSC Banking Units

·       Bullion Trading and Clearing Members

·       Broker Dealers

·       Clearing Members

·       Depositary Participants

·       Investment Advisors

·       Fund Management Entities

·       Insurance Companies (Life and General)

Special Considerations for Foreign Nationals

· CKYC Record Submission: Only mandatory for Indian nationals under Rule 9A. Submission for foreign nationals is not required—but is allowed.

· Acceptable Address Proof for Foreign Nationals:

· Documents issued by government departments in the foreign jurisdiction,

· Letters from a foreign embassy or mission in India.

· Proof of Identity Required:

· Passport,

· Driving License,

· or Voter Identity Card.

What Remains Unchanged?

· All untouched provisions of the original 2022 IFSCA AML, CTF & KYC Guidelines remain in force, ensuring overarching stability and continuity in compliance expectations.

Why These Modifications Matter

For Regulated Entities

· Reduces document duplication: Saves time and effort, streamlining customer onboarding and periodic KYC review.

· Risk-aligned processes: Allows entities to request additional information only when justified by risk or regulatory change.

· Real-time compliance: CKYCR updates trigger an industry-wide prompt, helping each entity keep customer records in sync and current.

For Clients

· Fewer repetitive KYC requests: Once your records are updated and validated by one institution, all others are automatically notified, saving you paperwork.

· Clear timelines: If you use a temporary address proof, there’s a defined window (three months) to submit a permanent OVD—ensuring both flexibility and responsibility.

· Robust data security: KYC documents are managed centrally by CKYCR, reducing risks of loss and mishandling.

Practical Example: How the New Process Works

Scenario: A customer opens an account at an IFSC bank using a foreign bank statement as temporary proof of address.

· The customer must submit a permanent OVD with the current address within three months.

· The bank uploads the KYC and any future updates to CKYCR.

· If the customer later updates address or compliance information through any organization in the IFSC network, all regulated entities where the customer has a relationship will be automatically informed by CKYCR to update their internal files.

· Repeated submission of the same documents is only needed if the data changes, is out of date or does not meet new KYC standards.

Where Can You Find This Update? The full circular and detailed guidelines are hosted on the official IFSCA website.

Conclusion

IFSCA’s latest amendments to AML, CTF, and KYC guidelines are a proactive response to evolving risks in global finance. By aligning with international standards, leveraging digital KYC records, and balancing regulatory rigor with customer convenience, these changes reinforce India’s position as a leading, secure center for international finance at GIFT City and beyond.

For IFSC-regulated institutions and their customers, these measures signal a new era of streamlined compliance, trusted recordkeeping, and greater protection in the fight against financial crime. Stay compliant, stay informed, and leverage the CKYCR’s digital backbone to build trusted financial relationships in the world’s fastest-growing market hub.