Introduction:
The Financial Action Task Force (FATF) issued a public statement on February 21, 2025, regarding jurisdictions with strategic deficiencies in Anti-Money Laundering (AML) and Combating Financing of Terrorism (CFT).
Key Points:
• FATF called attention to previous statements from February 2020 and October 2022.
• Jurisdictions identified with deficiencies that have an action plan include Algeria, Angola, Bulgaria, Burkina Faso, Cameroon, Côte d’Ivoire, Croatia, Democratic Republic of the Congo, Haiti, Kenya, Lao PDR, Lebanon, Mali, Monaco, Mozambique, Namibia, Nepal, Nigeria, South Africa, South Sudan, Syria, Tanzania, Venezuela, Vietnam, & Yemen.
• The Philippines has been removed from the list of jurisdictions under increased monitoring.
• Regulated entities are still allowed to engage in legitimate transactions with these jurisdictions.
On March 07, 2025 IFSCA issued a circular for Consultation Paper on Oilfield Equipment Leasing. This consultation paper aims to gather public views on a proposal from the Authority to classify “oilfield equipment” for leasing under specific government notifications. This classification would allow for its leasing to be recognized as a financial product.
Key Points:
1. The Authority seeks comments on specifying “oilfield equipment” under the powers given by the Indian government’s notification from December 14, 2021.
2. Once specified, the operating lease of oilfield equipment will be categorized as a financial product according to the IFSCA Act, 2019.
3. The proposed definition for “oilfield equipment” will mirror the list from the GST notification regarding supplies for exploration and production.
4. The leasing frameworks may include ownership or lease-in-lease-out options by financial institutions in the IFSC.
5. Oilfield equipment encompasses tools and machinery used for exploration, extraction, and production of oil and gas.
6. The global oilfield equipment leasing market represents 6-7% of total equipment leasing, growing steadily, with significant advancements in many countries, including those in Asia-Pacific.
7. India heavily relies on imported oilfield equipment. Recent policies aim to boost domestic exploration to reduce this dependency, forecasting increased demand for such equipment.
8. Leasing oilfield equipment could prove to be a cost-effective strategy for Indian companies, with interest expressed from stakeholders regarding leasing frameworks.
Conclusion:
The proposal aims to create an operational framework for leasing oilfield equipment, thus supporting increased oil exploration in India and positioning GIFT IFSC as a regional leasing hub. Public input is welcomed to assess the effectiveness and practicality of this proposal.
On March 07 2025, IFSCA released circular to notify updated Fee Structure for ITFS Operators/Applicants in IFSC
Introduction
This circular outlines the fee structure for International Trade Finance Service (ITFS) operators and applicants intending to set up an ITFS in the International Financial Services Centre (IFSC).
Key Points
• Effective April 01, 2025, a specific fee structure will apply.
• Application fee: $1,000
• Registration fee: $10,000
• Processing fee: 20% of registration fee (relaxation waiver of guidelines – $500)
• Recurring fee and activity-based fees are dependent on annual turnover:
• Less than or equal to $25 million: $3,000
• $25 million to $50 million: $5,000
• $50 million to $100 million: $7,000
• $100 million to $200 million: $10,000
• Over $200 million: $15,000
• Other provisions from a previous circular dated May 17, 2023, remain unchanged.
Circular dated 07 March 2025
Sub: Contribution to Settlement Guarantee Fund (SGF)
1. IFSCA has announced changes to the IFSCA (Market Infrastructure Institutions) Regulations, 2021 (MII Regulations).
2. Regulation 15 defines the net worth of a Clearing Corporation as the total value of its liquid assets, as determined by the Authority. Liquid assets include cash, bank balances, fixed deposits, Government Securities, and other specified instruments.
3. Regulation 31 states that the SGF of a Clearing Corporation can receive contributions from the Clearing Corporation, Stock Exchange, and Clearing Members.
4. It is clarified that a Clearing Corporation’s contribution to the SGF counts as part of its net worth, and the interest on this cash contribution will be shared among contributors.
Circular dated March 10, 2025, Cyber Security Guidelines for Regulated Entities in IFSCs
Introduction
The International Financial Services Centres Authority (IFSCA) has issued guidelines on cyber security and cyber resilience to enhance the protection of financial entities in International Financial Services Centres (IFSCs). These guidelines address the increasing complexity of cyber threats facing these organizations, emphasizing the importance of robust cyber security measures.
Key Points
1. Purpose of Guidelines
• These guidelines aim to establish IFSCA’s expectations from regulated entities (REs) regarding cyber security.
• Regulated Entities (REs) include any entity licensed or recognized by IFSCA.
2. Implementation Principles
• The guidelines should be implemented based on proportionality, considering:
• The scale and complexity of operations.
• The nature of activities conducted.
• Interconnectedness within the financial ecosystem.
• Corresponding cyber risks.
3. Governance
• Requisite governance mechanisms must be in place, with clear roles and responsibilities.
• An “Oversight Body” should include the governing board and senior management personnel.
• A Chief Information Security Officer (CISO) or Designated Officer must be appointed to oversee cyber security.
4. Cyber Security and Resilience Framework
• Regulated Entities (REs) need to develop a framework to ensure the confidentiality, integrity, and availability of IT assets.
• The framework should include risk identification, protection strategies, access controls, physical security, vulnerability assessments, recovery plans, incident management, and audit trails.
5. Third Party Risk Management
• A collaborative approach with third-party vendors is necessary to ensure data security and compliance.
• Regular reviews of third-party services are mandated, especially for those critical to operations.
6. Communication & Awareness
• Regular training on cyber security topics must be provided to employees.
• Effective channels for reporting suspicious activities and incidents should be established.
7. Audit Processes
• Periodic audits are required to ensure the effectiveness of the cyber security measures.
• Audits should be conducted by certified independent auditors, and the findings reported to IFSCA within specific timelines.
8. Exemptions
• Certain Regulated Entities (REs), such as small firms and foreign entities, may be exempt from the guidelines under specific conditions, including adherence to their parent entity’s cyber security policies.
Conclusion
These cyber security guidelines will be effective from April 1, 2025, and aim to safeguard the financial entities operating within the IFSC framework. Compliance will play a crucial role in maintaining credibility and trust in the financial services provided. For more detailed information, the complete circular is available on IFSCA’s website.
PRESS RELEASE: March 24, 2025, IFSCA Forms Standing Committee on Insurance to Enhance GIFT-IFSC’s Global Role
The International Financial Services Centres Authority (IFSCA) has established a Standing Committee on Insurance (SCI) to improve the insurance and reinsurance sector at GIFT – IFSC. This move is part of IFSCA’s goal to make GIFT – IFSC a leading global insurance hub with a robust regulatory framework that simplifies business operations.
The SCI will offer strategic advice on regulations, stakeholder relations, public consultations, and industry practices.
The committee’s key responsibilities include:
• Comparing IFSCA regulations with other international finance centers and suggesting regulatory improvements.
• Analyzing the ease and cost of doing business at IFSC and making recommendations.
• Engaging with stakeholders, especially NRIs/PIOs, and conducting educational initiatives.
• Reviewing insurance product demand and suggesting new product developments.
• Attracting investments from global insurance pools into IFSC.
• Providing feedback on IFSCA’s public consultations.
The 23rd meeting of the IFSCA Authority took place on March 26, 2025. During this meeting, several key regulatory changes were approved, primarily focusing on capital market intermediaries, Know Your Customer (KYC) registration agencies, and fund management.
Key Points:
1. IFSCA (Capital Market Intermediaries) Regulations, 2025:
• The new regulations will replace the existing IFSCA regulations from 2021.
• Key changes include:
• Introduction of a new category called ‘Research Entity’ and removal of ‘Account Aggregator. ‘
• Incorporation of regulatory frameworks for ‘Distributors’ and ‘ERDPP’ into the regulations.
• Specification of qualifications and experience needed for Principal Officers and Compliance Officers.
• Clarification that multiple roles can have common officers initially, pending future review.
• No changes to current policy on Global Access for entities in IFSC until further discussion.
• Revised net worth requirements, with specific amounts for Credit Rating Agencies, Investment Advisers, and Investment Bankers.
• Requirement for intermediaries to submit annual compliance audits by September 30 each year.
2. IFSCA (KYC Registration Agency) Regulations, 2025:
• New regulations were approved for KYC Registration Agencies (KRAs) in IFSC.
• Regulations detail eligibility requirements, registration criteria including net worth, and responsibilities of KRAs.
• All regulated entities are required to upload KYC records to the KRA, with possible exemptions.
3. Transition to IFSCA (Fund Management) Regulations, 2025:
• The Authority approved a one-time extension for the validity of expired private placement memoranda under specific conditions.
Conclusion:
The new regulations set forth by the IFSCA aim to enhance the regulatory framework in the IFSC, promoting investor protection, market fairness, and reducing systemic risks. The updated policies are designed to streamline processes for capital market intermediaries and enhance client onboarding through effective KYC practices.