XYZ International Ltd., a Global Financial Services Company headquartered in Singapore, plans to establish a full-fledged banking unit (IFSC Banking Unit-IBU) in the Gujarat International Finance Tec-City. XYZ Internatio

CS Professional · IFSCA - Regulations, Listing and Compliances · PYQS · June 2026
XYZ International Ltd., a Global Financial Services Company headquartered in Singapore, plans to establish a full-fledged banking unit (IFSC Banking Unit-IBU) in the Gujarat International Finance Tec-City. XYZ International Ltd. submits an application to IFSCA for approval to set up a banking unit. The company plans to offer multi-currency accounts and trade finance services to overseas corporates. The company has proposed to use a digital onboarding system for KYC verification of clients, integrating a KYC Registration Agency. During pre-approval consultation, IFSCA identifies potential regulatory compliance requirements related to the following: Minimum capital requirements, Governance and board composition, AML/CFT obligations, Risk management systems, Customer protection and disclosures. XYZ also wants to onboard clients from multiple jurisdictions, including high risk countries. which could increase regulatory scrutiny. In view of the above scenario, the following issues are identified: Regulatory Approval; Capital and Governance Compliance; AML/CFT Compliance; KYC and Client Onboarding; Cross-Border Transactions. Accordingly, you are engaged by XYZ. International Ltd. to deal with the following: How can the company ensure compliance with anti-money laundering and counter-terrorism financing regulations ?

Answer & Explanation:

As per IFSCA (Anti-Money Laundering, Counter-Terrorist Financing and Know Your Customer) Guidelines, 2022, XYZ must implement the following: A Regulated Entity must adopt Risk-Based Approach (RBA) to identify and assess the Money Laundering (ML) and Terrorist Financing (TF) risk to which the Regulated Entity is exposed, depending upon its nature of business and exposure to or involvement with certain types of clients, countries or geographic areas, products, services, transactions, or delivery channels, etc. and document the same. Integration with KYC Registration Agencies (KRAs) enables centralized customer identification and verification. A Regulated Entity after assigning risk rating for each Customer proportionate to their AML/CFT risks, shall undertake the Customer Due Diligence. High-risk clients require enhanced due diligence, ongoing monitoring, and periodic reporting of suspicious transactions. Many international banks operating in IFSC use KRAs like CAMS KRA or CVL KRA to streamline compliance while maintaining regulatory oversight.

Topics: IFSC Regulations

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic