TaxTMI 
TaxTMI 
International Financial Services Centres Authority (KYC Registration Agency) Regulations, 2025
X X X X Extracts X X X X
X X X X Extracts X X X X
.... as assigned to them below, and their cognate expressions shall be construed accordingly- (a) "Act" means the International Financial Services Centres Authority Act, 2019 (50 of 2019); (b) "Associate", in relation to a person, shall include another person: (i) who, directly or indirectly, by himself or in combination with other persons, exercises control over the first person; (ii) who holds control of at least twenty per cent. of the total voting rights of the first person; (iii) who is a holding company or a subsidiary company of the first person; (iv) who is a relative of the first person; (v) who is a member of a Hindu Undivided Family wherein the first person is also a member; (vi) such other cases where the Authority is of the view that a person shall be considered as an associate based on the facts and factors including the extent of control, independence and conflict of interest. (c) "Authority" or "IFSCA" means the International Financial Services Centres Authority established under sub-section (1) of section 4 of the Act; (d) "Client", for the purpose of these regulations, means a pe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er clause (g) of sub-section (1) of section 3 of the Act; (k) "KYC Registration Agency (KRA)" means an entity which has been granted certificate of registration under these regulations; (l) "Net Worth" means the aggregate value of the paid-up share capital and all reserves created out of the profits, securities premium account and debit or credit balance of profit and loss account, after deducting the aggregate value of the accumulated losses, deferred expenditure and miscellaneous expenditure not written off, as per the balance sheet, but does not include reserves created out of revaluation of assets, write-back of depreciation and amalgamation; (m) "Principal Officer" means a designated employee of the KRA responsible for overall activities of the KRA; (n) "Regulated Entity" means an entity which has been granted license, recognition, registration or authorisation by the Authority; (o) "SEBI" means the Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992. (2) Words and expressions used and not defined in these regulations but defined in the Act or Acts mentioned i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....initiated against the person by a financial regulatory authority and is pending; (v) an order has been passed against the person for malfeasance; (vi) the person has been declared insolvent and not discharged; (vii) an order, restraining, prohibiting or debarring the person from accessing or dealing in financial product (s) or financial service (s), has been passed by any regulatory authority, in any matter concerning financial services market and such order is in force; (viii) any other order against the person, which has a material bearing on the financial services market, has been passed by the Authority or any other regulatory authority and a period of three years from the date of the order has not elapsed; Explanation. - For the above provision, the decision to determine materiality shall be that of the Authority. (ix) the person has been found to be of unsound mind by a court of competent jurisdiction and the finding is in force; (x) the person is financially not sound or has been categorised as a willful defaulter; (xi) the person has been declared a fugitive economic offender; or (xii) any othe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ve an experience of at least five years in the financial services market. (4) The Compliance Officer shall immediately and independently report to the Authority any non-compliance. (5) A KRA shall have adequate manpower commensurate with its business activities in the IFSC. 8. Registration Requirements The Authority shall take into account all matters which it deems relevant for grant of registration to the entity seeking registration as KRA and in particular the following, namely, whether: a) the applicant or its Principal Officer and Compliance Officer have the specified qualification and adequate work experience; b) the applicant has the necessary infrastructure like adequate office space, equipment, communication facilities and manpower to effectively discharge its activities; c) the applicant satisfies the eligibility criteria and Net Worth requirements as specified under these regulations; d) the applicant has satisfactory financial credit worthiness; e) the applicant and its Principal Officers, directors, key managerial personnel and controlling shareholders are fit and proper persons; f) the applicant or any ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing of the KRA, in the IFSC. (6) The registration granted to a KRA may be withdrawn by the Authority after giving an opportunity of being heard. 10. Period of validity The certificate of registration of a KRA shall be valid unless it is suspended or cancelled by the Authority or surrendered by the KRA and accepted by the Authority. 11. Surrender of Registration A registered KRA may file an application with the Authority for surrender of its registration: Explanation: The voluntary surrender of certificate of registration shall be effective only after its acceptance by the Authority. 12. Code of Conduct A KRA shall abide by the Code of Conduct as specified in Schedule I. 13. Maintenance of books of account, records and other documents (1) A KRA shall maintain and preserve the following books of accounts, records and documents, in electronic retrieval form for a minimum of eight years, namely: - (a) a copy of the balance sheet at the end of each accounting period; (b) a copy of profit and loss account for each accounting period; (c) a copy of the auditor's report on the accounts for each accounting period; (d) a statem....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ty and Cyber Resilience A KRA shall have robust cyber security and cyber resilience framework in accordance with the requirements as may be specified by the Authority from time to time. 19. Risk Management and Internal Controls (1) A KRA shall have a sound risk management system for comprehensively managing risks. (2) A KRA shall have adequate internal procedures and controls, given the types of business in which it engages (including any activities which have been outsourced) with the aim of protecting the interests of Clients and their assets and ensuring proper management of risk. 20. Change in Control (1) Where a KRA is set up in the IFSC in the form of a Company, it shall seek prior approval of the Authority in case of any direct or indirect change in control of the KRA. (2) Where a KRA is operating in the form of a branch in the IFSC, it shall intimate the Authority within fifteen days of any direct or indirect change in control of the KRA. 21. Payment of Fees A KRA shall pay the fees as may be specified by the Authority. 22. Annual Audit (1) A KRA shall have an annual audit conducted in respect of compliance with these regulations, by a membe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....structions in co-ordination with other KRA(s) and issue the same to implement the requirements of these regulations. (h) KRA(s) shall ensure that the integrity of the automatic data processing systems for electronic records is maintained at all times. (i) A KRA shall take all precautions necessary to ensure that the KYC documents/records are not lost, destroyed or tampered with and that sufficient back up of electronic records is available at all times at a different place. (j) A KRA shall have adequate mechanisms for the purposes of reviewing, monitoring and evaluating its controls, systems, procedures and safeguards. (k) A KRA shall cause an audit of its controls, systems, procedures and safeguards to be carried out periodically and take corrective actions for deficiencies, if any and report to Authority. (l) A KRA shall take all reasonable measures to prevent unauthorised access to its database and ensure audit of its systems, controls, procedures and safeguards at regular intervals as specified by the Authority from time to time. (m) A KRA shall ensure compliance with the provisions of the Digital Personal Data Protection Ac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....certain classes of Regulated Entities from the applicability of these regulations. 26. Sharing of KYC information in the financial sector (1) A KRA may permit access to its systems to the entities regulated by other financial sector regulators specified by the Authority, for undertaking KYC of their Clients. (2) A KRA may connect its systems to any central KYC registry authorised by the Central Government for the purpose of collation and sharing of the KYC information in the financial sector. CHAPTER IV INSPECTION 27. Inspecting Authority (1) The Authority may suo motu or upon receipt of information or complaint at any time appoint one or more persons as Inspecting Authority to undertake the inspection of the books, accounts, records, documents, infrastructure, procedures, systems of a KRA, for any purpose, including the purposes as specified under sub-regulation (2). (2) The purposes referred to in sub-regulation (1) may include, - (a) to ensure that the books of account, records and documents are being maintained in the manner as required under these regulations; (b) to ensure that the provisions of the Act, the regulations and circulars ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... a KRA to give to the inspecting officer all assistance in connection with the inspection, which the inspecting officer may require. 29. Inspection by third parties (1) The Authority may appoint a professional to inspect the books of account, records, documents infrastructures, systems and procedures or affairs of a KRA: Provided that such professional so appointed shall have the same powers of an Inspecting Authority: Provided further that a KRA and its employees shall have the same obligations towards the third party professional as they have towards the Inspecting Authority, as specified in regulation 27 with respect to such inspection. (2) The Authority shall be entitled to recover expenses including fees paid to the third party professional as may be incurred by it relating to such inspection from the KRA. 30. Submission of report The Inspecting Authority shall submit an inspection report including interim reports to the Authority, and the Authority may take such action as it may deem fit and appropriate, on such report: Provided that if directed to do so by the Authority, the Inspecting Authority may submit an interim report. CHAPTER V ACTION IN ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at any change in registration status/any penal action taken by the Authority or any material change in financial position which may adversely affect the interests of Clients is promptly displayed on its website. 6. A KRA shall not divulge to anybody either orally or in writing, directly or indirectly, any confidential information about the Clients which has come to its knowledge, without taking prior permission of its Clients, except where such disclosures are required to be made in compliance with any law for the time being in force. 7. A KRA shall not indulge in any unfair competition. 8. A KRA shall display on its website adequate and appropriate information about its business, including contact details of persons and services available to Clients. 9. A KRA shall ensure that grievances of Clients are redressed in a timely and appropriate manner. 10. A KRA shall make reasonable efforts to avoid misrepresentation and ensure that the information provided to the Clients and intermediaries is not misleading. 11. A KRA shall abide by the provisions of the Act and the rules, regulations issued by the Government and the Authority, from time to time, as may be applicabl....