The International Financial Services Centre Authority (IFSCA) will next issue regulations for KYC Registration Agency, its Chairman K Rajaraman has said. 

The GIFT City regulator had in December 2024 published a consultation paper seeking public comments on the Draft IFSCA Regulations, 2024 (IFSC KRA Regulations), which set out a framework for Know Your Customer Registration Agencies (KRAs) to operate in an International Financial Services Centre (IFSC). 

“Just as SEBI had KYC Registration Agency regulations, we will also have one for GIFT City. That will be our next focus area,” Rajaraman told businessline here. He was in the capital for the 20th foundation day event of the India Infrastructure Finance Company Ltd (IIFCL). 

The IFSC KRA Regulation aims to establish a centralised platform for streamlined KYC verification, reducing duplication, enhancing compliance and promoting interoperability with SEBI KRAs and international best practices.

SEBI rules

The proposed IFSC KRA Regulations allow (i) wholly-owned subsidiaries of recognised stock exchanges, (ii) depositories, and (iii) SEBI–registered KRAs in India or in foreign jurisdictions to be eligible to register as a KRA. The applicant must also have a minimum net worth of $1 million. SEBI KRA Regulations limit the eligibility to domestic entities and has a higher net worth requirement of ₹25 crore. 

IFSC KRA Regulations require the KRAs to appoint a compliance officer (CO) for monitoring compliance with applicable laws, regulations, and guidelines. A KRA must also have principal officer (PO) who has at least five years of experience in financial markets. The IFSC KRA Regulations require the PO and the CO to be based in the IFSC.

The rules specify that a KRA in the IFSC will be connected to any central KYC registry authorised by the Central government for the purpose of collation and sharing of KYC information in the financial sector. The regulations specifically refer to the Central KYC Records Registry (CKYCRR).

However, the IFSCA regulations specifically exempt foreign nationals transacting in the IFSC from the requirement of storing, safeguarding, and retrieving their KYC records in the CKYCRR under the Prevention of Money Laundering (Maintenance of Records) Rules, 2005. Foreign clients are not mandated to store their KYC records in the domestic CKYCRR; they are required to comply with the IFSCA’s KYC framework.