International Financial Services Centres Authority (Book-keeping, Accounting, Taxation and Financial Crime Compliance Services) Regulations, 2024

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3414 GI/2024 (1) - 33004/99 REGD. No. D. L.-33004/99 xxxGIDHxxx xxxGIDExxx EXTRAORDINARY III 4 PART III Section 4 PUBLISHED BY AUTHORITY , 4 , - , , , 2024 / /2024/003 , 2019 12 - 1) 28 - 1) , , - I 1. (1) - , \ , (2) 2. , , , . 394] , , 6, 4 16, 6 No. 394] NEW DELHI, THURSDAY, JUNE 6, 2024/JYAISHTHA 16, 1946 CG-GJ-E-07062024-254595 2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III SEC.4] 3. (1) , , ( ) , 2019 (2019 50) ; ( - (i) ; (ii) ; (iii) ; (iv) , ; (v) ; (vi) - ( ' ' 10 , 2021 - , ; ( 4 - 1) ; ( - - ; - ) ; ) i) - - 110/ 21 ; (ii) - 28/ 27 ; (iii) - 28/ 23 ; (iv) ; (v) 20 ; (vi) ; ' ' , , , , , - ( ) " - (i) ; [ III 4] 3 (ii) ; (iii) ; (iv) ) 3 - 1) ; ) , (1999 42) ; ) , , ; ) , ; ) , ; - ' ' , , (2) , , 2013 (2013 18) , 2008 (2009 6) , , , II 4. (1) , , (2) , 60) , (3) 8 9 5. (1) , - (2) - 1) - - (3) , - 4 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III SEC.4] (4) (5) , ) - 6. 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In exercise of the powers conferred by sub-section (1) of Section 28, read with sub-section (1) of Section 12 of the International Financial Services Centres Authority Act, 2019, the International Financial Services Centres Authority hereby makes the following regulations namely: - CHAPTER I PRELIMINARY SHORT TITLE AND COMMENCEMENT 1. (1) These regulations may be called the International Financial Services Centres Authority (Book-keeping, Accounting, Taxation and Financial Crime Compliance Services) Regulations, 2024. (2) These regulations shall come into force from the date of their publication in the Official Gazette. Objective 2. These regulations aim to put in place the regulatory framework relating to development, registration and operations of Book-keeping, Accounting, Taxation and Financial Crime Compliance Services from International Financial Services Centres. Definitions 3. (1) In these regulations, unless the context otherwise requires, the terms defined herein shall bear the meanings as assigned to them herein below - (a) 2019); (b) - (i) reviewing annual and interim financial statements or other accounting information without any attestation or assurance thereof; (ii) compilation of financial statements from information provided by the client, without giving any attestation or assurances regarding the accuracy of the resulting statements; (iii) preparation of financial statements; (iv) compilation of income statements, balance sheets or other financial information; (v) analysis of financial statements; (vi) other related accounting support services in relation to any of the above including valuation support services. Explanation: Accounting Services under this clause do not include auditing services. (c) -keeping, Accounting and/or Taxation services under Framework dated February 10, 2021, for enabling Ancillary services at International Financial Services Centres (hereinafter referred t (d) - section (1) of section 4 of the Act; (e) - - classifying and recording transactions including payroll ledgers in terms of money or any other unit of measurement in the books of account and other related documents; Explanation: Book-keeping Services under this clause do not include payroll and taxation services. (f) includes services rendered in relation to compliances of Anti- Money Laundering (AML) / Countering the Financing of Terrorism (CFT) measures and Financial Action Task Force (FATF) recommendations, and other related activities; 10 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III SEC.4] (g) arrangement involving two or more entities related to each other through any of the following relationships: (i) parent- subsidiary (as per Ind-AS 110/AS 21); (ii) joint venture (as per Ind-AS 28/AS 27); (iii) associate (as per Ind-AS 28/AS 23); (iv) common brand name; (v) investment in equity shares/capital contribution of 20 per cent and above; or (vi) part of a network; Explanation firms that have come together for mutual benefits by pooling resources, showcase their combined strength, and have uniform policies, technology and collaterals, and showcase themselves as one big unit, with one lead firm acting on behalf of the member-firms. (h) the entity registered under these regulations to undertake all or any of the following:- (i) book-keeping services; (ii) accounting services; (iii) taxation services; (iv) financial crime compliance services. (i) the same meaning as assigned to it under clause (g) of sub-section (1) of Section 3 of the Act; (j) - Act, 1999 (42 of 1999) and shall also include units in International Financial Service Centre; (k) -keeping, accounting, taxation and financial crime compliance services; (l) chedule of the International Financial Services Centres Authority (Banking) Regulations, 2020 or any other regulation issued by the Authority; (m) providing advice and guidance concerning taxes as well as preparing and filing of tax returns of all kinds; Explanation taxes, cesses, duties or levies. (2) Words and expressions used and not defined in these regulations but defined in the Act or Acts mentioned in the First Schedule to the Act or Companies Act, 2013 (18 of 2013) or Limited Liability Partnership Act 2008 (6 of 2009) or any rules or regulations made thereunder shall have the same meanings respectively assigned to them in those Acts, rules or regulations or any statutory modification or re-enactment thereto, as the case may be. CHAPTER II SETTING UP OF A BATF SERVICE PROVIDER Registration 4. (1) No person, except an Ancillary Service Provider, shall provide BATF Services in an IFSC without obtaining certificate of registration from the Authority, in accordance with these regulations. (2) An Ancillary Service Provider, intending to provide BATF Services shall, within a period of sixty (60) days from the date of commencement of these regulations, communicate its willingness to operate under these regulations to the Authority, in such form and manner as may be specified. (3) The Ancillary Service Provider communicating its willingness shall ensure compliance of regulation 8 and 9, from the date of commencement of these regulations until it receives a letter of continuation from the Authority. Application for Registration 5. (1) An applicant desirous of providing all or any of the BATF Services shall submit an application to the Authority, for grant of certificate of registration, in the format and in the manner, as may be specified by the Authority. [ III 4] 11 (2) The application under sub-regulation (1) shall be accompanied by a non-refundable application fee, as may be specified by the Authority. (3) An application which is not complete in all respects shall be liable to be rejected, in the manner as specified under these regulations. (4) The applicant desirous of providing BATF Services shall be required to be set up in IFSC either in the form of a Company or Limited Liability Partnership. (5) The promoters of the applicant entity shall be from a jurisdiction which has not been identified in the public statement of Financial Action Task Force (F - subject to call for Procedure for grant of certificate of registration 6. (1) After considering the application made under regulation 5, the Authority may grant certificate of registration to the applicant, subject to such conditions, as may be specified. (2) After considering the application, if the Authority is of the opinion that the certificate of registration cannot be granted due to certain deficiencies, it shall communicate the same to the applicant advising it to rectify those within thirty (30) days from the date of communication, failing which the application is liable to be rejected. Provided that no application shall be rejected without giving the applicant a reasonable opportunity to make written submissions. (3) The certificate of registration granted to BATF Service Provider under this regulation shall be valid unless cancelled by the Authority, or surrendered by the BATF Service Provider, in accordance with these regulations. Provided that the surrender of certificate of registration by the BATF Service Provider shall be effective only after approval by the Authority. (4) The BATF Service Provider shall keep the Authority informed of any material change in the information or particulars previously furnished. CHAPTER III FIT AND PROPER REQUIREMENTS Fit and Proper Requirements 7. (1) The BATF Service Provider shall ensure that the entity and its principal officer, directors/ partners/ designated partners, key managerial personnel and controlling shareholders are fit and proper persons, at all times. (2) For the purpose of sub-regulation (1), a person shall be deemed to be a fit and proper person if :- (a) such a person has a record of fairness and integrity, including but not limited to- (i) financial integrity; (ii) good reputation and character; and (iii) honesty. (b) Such a person has not incurred any of the following disqualifications :- (i) the person has been convicted by a court for any offence involving moral turpitude or any economic offence; (ii) a recovery proceeding has been initiated against the person by a statutory body or financial regulatory authority and is pending; (iii) an order for winding up has been passed against the person for malfeasance; (iv) the person has been declared an undischarged insolvent; (v) an order, restraining, prohibiting or debarring the person from accessing, providing or dealing in financial products or financial services, has been passed by any regulatory authority, and a period of three (3) years from the date of the expiry of the period specified in the order has not elapsed; (vi) any other order against the person, has been passed by the Authority or any other regulatory authority, and a period of three (3) years from the date of the order has not elapsed; 12 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III SEC.4] (vii) the person has been found to be of unsound mind by a court of competent jurisdiction and the finding is in force; (viii) the person is financially not sound or has been categorised as a wilful defaulter; (ix) the person has been declared a fugitive economic offender; or (x) any other disqualification as may be specified by the Authority. CHAPTER IV SAFEGUARDING CONDITIONS 8. The applicant shall ensure that their business in IFSC is not set up either by (1) splitting up of business already in existence in India; or (2) reconstructing of business already in existence in India; or (3) reorganising of a business already in existence in India. Explanation: For the purpose of determination of splitting up, reconstruction and reorganization of any business already in existence in India, the applicant shall adhere to the requirements specified in Part-A of First Schedule. 9. The BATF Service Provider shall not offer BATF Services by way of transferring or receiving of existing contracts or work arrangements from their Group Entities in India. Explanation: For the purpose of this regulation, the interpret -B of First Schedule. CHAPTER V SERVICE RECIPIENT Service Recipient 10. The BATF Service Provider shall ensure that the service recipient is a non-resident and is not from a Risk Jurisdiction- CHAPTER VI KEY MANAGERIAL PERSONNEL Appointment of Principal Officer and Compliance Officer 11. (1) The BATF Service Provider shall designate a Principal Officer who shall be responsible for its overall activities in IFSC. (2) In addition to the above, the BATF Service Provider shall also designate a Compliance Officer who shall be responsible for reporting to the Board of Directors or head of the organization, as the case maybe, besides the compliance of policies, procedures, maintenance of records and the implementation of the requirements as specified under these regulations and other applicable laws in force. (3) The BATF Service Provider shall ensure that its Principal Officer and Compliance Officer are based out of IFSC and meet the following requirements:- (a) A professionally qualified Chartered Accountant (CA), Company Secretary (CS), Cost and Management Accountant (CMA), Certified Public Accountant (CPA), Chartered Financial Analyst (CFA) or any other equivalent qualifications from professional bodies or institutes or a post-graduate degree in finance, accountancy, business management, commerce, economics, taxation or a degree in law from a university or an institution recognized by the UGC or AICTE or such other equivalent authority in India or a foreign jurisdiction. Provided that the Principal Officer of a BATF Service Provider, who is providing Financial Crime Compliance Services, shall also hold relevant qualification from a reputed foreign or domestic institution in financial crime compliance. (b) No person shall be eligible to be appointed as Principal Officer or Compliance Officer, unless he has the experience in the relevant field of not less than five (5) years and three (3) years, respectively. CHAPTER VII MISCELLANEOUS Minimum office space criteria 12. The BATF Service Provider shall ensure office space in IFSC of minimum carpet area computed at 60 sq. ft. per employee. [ III 4] 13 Currency of Operations 13. (1) The BATF Service Provider shall carry out its operation in any Specified Foreign Currency. Provided that the BATF Service Provider shall be permitted to have an INR account to defray their administrative and statutory expenses and for such other purposes as may be permitted under the applicable laws. (2) Every BATF Service Provider shall maintain its balance sheet in any Specified Foreign Currency. Reporting Requirements 14. (1) The BATF Service Provider shall furnish information relating to its operations to the Authority, in such manner, interval and form, as may be specified by the Authority. (2) Any financial reporting by the BATF Service Provider to the Authority shall be in US Dollar, unless otherwise specified by the Authority. (3) The BATF Service Provider shall submit a certificate, issued by an independent third party practicing professional namely, CA, CS or CMA, certifying compliance of the requirements specified in these regulations including that of regulation 8 and 9, within ninety (90) days from the closure of each Financial Year. Power to relax strict enforcement of the regulations 15. (1) The Authority, for reasons to be recorded in writing, may in the interest of development of financial market in IFSC, relax the strict enforcement of any requirements of these regulations. (2) For seeking relaxation under sub-regulation (1), an application giving details and the grounds on which such relaxation has been sought, shall be filed with the Authority along with a non-refundable fee as may be specified by the Authority. (3) The Authority shall process such application within sixty (60) days of the date of receipt of the application, complete in all respects, including responses to clarifications sought and shall record reasons for acceptance or refusal of the relaxations sought by the applicant. Power to specify norms, procedures, issue clarifications and remove difficulties 16. (1) For the purposes of implementation of these regulations and matters incidental thereto, the Authority may specify norms, procedures, processes, additional requirements, etc. by way of circulars or guidelines or directions. (2) In order to remove any difficulties in the interpretation or application of the provisions of these regulations, the Authority may issue directions through guidance notes or circulars. Payment of Fees 17. The BATF Service Provider shall pay such fee or charges as may be specified by the Authority from time to time. Action in Case of Default 18. (1) The BATF Service Provider who contravenes any of the provisions of these regulations, guidelines, circulars or direction made thereunder, shall be liable for enforcement action under the Act, including but not limited to suspension or cancellation of registration. (2) No enforcement action as referred to in sub-regulation (1) shall be taken without giving reasonable opportunity to the BATF Service Provider to make its submissions. Repeal and Savings 19. (1) The reference to Accounting, Book-keeping and Taxation Services in clause 1.C (ii) and item no. 2 of Annexure I of the Ancillary Services Framework shall stand omitted after sixty (60) days from the commencement of these regulations. (2) Notwithstanding anything contained in these regulations, an Ancillary Service Provider, who has been issued a letter of continuation, shall adhere to the conditions specified in the Second Schedule. K. RAJARAMAN, Chairperson [ADVT.-III/4/Exty./168/2024-25] 14 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III SEC.4] FIRST SCHEDULE SAFEGUARDING CONDITIONS PART- A (Refer Regulation 8) 1. While complying with conditions on splitting up, reconstruction and reorganization of any business already in existence in India, the applicant shall adhere to the following requirements:- (a) Workforce Requirement: The number of employees transferred/relocated from any of its Group Entities in India as at the end of the financial year do not exceed 20% of the total employees employed with the BATF Service Provider. Note: (i) An employee shall be treated as a new employee if he was not employed in any of its Group Entities in India for a period of twelve (12) months immediately preceding his date of employment with the BATF Service Provider. (ii) The condition(s) specified above shall be complied with every year for ten (10) consecutive financial years from the date of issuance of certificate of registration. The first such compliance shall be examined at the end of the first full financial year. (b) Asset Requirement: There should not be any transfer of assets from any of the Group Entities in India to the BATF Service Provider. PART-B (Refer Regulation 9) 2. Contracts or work arrangement between a BATF Service Provider with its service recipients shall be group entities in - (a) Transferring of existing contracts or work arrangements in India: When an existing contract or work arrangement, by whatever name called, between any of the Group Entities of BATF Service Provider in India with its non-resident client is shifted or transferred to the BATF Service Provider during the subsistence of such contract or work arrangement. (b) Termination of existing contracts or work arrangements in India: When an existing contract or work arrangement, by whatever name called, between any of the Group Entities of the BATF Service Provider in India with its non-resident client is prematurely terminated and a new contract or a work arrangement is signed between the BATF Service Provider with the same service recipient, directly or indirectly. (c) Other scenarios, as may be specified by the Authority, from time to time. SECOND SCHEDULE Conditions for entities under Ancillary Services Framework (Refer Regulation 19) 1. An Ancillary Service Provider, who has received a letter of continuation from the Authority, may continue to provide BATF services in its existing legal form for a period of three (3) years from the date of commencement of these regulations. 2. Such Ancillary Service Provider shall seek registration under these regulations within the said period of three (3) years from the date of commencement of these regulations, failing which it shall not be permitted to undertake BATF Services from IFSC. 3. Such Ancillary Service Provider shall ring-fence its BATF Service operations from their other existing operations in IFSC. 4. Such Ancillary Service Provider, providing BATF Services, shall adhere to the requirements specified in regulation 8, 9 and 14. Provided that the requirements specified in regulation 8 and 9 shall not apply to the existing contracts, manpower and assets deployed at such Ancillary Service Provider prior to the commencement of these regulations. [ III 4] 15 Provided further that the requirements specified in regulation 8 and 9, shall not apply at the time of migration of BATF Services from such Ancillary Service Provider to the newly incorporated entity formed by such Ancillary Service Provider for compliance with the requirement specified under sub-regulation 4 of regulation 5. 5. Such Ancillary Service Provider shall comply with the conditions specified in regulation 11 and 12 within a period of six (6) months from the date of commencement of these regulations. 6. Such Ancillary Service Provider, providing BATF services, shall pay such fee as may be specified by the Authority. Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064 and Published by the Controller of Publications, Delhi-110054.