GIFT CITY Update December 2025

03 Nov 2025: FATF High-Risk & Monitored Jurisdictions

The Financial Action Task Force (FATF) Plenary released updated lists of jurisdictions with strategic AML/CFT deficiencies:

1. High-Risk Jurisdictions – Subject to Call for Action

FATF urges all countries to apply countermeasures, targeted financial sanctions, and enhanced due diligence for:

• Democratic People’s Republic of Korea (DPRK)
• Iran
• Myanmar

2. Jurisdictions Under Increased Monitoring (Grey List)

Countries with identified AML/CFT deficiencies and working with FATF on action plans include:

• Algeria, Angola, Bolivia, Bulgaria, Cameroon, Côte d’Ivoire, DRC, Haiti, Kenya, Lao PDR, Lebanon, Monaco, Namibia, Nepal, South Sudan, Syria, Venezuela, Vietnam, Virgin Islands (UK), Yemen

3. Countries Removed from Increased Monitoring (as of Oct 2025)

• Burkina Faso
• Mozambique
• Nigeria
• South Africa

FATF clarifies that the advisory does not prohibit legitimate trade or business transactions by IFSCA-regulated entities with these jurisdictions.

Detailed updates are available in the FATF’s October 24, 2025 public statements.

 2025: Consultation Paper — Amendments to IFSCA (Capital Market Intermediaries) Regulations, 2025

Purpose / Background

• IFSCA issued the IFSCA (Capital Market Intermediaries) Regulations (CMI Regulations) in April 2025, replacing the 2021 rules.
• New rules set detailed norms for principal officers, compliance officers, and revised net worth definitions for certain intermediaries (broker-dealers, clearing members, investment bankers).
• Original compliance deadline for appointments / net-worth infusion was Oct 1, 2025; extended to Dec 31, 2025 due to stakeholder representations.

Objective of this consultation

• Seek public / stakeholder comments on proposed amendments to improve ease of doing business and align rules with IFSC market realities.

Key proposed changes (high level)

1. Eligibility / Qualifications for Principal & Compliance Officers
   • Add fintech and STEM (science, technology, engineering, mathematics) as acceptable postgraduate qualifications.
   • Reduce minimum experience required for graduates from 10 years → 5 years (so graduation + 5 years qualifies).
2. Common Principal Officer across multiple registrations
   • Allow same person to be principal officer for entities registered as broker-dealer, clearing member, depository participant, custodian and registered distributor.
   • For distribution activities, require a separate vertical head with adequate financial services experience.
3. Clarification on ‘Liquid Net Worth’ components
   • Exclude base minimum capital and interest-free deposits placed with stock exchanges / clearing corporations from liquid assets.
   • Include margins deposited with clearing members and clearing corporations as part of liquid assets.
4. Net worth requirement for Custodians
   • Propose minimum net worth = USD 1 million for custodians registered with IFSCA.
   • For branches, parent may maintain net worth at parent level but earmark the specified amount for the IFSC branch.
   • Existing custodians will have time till Jan 31, 2026 to comply where additional infusion/earmarking is required.
5. Umbrella / Unified Registration (exploratory)
   • IFSCA is exploring an umbrella registration allowing one application/license to cover multiple capital market activities (similar to Singapore’s CMS licence).
   • Consultation invites views on merits, challenges and safeguards (e.g., conflicts of interest) if entities undertake multiple activities.

Expected impact

These amendments aim to ease operational burden, reduce compliance friction for nascent IFSC players, and streamline registration while protecting investor/market integrity through specified safeguards.

04 Nov 2025: Consultation Paper – Proposed IFSCA (Pension Fund) Regulations, 2025

The International Financial Services Centres Authority (IFSCA) has released a consultation paper proposing the IFSCA (Pension Fund) Regulations, 2025, following recent government notifications that bring pension schemes under its regulatory ambit within GIFT-IFSC.

Key drivers include expanding pension access for 15 million NRIs, 19 million PIOs, and foreign expatriates, and positioning IFSC as a global pension hub.
The proposed regulations aim to create a robust, flexible, and globally aligned pension ecosystem, offering:

• Voluntary subscriber participation

• Flexible contribution frequency and amounts

• Multiple investment scheme options

• Diverse exit choices

• Integration with health/medical insurance products

Stakeholders have been invited to provide feedback by November 25, 2025.

11 Nov 2025: Additional Directions on Reporting of Transactions for India’s External Account Statistics (IBUs – BAL Statement)

The IFSCA has issued new reporting requirements to enhance the accuracy of India’s external account statistics, specifically related to the fortnightly Banking Asset Liability (BAL) statement submitted by IFSC Banking Units (IBUs) through the RBI’s FETERS system.

Background

• IBUs currently report foreign currency holdings (Nostro balances, FDs, loans, securities, T-bills) as required by the 2022 IFSCA circular.
• However, IBUs have now begun maintaining foreign currency Vostro accounts of overseas banks, which are not being captured in current BAL submissions.

New Reporting Requirements (Effective from 2nd Fortnight of November 2025)

IBUs must now also report:

• Balances in foreign currency Vostro accounts of overseas banks maintained with the IBU.

Key Reporting Instructions

1. Vostro Account Reporting
   • Only one subcomponent: Current Account.
   • Report either:
     • Net Credit (Ct) balance, or
     • Net Debit (Dt) balance (entered as a positive number).
       → No simultaneous reporting of both Ct and Dt.
2. Valuation
   • Report book value of balances held by overseas banks/branches in the respective currency.
3. Country & Currency Fields
   • Country: jurisdiction of overseas bank holding the Vostro account.
   • Currency: currency in which the account is maintained.
4. Revised BAL format shared in the annexure (not included in text).

Compliance Note

• Instructions supplement existing IFSCA (2022) and RBI reporting guidelines.
• Non-compliance (inaccuracy or delays) will be taken seriously by IFSCA.

Legal Basis

• Issued under Section 35A of the Banking Regulation Act, 1949 and Section 13(1) of the IFSCA Act, 2019.

13 Nov 2025: Implementation Services by Investment Advisers in IFSC

The circular clarifies how Investment Advisers (IAs) in GIFT-IFSC may offer implementation services—i.e., assisting clients in executing transactions related to the advice they provide.

Key Provisions

1. Implementation of Products Listed on IFSC Exchanges

• If the financial products or securities are listed on a recognized IFSC stock exchange, → Implementation services must be routed through an IFSCA-registered broker dealer.

2. Implementation of Foreign (Non-IFSC) Products

• For products/securities listed in foreign jurisdictions, → Investment Advisers may enter into formal arrangements with:
  • Overseas investment platforms, and/or
  • Asset management companies (AMCs) → Provided these entities are registered or regulated with a financial regulator in that foreign jurisdiction.

3. Optional Nature of Implementation Services

• IAs must ensure implementation services remain completely optional.
• Clients cannot be compelled to use the IA’s execution/implementation services (as per Regulation 34(13) of CMI Regulations).

Effective Date

• The circular is effective immediately.

Legal Authority

• Issued under Sections 12 & 13 of the IFSCA Act, 2019 and
  Regulations 27 & 45 of the Capital Market Intermediaries (CMI) Regulations.

17 Nov 2025: Mandatory AML/CFT Certification for Designated Directors & Principal Officers

IFSCA has issued a circular requiring key compliance personnel of all regulated entities in the IFSC to obtain a newly launched AML/CFT certification.

Background

• Clause 8.2 and 8.4 of the IFSCA (AML/CFT/KYC) Guidelines, 2022 mandate adequate training and competency for Principal Officers and relevant employees responsible for AML/CFT compliance.

New Certification Requirement

• A specialized program titled “NISM-IFSCA-01: Certification Course on Anti-Money Laundering and Counter-Terrorist Financing in the IFSC” has been jointly developed by:
  • NISM (National Institute of Securities Markets)
  • IFSCA Academy
• Course launch date: 18 November 2025.
• The curriculum is aligned with the IFSCA AML/CFT/KYC Guidelines.

Mandate

• Designated Directors and Principal Officers of all IFSC regulated entities:
  • Must undergo this certification course, and
  • Must maintain valid certification at all times while performing their AML/CFT responsibilities.

Objective

• To strengthen AML/CFT compliance standards and ensure competent oversight across IFSC-regulated entities.

19 Nov 2025: Consultation Paper on Proposed IFSCA (Registration of Insurance Business) (Amendment) Regulations, 2025

Objective: To seek public comments on proposed amendments to the definition of Lloyd’s IFSC Service Companies under the IFSCA (Registration of Insurance Business) Regulations, 2021.

Background

• Lloyd’s London requested IFSCA to expand the definition of entities permitted to establish a Lloyd’s Service Company in GIFT-IFSC.
• The current definition allows only Managing Agents of Lloyd’s or Indian Companies to set up such Service Companies.
• IFSCA noted that Members of Lloyd’s Syndicates (which may be corporate bodies or Indian persons) are currently excluded.
• The proposed amendment intends to broaden eligibility by including members or group entities as approved by Lloyd’s.

Proposed Amendment

A revised definition of “Service Companies of Lloyd’s IFSC” is proposed, allowing establishment of Lloyd’s Service Companies by:

1. Managing Agents of Lloyd’s,
2. Group entities of Managing Agents or Members of Lloyd’s, as permitted by Lloyd’s,
3. Indian companies meeting prescribed criteria.

Public Consultation

• Draft amendment notification is published on the IFSCA website.
• Stakeholders are invited to submit comments by 29 November 2025.

Regulatory Basis

The amendment is issued under Sections 12, 13, and 28 of the IFSCA Act, 2019.

25 Nov 2025: Consultation Paper on Guidelines on Cyber Security and Cyber Resilience for the Market Infrastructure Institutions (MIIs) in IFSC

Consultation Paper issued by IFSCA that presents the draft Guidelines on Cyber Security and Cyber Resilience for Market Infrastructure Institutions (MIIs) in IFSC (such as stock exchanges, clearing corporations, depositories, and the bullion exchange).

The purpose is to seek stakeholder comments on a proposed enhanced, risk-based cybersecurity framework tailored for MIIs, considering their systemic importance and high interconnectivity in the financial market ecosystem.

Why this is needed

• MIIs are critical infrastructure enabling listing, trading, clearing, and settlement.
• Cyber threats can disrupt financial stability, market integrity, and interconnected participants.
• As an IOSCO member, IFSCA aligns its norms with CPMI–IOSCO Principles for FMIs, especially Principle 17 (Operational Risk).
• MIIs in IFSC require a “differentiated and elevated” cybersecurity baseline, stronger than the standard RE guidelines.

What the paper contains

The document includes comprehensive draft guidelines (Annexure A), covering:

• Governance: Board-approved policies, risk appetite, CISO role, SCOT oversight.
• Identify: Asset inventory, critical asset classification, risk assessment.
• Protect: Access control, AD/DC security, network security, data protection, training, secure SDLC, change management, patching, third-party risk, cloud security.
• Detect: Continuous monitoring, alerts, anomaly detection.
• Respond: Cyber Crisis Management Plan, incident reporting (within 6 hours), RCA and mitigation.
• Recover: DR/BCP aligned restoration and backups.
• Resilience: Cyber resilience testing, scenario drills.
• Cyber SOC: Mandatory 24×7 C-SOC + DR-site C-SOC.
• Audit: Annual CERT-In empanelled audits, ISO 27001 certification within 2 years, VAPT, revalidation.

Consultation Process

Stakeholders are invited to send comments (with a structured format) by December 16, 2025 to IFSCA’s cybersecurity team.

26 November 2025: IFSCA Circular- Disclosure Requirement under Clause 39

Applies to:

• Global Access Providers (GAPs)
• Introducing Brokers (IBs)
• Recognised Stock Exchanges in IFSC
• Broker-dealers in IFSC

Purpose of the Circular

To mandate display of key risk disclosures to clients at every login, as required under Clause 39 of the “Regulatory Framework for Global Access in the IFSC” (issued August 12, 2025).

What Entities Must Do

• GAPs and IBs must display IFSCA-specified key risks & disclaimers to clients at every login.
• They must fully comply by December 31, 2025.

Legal Basis

Circular issued under Sections 12 & 13 of the IFSCA Act, 2019 read with Regulations 27 and 45 of the CMI Regulations.

Annexure I — Key Risks to Be Shown to Investors

These risks must be shown as a mandatory notice before a client proceeds.

1. Market & Interest Rate Risk: Foreign markets operate under different regulations, hours, disclosure norms, and investor-protection frameworks.

2. Currency Risk: Returns may vary due to currency fluctuations when converting to base currency.

3. Custody Risk: Assets held with foreign brokers/custodians could be impacted if those entities fail or become insolvent.

4. Liquidity & Settlement Risk: Foreign markets may have different settlement cycles and lower liquidity, causing potential delays or execution challenges.

5. Technology, Time-Zone & Cybersecurity Risk: Electronic trading across time zones may face outages, latency, price gaps, and cyber-attack risks (including exposure of personal data).

6. Product & Suitability Risk: Foreign products may be complex and unsuitable for all investors; investors must independently assess suitability.

7. Regulatory & Legal Risk: Foreign laws govern the trades; investor protection and dispute mechanisms vary by jurisdiction. Some markets may have restrictions or sanctions.

8. Taxation Risk: Trades may attract taxes both in India and the foreign market; tax rules may change, and the investor is responsible for compliance.

9. Remittance & Compliance Risk: All transfers must follow Indian laws (including RBI’s LRS) and foreign jurisdiction rules; violation may lead to regulatory action.

10. Social & Political Risk:  Geopolitical or economic developments in foreign markets may materially impact investments.

26 Nov 2025: IFSCA Good Delivery Guidelines 2025 

1. Objective

The consultation paper proposes a framework to allow gold refined by any Indian or global refinery—subject to responsible sourcing, best practices, and third-party audits—to be eligible for delivery on the India International Bullion Exchange (IIBX).
The aim is to deepen India’s bullion market and align it with global standards.

2. Strategic Background

• India is one of the largest gold importers/consumers globally.
• The International Bullion Exchange at GIFT IFSC (IIBX) was conceptualized based on NITI Aayog’s 2018 gold market reform recommendations and announced in Union Budget 2020.
• IIBX was launched in July 2022 to help India transition from being a price taker to a price setter in the global gold market. 

3. Why New Good Delivery Guidelines?

Global bullion markets (e.g., LBMA, UAE Good Delivery) admit only refineries that follow:

• Responsible sourcing norms
• Supply chain due diligence
• ESG and human rights safeguards
• AML/CFT compliance

IFSCA intends to create an Indian standard aligned with these benchmarks to:

• Improve credibility of bullion delivered on IIBX
• Encourage more global participation
• Promote domestic refining
• Make India a trusted global bullion hub
  

4. Expected Impact

The proposed guidelines aim to create:

• A transparent, compliant, responsible sourcing ecosystem
• A refined and well-regulated bullion market at IFSC
• Better ease of doing business for bullion players
• Strong alignment with ESG norms and global best practices
  

5. Public Consultation

IFSCA invites public comments on the draft guidelines until 31 December 2025.
Stakeholders may submit structured feedback in the prescribed format. 

The consultation paper lays the foundation for a comprehensive responsible sourcing and compliance framework governing all refineries delivering gold on IIBX. It positions India to become an internationally recognized, transparent, and credible bullion market, strengthening GIFT City’s role as a global financial hub.

27 Nov 2025: Clarification on raising invoices by IFSC Insurance Offices (IIOs)

Background

• IIOs had reported operational issues because invoices for reinsurance transactions had to be raised in the currency of the underlying contract, while settlements were routed through IFSC Banking Units (IBUs).
• IFSCA issued this clarification under its regulatory powers.

Key Clarification

1. Invoice Currency Flexibility
   • An IIO can raise invoices on Indian insurers, foreign insurers, reinsurers, or cedants in the currency of the underlying reinsurance contract.
   • This includes the option to raise invoices in INR.
2. Settlement Requirement
   • Even if the invoice is raised in INR (or any other currency), the actual realization of money into the IIO’s bank account with an IBU must be in a specified foreign currency – refers to the currencies listed in the First Schedule of the IFSCA Banking Regulations, 2020.

Regulatory Basis

• Issued under Section 12 & 13 of the IFSCA Act, 2019 and Regulation 18 of the IFSCA (Registration of Insurance Business) Regulations, 2021.

• You can raise the invoice in INR, but
• You must receive the payment in a permitted foreign currency in your IBU account.

29 Nov 2025: IFSCA Consultation Paper & Master Circular 

Purpose

IFSCA has issued a draft Master Circular consolidating and superseding all earlier circulars (SEBI pre-Oct 2020 + IFSCA) governing Broker Dealers and Clearing Members in GIFT IFSC. Public comments invited by 20 December 2025.

Key Highlights

1. Unified Framework

• Consolidates rules under the IFSCA (Capital Market Intermediaries) Regulations, 2025.
• Provides a single, harmonised regulatory structure for broker dealers & clearing members.

2. Registration Process

• Registration must be applied through the Single Window IT System (SWITS).
• SWITS integrates:
  • SEZ Letter of Approval (LoA)
  • GST registration
  • NOCs from SEBI, RBI, IRDAI
• Fees must be paid as per IFSCA Fee Circular (2025).
• Registration is perpetual, subject to continued validity of SEZ LoA.

3. Supervision & Oversight

• Stock Exchanges/Clearing Corporations must inspect members annually.
• Joint inspections allowed for multi-membership entities.
• Monitoring requirements include:
  • Net worth maintenance
  • Client funds monitoring
  • Event-based red flags
• Early Warning Mechanism to detect diversion of client securities.

4. Client-Related Rules

• Mandatory Unique Client Code.
• Client funds must be in segregated accounts.
• Proprietary trading disclosure required in KYC.
• Contract notes must be issued within 24 hours.

5. Authorised Persons (APs)

• Market access permitted through APs:
  • Foreign jurisdictions
  • India (for LRS-based investors)

6. Technology & Cyber Regulations

Software Testing

• Mandatory:
  • Simulated testing
  • Monthly mock trading
  • UAT procedures
  • Regular system audits (annual for all; half-yearly for algo brokers)

Technical Glitch Framework

Broker must:

• Report glitch within 1 hour
• Submit:
  • Preliminary Report (T+1)
  • RCA (within 14 days)

Capacity planning:
Installed capacity must be 1.5× peak load.

BCP/DR Requirements

• Mandatory DR site for large brokers.
• DR site must be 250+ km away.
• Mandatory DR drills/live trading.

Cybersecurity

• Must comply with IFSCA Cybersecurity Guidelines (Mar 10, 2025).

7. Outsourcing Policy

• A formal Outsourcing Policy is mandatory before operations begin.

8. Complaint Handling

• Must comply with IFSCA’s Complaint Handling & Grievance Redressal framework (Dec 2024).

9. Change in Control

• Branch structures: Intimation within 15 days.
• IFSC-incorporated entities: Prior approval mandatory.

10. Periodic Reporting

• Quarterly reporting as per “Reporting Norms” (Feb 2024).
• Annual Compliance Audit due by Sept 30 to IFSCA.

11. Surrender of Registration

• Must be filed through the Exchange/CC.
• Clean-up requirements include:
  • No pending investigations
  • Record preservation
  • Transfer/closure of client activities
• Security deposit refunded after:
  • 12 months – client-trading brokers
  • 6 months – proprietary-only brokers