Centre Extends Ambit of Financial Services Offered in IFSC

The Ministry of Finance has extended the ambit of financial services offered by units in the International Financial Service Centre (IFSC) to non-residents, to include bookkeeping, accounting, taxation, and financial crime compliance services. Here, financial crime compliance services are said to include services rendered in relation to compliance with the Anti-Money Laundering (AML) or Countering the Financing of Terrorism (CFT) measures and Financial Action Task Force (FATF) recommendations, and other related activities.

Section 3(1)(e) of the International Financial Services Centres Authority Act, 2019, lists the activities that come under financial services, such as acceptance of deposits, establishing or operating investment schemes, etc. The Central Government has notified four additional services under the notification dated January 18, 2024, which will apply only if the financial services are offered to non-residents whose business is not set up by splitting up, reconstructing, or reorganising of the business already in existence in India. The second proviso adds that “the units shall not offer the services by way of transferring or receiving of existing contracts or work arrangements from their group entities in India”.