International Financial Centre

A financial centre that caters to customers outside its own jurisdiction is an International Financial Centre, or an Offshore Financial Centre. All of them are "international" in the same sense: what moves through them is cross-border finance.

India has one. The Gujarat International Finance Tec-City International Financial Services Centre (GIFT IFSC) is both a financial centre and a special economic zone, set up in 2015 to give banking, insurance, capital markets and asset management a world-class base on Indian soil that operates under offshore rules.

For this paper, the IFSC is not background colour. Several AML rules read differently inside it.

Being inside the IFSC changes the AML mechanics in at least five concrete ways, and the workbook flags each one:

1. No cash. No cash transactions are permitted in the IFSC domain, so Rule 3's Rs 10 lakh cash-transaction trigger has nothing to bite on there.
2. One channel for money. All financial institutions shall transact and receive all monetary consideration only through an account maintained with a Banking Unit in the IFSC.
3. A carve-out from the central registry. Under Rule 9A(1), in an International Financial Services Centre no receiving, storing, safeguarding or retrieving of KYC records is required for a client who is a foreign national.
4. A different Designated Director. Where the reporting entity is located in an IFSC, the Designated Director is the person heading the reporting entity in India.
5. Restricted legal forms. In IFSCA the permitted legal forms are company, partnership firm and body corporate; proprietary concerns are not allowed — so the proprietor limb of the Designated Director definition is dead letter there.

A Domestic Wire Transfer, in this vocabulary, means one where both the ordering institution and the beneficiary institution are located in the IFSC — "domestic" means inside GIFT City, not inside India.

A Registered FME in GIFT IFSC onboards Meridian Capital Pte Ltd, a Singapore fund, on 8 April 2025, and a resident Indian investor, Mr Anand Rao, the same week.

For Meridian, a foreign national client, the FME performs full customer due diligence — identity, beneficial owners above the 10% threshold, purpose of the relationship — but it does not have to file the KYC records with the Central KYC Records Registry, because of the Rule 9A(1) IFSC carve-out.

For Mr Rao, an Indian national, the FME runs V-CIP or digital KYC, collects the PAN, and the CKYCR filing obligation applies in the ordinary way.

Meridian then wants to fund its commitment of USD 2.5 million. It offers a cash deposit at a branch in Ahmedabad. The FME refuses twice over: no cash transactions are permitted in the IFSC domain at all, and all monetary consideration must come through an account with a Banking Unit in the IFSC. The money arrives instead as a wire from Meridian's own named account — which, being above USD 1,000, must carry the originator's address or unique identification number as well as name and account number.

Same fund, same week, two different KYC files — and one refused rupee.

Chapter 1 (section 1.4.8) defines the IFC and introduces GIFT IFSC and IFSCA together. Chapter 5 carries the no-cash footnote, the Banking Unit routing rule and the Domestic Wire Transfer definition; Chapter 3 carries the Rule 9A(1) carve-out. Expect a definition question on what makes a centre "international", and application questions that turn on whether a rule written for domestic India survives inside the IFSC.

• "Domestic" inside this paper means inside the IFSC, not inside India. A wire from GIFT City to Mumbai is not a domestic wire transfer in the Guidelines' sense.
• The CKYCR carve-out is for foreign nationals only. An Indian client of an IFSC unit is filed with the registry like anybody else.
• GIFT IFSC (2015) and IFSCA (April 2020) are different dates for different things — the centre, and its regulator.
• IFC and OFC are the same idea in this workbook, used interchangeably. Do not look for a distinction the source does not draw.
• The no-cash rule does not delete Rule 3. It means the cash clauses are inapplicable in the IFSC while the suspicious-transaction and cross-border wire clauses still very much apply.