UNSC sanctions lists

Some names are off-limits to the whole financial system. The United Nations Security Council approves lists of people and entities suspected of having terrorist links. It sends out these lists from time to time. India gives them force through section 51A of the Unlawful Activities (Prevention) Act, 1967.

For a regulated entity in the IFSC, the rule is simple to state but hard work to follow. Do not hold any account in the name of a listed person or entity. Keep checking as the lists change. Report any name that merely resembles a listed name.

The lists come up in four places in the workbook. These are the compliance chapter, ongoing due diligence, wire transfers and risk assessment. That is because checking names against the lists runs through all four.

The obligation (Chapter 5, section 5.7.4, drawn from Chapter XI, clause 11.1 of the Guidelines). In terms of section 51A of the UAPA, regulated entities shall ensure they do not have any account in the name of individuals or entities appearing in the lists approved and periodically circulated by the UNSC.

The two lists.

Resembling accounts. Details of accounts resembling any listed individual or entity shall be reported to FIU-IND, apart from advising the Ministry of Home Affairs as required under the UAPA Order, file no. 14014/01/2019/CFT dated 2 February 2021, issued by the CTCR Division of MHA.

Other resolutions. Other UNSC Resolutions circulated by IFSCA in respect of any other jurisdictions or entities shall also be taken note of.

Where screening recurs.

• Ongoing sanctions screening (section 6.8): customers, their business and transactions are reviewed against UNSC sanctions lists and any other relevant sanctions list.
• Wire transfers (section 5.6.2): suspend or reject payment messages with sanctioned parties or jurisdictions; where screening confirms a terrorist or terrorist entity, block, reject or freeze immediately; escalate positive hits to the Principal Officer.
• Risk assessment (section 5.3): the updated list of persons subject to sanction measures under UNSC resolutions may be used in the risk assessment; a country subject to sanctions or embargoes is a geographic high-risk factor.

The State's powers — section 51A. The Central Government may freeze, seize or attach funds and financial assets of listed persons or those engaged or suspected to be engaged in terrorism; prohibit anyone from making funds or services available for their benefit; and prevent their entry into or transit through India.

Illustrative names; the procedure is the workbook's.

Narmada Bank (IFSC Banking Unit) runs its nightly screening after a list update.

The record. Each decision — including the cleared false positive — is documented, because records must be kept for at least six years and produced to the Authority immediately on request.

Chapter 5 (IFSCA AML, CFT and KYC Guidelines), section 5.7.4, "Compliance obligations under International Agreements and domestic laws", names the two lists and the reporting to FIU-IND and MHA; section 5.6.2 carries the wire-transfer screening rules; Chapter 6, section 6.8, requires ongoing sanctions screening; and Chapter 1 sets out section 51A of the UAPA. Expect a question on which two lists are named, which list Sections A and B belong to, and to whom resembling accounts are reported.

• Two lists: ISIL (Da'esh) & Al-Qaida, and 1988 (Taliban). Sections A and B — individuals and entities — belong to the 1988 list.
• Resembling accounts are reported too, not only exact matches — to FIU-IND, with MHA advised.
• The legal hook is section 51A of the UAPA; the procedure order is MHA's of 2 February 2021. The workbook's additional reading also lists a UAPA Order gazette notification 4391(E) dated 10 October 2024; the chapter text itself cites the 2021 order.
• Screening is ongoing, not only at onboarding, and covers transactions as well as customers.
• A confirmed terrorist match in a wire: block, reject or freeze immediately.
• Other UNSC resolutions circulated by IFSCA must also be taken note of.