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The IFSCA or International Financial services centres authority, issued IFSCA AML/CFT Guidelines, 2022 on 28th October 2022. Under the said guidelines, it is required that the regulated entity is required to frame policies and measures for the wire transfers. The wire transfer includes ascertaining from where the funds are received and sent. The present article will discuss in detail the provisions relating to conditions for wire transfer and the responsibilities of various intermediaries.
Table of Contents
The wire transfers[1] include the transfer of funds to the accounts of the wire transfer originator or wire transfer beneficiary. The provisions of wire transfers shall apply to the regulated entity or bank when it receives or sends funds through wire transfer. Moreover, it shall apply when a debit, credit, charge or prepaid card is used as a payment system in order to effect person-to-person wire transfer.
Further, the certain transfers and settlements which shall not be covered are:
The regulated entity shall have to follow the following conditions:
The responsibilities of every bank that is an ordering institution are:
Before effecting any wire transfer, the ordering institution shall:
A bank that is an ordering institution shall include the following in the message or payment instruction that relates to a wire transfer and where the transferred amount is below or equal to USD 1000:
A. Every bank that is an ordering institution shall include the following in the message or payment instruction that relates to a wire transfer and where the transferred amount is more than USD 1000:
B. A bank shall ensure that the batch transfer shall contain the following information where several individual cross-border wire transfers take place from a single wire transfer originator for transmission to the wire transfer beneficiary:
A bank that is an ordering institution shall include the following information in a domestic wire transfer.
A. The following information must be included in the message or payment instruction:
B. Includes only the account number of the wire transfer originator provided that:
C. Every information of the wire transfer originator and wire transfer beneficiary shall be collected and documented by the ordering institution failing which they shall not be allowed to execute any wire transfer.
The responsibility of beneficiary institutions in wire transfers are as follows:
The responsibility of an intermediary institution in wire transfers is as follows:
1. The bank, which is an intermediary institution, shall retain all the information of the wire transfer originator and wire transfer beneficiary.
2. In a cross-border wire transfer, if the technical limitations prevent the information on the wire transfer originator and wire transfer beneficiary from remaining with a domestic wire transfer, in that case, the ordering institution shall preserve the record for at least 6 years or the period applicable under laws.
3. The intermediary institution shall put in place appropriate internal risk-based policies, procedures & controls for the following:
The wire transfers policies, measures and controls are framed by the regulated entity in order to ascertain the information of the wire transfer originator and wire transfer beneficiary. The gathering of information helps in maintaining a record of the transaction in a cross-border or domestic wire transfer. The information helps the regulated entity know the source of funds and helps prevent any money laundering or terrorist financing risks. Moreover, the regulated entity must frame parameters that will state the conditions for undertaking any wire transfer.
Read Our Article: Money Laundering and Terrorist Financing for NBFCs
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