INDIA Law and Practice Contributed by: Ayush Mehrotra, Upkar Agrawal and Varsha Goel, Khaitan and Co
examined in light of applicable Indian law, India’s inter - national obligations and constitutional safeguards, including principles of due process and protection of fundamental rights.
assets held by persons on their behalf or for their benefit; • the RBI mandates financial institutions to identify and freeze accounts that resemble or are connect - ed to designated individuals or entities; and • entities are expected to conduct due diligence on a risk-based approach to determine whether they may be dealing with persons who are owned or controlled by designated persons. 7.3 Circumvention 7.3.1 Prohibiting Provisions Indian sanctions laws do not contain a standalone, express anti-circumvention provision equivalent to those found in US (International Emergency Econom - ic Powers Act) or EU (Council Regulation) sanctions regulations. However, the substance of anti-circum - vention is addressed through the combined effect of multiple statutory provisions: • the UAPA prohibits “indirect” support to or trans - actions with terrorist organisations, capturing arrangements designed to circumvent the direct prohibition through intermediaries or layered struc - tures; • the FTDR Act and FTP prohibit “direct or indirect” import or transit of goods from Pakistan, address - ing circumvention through transhipment, re-routing or false declarations of origin; • the WMD Act prohibits financing of prohibited activities “directly or indirectly”, targeting layered financing structures, front companies and nominee arrangements; • the Customs Act treats attempts to evade any prohibition as a criminal offence; and • RBI directions require financial institutions to iden - tify indirect dealings that effectively benefit desig - nated persons. 7.3.2 Criminal Penalties While Indian law has no standalone “circumvention” offence, circumvention that amounts to a substantive violation of sanctions laws attracts criminal penalties under the relevant statute. UAPA Providing support to or transacting with a terrorist organisation carries imprisonment of up to 10 years;
7. Designation, Compliance and Circumvention 7.1 Executive Body
Designation decisions in India are made by the fol - lowing bodies, each operating within its statutory mandate. MEA Adopts UNSC-derived designations through UNSCA Orders issued under the UNSC Act. The MEA trans - lates UNSC sanctions committee listings into binding domestic orders and is responsible for timely imple - mentation of new designations, amendments and delistings. MHA (Counterterrorism and Counter-Radicalisation Division) Designates individuals and entities as terrorists or ter - rorist organisations under Schedules to the UAPA and declares associations as unlawful. DGFT Implements trade embargoes on countries organisa - tions and individuals under the Foreign Trade Policy, including the administration of the SCOMET control list and the issuance of trade prohibition notifications. 7.2 Scope of Designation India’s sanctions framework does not contain an explicit statutory “ownership and control” test equiva - lent to the US 50% rule or the ownership and control provisions found in EU and UK regulations. However, the extant Indian sanctions framework addresses this issue through the following mechanisms: • UNSCA Orders apply to funds, financial assets or economic resources owned or controlled by desig - nated persons or held on behalf of such persons, mirroring the UNSC resolutions; • the UAPA prohibits dealing with funds and assets of unlawful associations and terrorists, including
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