INDIA Law and Practice Contributed by: Shilpa Mankar Ahluwalia, Himanshu Malhotra and Purva Anand, Shardul Amarchand Mangaldas & Co
including transactions relating to terrorism, with the FIU-Ind. REs are also required to appoint a principal officer who is responsible for monitor - ing and reporting all transactions and sharing information as required under the law. Unregulated entities are not required to comply with the provisions of the PMLA and various rules framed under it. The Outsourcing Guide - lines also restrict banks, NBFCs and PSOs from outsourcing core functions such as KYC com - pliance. 2.15 Financial Action Task Force Standards Indian anti-money laundering and sanction norms are generally aligned with the FATF stand - ards. 2.16 Reverse Solicitation India does not permit otherwise regulated prod - ucts and services to be offered from another jurisdiction under a reverse solicitation scenario without triggering domestic regulations. Typi - cally, any cross-border fintech offering, regard - less of the solicitation’s origin, would necessitate conformity with Indian financial, exchange con - trol, and data protection laws. A fintech offering in India would typically need to comply with the regulatory framework for finan - cial services (see 2.2 Regulatory Regime ), as the regulations are activity-centric. Even otherwise, the Indian foreign exchange legislation (FEMA), which imposes strict controls on cross-border transactions, will typically be applicable to any offering of cross-border payment or investment products (see 5.2 Regulation of Cross-Border Payments and Remittances ). Payment prod - ucts, lending offerings or investments/wealth - tech products may or may not require prior RBI approval (it could be a capital account transac -
tion or be permissible under the liberalised remit - tance scheme), but in any case, will need to be FEMA compliant. 3. Robo-Advisers 3.1 Requirement for Different Business Models The robo-adviser financial market has been evolving rapidly in India over the last few years; however, the regulatory framework is at a very nascent stage. While undertaking the business of investment advice requires registration with SEBI, current regulations do not stipulate a spe - cific requirement for registration of robo-advisers with SEBI. As a matter of market practice, robo-advisers have focused on one or more asset classes, depending on their client base and area of expertise. There are a range of robo-advisers in India which focus on offering advice in connec - tion with equity-based investments, while others focus on investments in funds and other general wealth advisory. 3.2 Legacy Players’ Implementation of Solutions Introduced by Robo-Advisers The legacy players in India have been quick to recognise and utilise the potential of robo- advisers. Several RE players have been quick to establish a multi-asset robo-advisory platform. Legacy players across India have taken a two- pronged approach to incorporate robo-advisory services: • acquisition or partnerships with players in the robo-advisory space; or • development of in-house technology, using internal analytical information to provide
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