What changed
RBI updated its earlier May 2010 advisory by incorporating FATF's June 25, 2010 statement, which categorizes Iran as requiring countermeasures and DPRK and Sao Tome and Principe as having strategic deficiencies without committed action plans. Banks must now assess risks from these countries before entering business relationships or transactions.
What it means for you
Cooperative banks must exercise heightened due diligence for any transaction or relationship involving Iran, DPRK, or Sao Tome and Principe. The directive reinforces the need to align with global AML/CFT standards and protect the Indian financial system from potential money laundering or terrorist financing risks.
What you must do
- Update internal KYC/AML policies to include enhanced scrutiny for counterparties from Iran, DPRK, and Sao Tome and Principe.
- Train staff to identify and flag transactions or relationships linked to these jurisdictions.
- Ensure the Principal Officer acknowledges receipt of this circular to the respective RBI Regional Office.
- Review existing relationships with entities from these countries and apply risk-based countermeasures as needed.
Who it affects
All State and Central Cooperative Banks, Principal Officers of cooperative banks, Compliance and AML teams in cooperative banks
Which countries are specifically flagged in this circular?
Iran is subject to countermeasures; Democratic People's Republic of Korea (DPRK) and Sao Tome and Principe are listed as having strategic AML/CFT deficiencies without committed action plans.
What action must cooperative banks take for these jurisdictions?
Banks must assess risks from these countries before entering business relationships or transactions with persons or entities from or in those jurisdictions, and apply appropriate countermeasures or enhanced due diligence.
Is acknowledgment of this circular mandatory?
Yes, the Principal Officer of the bank must acknowledge receipt of this letter to the concerned RBI Regional Office.