What changed
RBI expanded the scope of high-risk jurisdictions NBFCs must monitor. Previously, NBFCs relied solely on FATF Statements circulated by RBI. Now they must also use publicly available information to identify countries that do not or insufficiently apply FATF recommendations. Additionally, ongoing monitoring must include examining the background and purpose of transactions from such jurisdictions, and retaining written findings for authorities.
What it means for you
NBFCs must broaden their AML/CFT due diligence beyond official FATF lists, using open-source intelligence to flag risky jurisdictions. This increases compliance burden but strengthens India's anti-money laundering framework. Lenders need to update their KYC policies and transaction monitoring systems to capture these additional risk factors.
What you must do
- Update your KYC/AML policy to include publicly available information for identifying high-risk jurisdictions.
- Enhance transaction monitoring systems to flag transactions from countries that insufficiently apply FATF recommendations.
- Train staff on examining background and purpose of transactions from such jurisdictions and documenting findings.
- Ensure written findings and documents are retained and available for RBI or other authorities on request.
Who it affects
All Non-Banking Financial Companies (NBFCs), Residuary Non-Banking Companies (RNBCs)
What sources should we use beyond FATF statements?
Use publicly available information such as reports from international bodies, government advisories, and credible news sources to identify countries with weak AML/CFT regimes.
What documentation is required for transactions from high-risk jurisdictions?
You must examine the background and purpose of such transactions, document written findings, and retain all related documents. These must be made available to RBI or other authorities on request.