What changed
FATF issued a new statement on June 25, 2010, categorizing strategic AML/CFT deficient jurisdictions into two groups: Iran (subject to countermeasures) and DPRK and Sao Tome and Principe (deficiencies without committed action plan). RBI has updated its earlier April 2010 circular to include these changes for RRBs.
What it means for you
RRBs must now treat Iran as a jurisdiction requiring countermeasures to protect the financial system, while for DPRK and Sao Tome and Principe, they must assess and mitigate risks from deficiencies. This increases due diligence burden for transactions involving these countries.
What you must do
- Update internal AML/CFT policies to reflect the two-tier FATF categorization for Iran, DPRK, and Sao Tome and Principe.
- Apply enhanced due diligence and consider countermeasures for all business relationships and transactions with Iran.
- Assess and document risks for transactions involving DPRK and Sao Tome and Principe, and take appropriate mitigation steps.
- Ensure Principal Officer acknowledges receipt of this circular to the respective RBI Regional Office.
Who it affects
Regional Rural Banks (RRBs), Principal Officers of RRBs, Compliance and AML teams at RRBs
What specific action is required for Iran?
RRBs must apply countermeasures to protect the international financial system from ongoing ML/FT risks from Iran, as per FATF's call.
How should RRBs handle transactions with DPRK and Sao Tome and Principe?
RRBs need to consider the risks arising from AML/CFT deficiencies in these jurisdictions and take appropriate risk-based measures.
Is acknowledgment of this circular mandatory?
Yes, the Principal Officer must acknowledge receipt to the concerned RBI Regional Office.