What changed
FATF updated its list of strategic AML/CFT deficient jurisdictions in June 2010, dividing them into two groups: Iran (subject to countermeasures) and DPRK and Sao Tome and Principe (deficiencies without committed action plans). RBI now requires NBFCs/RNBCs to account for risks from these countries, replacing the earlier April 2010 circular that included a broader set.
What it means for you
NBFCs must enhance due diligence for transactions or relationships involving Iran, DPRK, or Sao Tome and Principe. Iran demands stricter countermeasures like enhanced monitoring or transaction restrictions. For DPRK and Sao Tome and Principe, lenders need to assess and mitigate elevated ML/FT risks. Non-compliance could invite regulatory scrutiny.
What you must do
- Update your AML/CFT risk assessment to include Iran, DPRK, and Sao Tome and Principe as high-risk jurisdictions.
- Apply appropriate countermeasures for Iran, such as enhanced due diligence or transaction restrictions.
- For DPRK and Sao Tome and Principe, evaluate and document risk mitigation steps.
- Ensure your compliance officer submits an acknowledgment of this circular to the concerned DNBS regional office.
Who it affects
All Non-Banking Financial Companies (NBFCs), Residuary Non-Banking Companies (RNBCs), Compliance officers and principal officers of NBFCs/RNBCs
Which countries are now flagged by FATF as per this circular?
Iran is subject to countermeasures due to substantial ML/FT risks. Democratic People's Republic of Korea (DPRK) and Sao Tome and Principe have strategic deficiencies without committed action plans as of June 2010.
What actions must NBFCs take for Iran?
NBFCs must apply countermeasures to protect the financial system from ongoing ML/FT risks from Iran, such as enhanced due diligence, transaction monitoring, or restrictions on business relationships.
Do we need to report receipt of this circular?
Yes, the compliance officer or principal officer must submit an acknowledged receipt to the concerned Regional Office of DNBS where the NBFC/RNBC is located.