What changed
FATF's October 22, 2010 statement reclassified strategic AML/CFT deficient jurisdictions into two groups: Iran, requiring countermeasures due to substantial ML/FT risks, and DPRK, with deficiencies but no committed action plan. RBI now advises RRBs to factor these risks into business relationships and transactions with entities from these countries.
What it means for you
RRBs must enhance due diligence for any dealings involving Iran or DPRK, potentially applying stricter monitoring or restrictions. This aligns with global FATF standards to protect the financial system from money laundering and terrorist financing risks.
What you must do
- Update internal AML/CFT policies to reflect FATF's two-tier risk categorization for Iran and DPRK.
- Screen all new and existing business relationships and transactions for links to these jurisdictions.
- Advise your Principal Officer to acknowledge receipt of this circular to the concerned RBI Regional Office.
- Consider applying enhanced due diligence or countermeasures for Iran-related transactions.
Who it affects
All Regional Rural Banks (RRBs), Principal Officers of RRBs, Compliance and AML/CFT teams at RRBs
What are the two groups of jurisdictions mentioned in the FATF statement?
The first group includes Iran, where FATF calls for countermeasures due to ongoing ML/FT risks. The second group includes DPRK, which has strategic deficiencies but no committed action plan, requiring risk consideration.
Do RRBs need to stop all transactions with Iran or DPRK?
No, but they must assess and mitigate risks from these jurisdictions. For Iran, countermeasures are recommended; for DPRK, risk consideration is required. RBI advises taking these risks into account when entering business relationships.
What should the Principal Officer do after receiving this circular?
The Principal Officer must acknowledge receipt of the circular letter to the concerned RBI Regional Office, as per paragraph 4 of the circular.