What changed
RBI updated its earlier AML/CFT circular (September 22, 2010) to reflect FATF's October 22, 2010 statement. Iran is now subject to countermeasures due to ongoing ML/FT risks, while North Korea (DPRK) is flagged for strategic deficiencies without a committed action plan. The earlier list of eight jurisdictions (Iran, Angola, DPRK, Ecuador, Ethiopia, Pakistan, Turkmenistan, Sao Tome and Principe) was narrowed to two.
What it means for you
NBFCs must apply enhanced due diligence and consider countermeasures for transactions involving Iran, and assess risks for North Korea. This increases compliance burden and may restrict business relationships with entities from these countries. Lenders need to update their AML policies and train staff accordingly.
What you must do
- Take into account risks arising from deficiencies in AML/CFT regime of Iran and DPRK when entering into business relationships and transactions with persons from these jurisdictions.
- Apply countermeasures for Iran-related transactions and consider risks for North Korea.
- Ensure Principal Officer acknowledges receipt of this circular and disseminates it to relevant teams.
- Review existing business relationships with entities from these jurisdictions for potential ML/FT risks.
Who it affects
All Non-Banking Financial Companies (NBFCs), Residuary Non-Banking Companies (RNBCs), Principal Officers of NBFCs/RNBCs
Which countries are specifically mentioned in this circular?
Iran is subject to countermeasures, and Democratic People's Republic of Korea (DPRK) has strategic AML/CFT deficiencies without a committed action plan.
What should NBFCs do differently for Iran compared to North Korea?
For Iran, NBFCs must apply countermeasures to protect the financial system. For North Korea, they need to consider the risks from deficiencies but no mandatory countermeasures are called for.
Does this circular replace the earlier September 2010 circular?
It updates the earlier circular by narrowing the list of deficient jurisdictions to two based on FATF's October 22, 2010 statement. The earlier guidance on other countries is superseded.