What changed
RBI issued a circular on March 24, 2011, referencing FATF's February 25, 2011 statement, which urged members to apply counter-measures against Iran and DPRK due to ongoing ML/FT risks. Banks and All India Financial Institutions must now consider these risks in business relationships and transactions with entities from or in these countries.
What it means for you
Banks and lenders must enhance due diligence for any transaction or relationship involving Iran or DPRK, including legal persons and financial institutions. This increases compliance burden and may require additional screening or reporting. Non-compliance could expose banks to regulatory action or reputational damage.
What you must do
- Update AML/CFT policies to explicitly address risks from Iran and DPRK.
- Train staff to identify and flag transactions involving these jurisdictions.
- Ensure Principal Officer acknowledges receipt of this circular.
- Review existing relationships with any counterparties linked to Iran or DPRK.
Who it affects
All Scheduled Commercial Banks (excluding RRBs), Local Area Banks, All India Financial Institutions
What triggered this circular?
FATF issued a statement on February 25, 2011, highlighting ongoing ML/FT risks from Iran and DPRK and calling for counter-measures.
Does this apply to existing customers?
Yes, banks must consider AML/CFT risks when entering into or continuing business relationships with persons or entities from or in these countries.
What should we do if we have no exposure to Iran or DPRK?
Still update your AML/CFT framework to cover these risks and ensure staff awareness, as indirect exposure through third parties is possible.