What changed
RBI issued a circular on April 8, 2011, advising all payment system operators under the PSS Act to account for AML/CFT deficiencies in Iran and DPRK. This follows an earlier January 2011 letter and a FATF statement from February 25, 2011, calling for counter-measures against these countries.
What it means for you
Banks and payment operators must now apply enhanced due diligence for any business relationships or transactions involving Iran or DPRK. This increases compliance costs and operational scrutiny, as failure to mitigate these risks could expose institutions to regulatory action.
What you must do
- Update AML/CFT policies to explicitly address risks from Iran and DPRK.
- Screen all new and existing customers and transactions for links to these jurisdictions.
- Ensure your nodal/principal officer acknowledges receipt of this circular.
- Train staff on FATF-recommended counter-measures for high-risk countries.
Who it affects
All payment system operators authorised under the PSS Act, 2007, Banks and financial institutions involved in cross-border payments, Compliance and AML/CFT teams
What triggered this RBI circular?
The circular follows a FATF statement from February 25, 2011, which highlighted ongoing ML/FT risks from Iran and DPRK and urged members to apply counter-measures.
Does this apply to all payment operators or only specific ones?
It applies to all payment system operators authorised under the Payment and Settlement Systems Act, 2007, as per the circular's address.
What should we do if we already have relationships with entities in Iran or DPRK?
You must reassess those relationships considering the heightened risks and apply enhanced due diligence or consider terminating them if risks cannot be mitigated.