What changed
RBI issued a circular on April 6, 2011, updating earlier MTSS guidelines (November 2009) to incorporate FATF's October 2010 statement. The FATF statement categorised Iran as requiring countermeasures due to substantial ML/FT risks, and DPRK as having strategic deficiencies without a committed action plan. Authorised Persons must now assess these risks in business relationships and transactions.
What it means for you
Indian banks and MTSS agents must exercise enhanced due diligence for any cross-border inward remittance or business involving Iran or North Korea. Non-compliance with these AML/CFT guidelines could attract penal provisions under FEMA and PMLA. This reinforces the need for robust KYC/AML frameworks to mitigate regulatory and reputational risks.
What you must do
- Update internal AML/CFT policies to explicitly flag Iran and DPRK as high-risk jurisdictions per FATF guidance.
- Conduct enhanced due diligence on all transactions and relationships involving persons or entities from these countries.
- Ensure Principal Officer acknowledges receipt of this circular and disseminates it to relevant constituents.
- Review existing MTSS agent networks and correspondent relationships for any exposure to these jurisdictions.
Who it affects
All Authorised Persons acting as Indian Agents under Money Transfer Service Scheme, Banks handling cross-border inward remittances, Compliance and AML teams of financial institutions
What specific action does RBI require for Iran and North Korea?
RBI mandates that Authorised Persons consider the AML/CFT deficiencies of Iran and DPRK when entering into business relationships or transactions with entities from these jurisdictions, applying appropriate countermeasures or risk assessments as per FATF's call.
What are the consequences of non-compliance with this circular?
Non-compliance attracts penal provisions under the Foreign Exchange Management Act, 1999, and the Prevention of Money Laundering Act, 2002, as amended, along with related rules.