What changed
RBI issued a circular on April 27, 2011, referencing FATF's February 25, 2011 statement that urged members to apply counter-measures against Iran and DPRK due to ongoing ML/FT risks. This builds on an earlier March 7, 2011 letter on the same subject. Banks are advised to consider these risks in all business relationships and transactions with those countries.
What it means for you
Co-operative banks are advised to tighten due diligence for any customer or counterparty linked to Iran or North Korea. Failure to identify and mitigate these risks could expose the bank to regulatory action and reputational damage. This aligns with global FATF standards and reinforces India's commitment to combating money laundering and terrorist financing.
What you must do
- Consider updating your AML/CFT policy to explicitly flag Iran and DPRK as high-risk jurisdictions.
- Consider training staff to identify transactions or relationships involving persons or entities from these countries.
- Ensure your Principal Officer acknowledges receipt of this circular to the concerned RBI Regional Office.
- Consider reviewing existing customer portfolios for any exposure to Iran or DPRK and apply enhanced due diligence.
Who it affects
All State Co-operative Banks (StCBs), All District Central Co-operative Banks (DCCBs), Chairmen/CEOs of co-operative banks
What triggered this circular from RBI?
The Financial Action Task Force (FATF) issued a statement on February 25, 2011, calling for counter-measures against Iran and DPRK due to serious deficiencies in their AML/CFT regimes. RBI is advising co-operative banks to act on this.
Does this apply to all transactions or only new ones?
The circular advises banks to take into account these risks while entering into business relationships and transactions. This implies both new and existing relationships should be reviewed for exposure to Iran or DPRK.
What should the Principal Officer do?
The Principal Officer must acknowledge receipt of this letter to the concerned RBI Regional Office, as stated in paragraph 4 of the circular.