What changed
FATF identified certain jurisdictions with strategic AML/CFT deficiencies and issued a statement on February 25, 2011, calling for action plan implementation. RBI now advises all NBFCs and RNBCs to consider the information in that FATF statement for their KYC/AML/CFT processes.
What it means for you
NBFCs and RNBCs must incorporate FATF’s updated list of high-risk jurisdictions into their risk assessment frameworks. This may require enhanced due diligence for customers or transactions linked to those jurisdictions. Lenders should review their existing KYC policies to ensure alignment with the latest FATF guidance.
What you must do
- Obtain and review the enclosed FATF statement dated February 25, 2011, for the list of jurisdictions with strategic deficiencies.
- Update your KYC/AML/CFT policies to reflect heightened scrutiny for customers or transactions from those jurisdictions.
- Train compliance and operations teams on the revised risk parameters and enhanced due diligence requirements.
- Document the steps taken to incorporate the FATF statement into your internal controls for audit readiness.
Who it affects
All Non-Banking Financial Companies (NBFCs), Residuary Non-Banking Companies (RNBCs), Compliance and KYC/AML teams at NBFCs/RNBCs
What is the FATF statement referenced in this circular?
The FATF issued a statement on February 25, 2011, identifying jurisdictions with strategic AML/CFT deficiencies and calling for action plan implementation. The circular advises NBFCs to consider this information.
Do I need to take any immediate action beyond reviewing the statement?
Yes, you should update your KYC/AML policies to incorporate enhanced due diligence for customers or transactions linked to the listed jurisdictions, and train your staff accordingly.
Is this circular still applicable today?
The circular is from 2011 and may have been superseded by later updates. However, the principle of following FATF guidance remains relevant. Check for the latest RBI master circular on KYC/AML for current requirements.