What changed
RBI issued a circular on September 22, 2011, referencing and updating the May 4, 2011 advisory. It incorporates FATF's June 24, 2011 statement, which calls for countermeasures against Iran and DPRK due to ongoing ML/FT risks. It also adds Bolivia, Cuba, Ethiopia, Kenya, Myanmar, Sri Lanka, Syria, and Turkey as jurisdictions with strategic deficiencies.
What it means for you
NBFCs must now apply enhanced scrutiny to transactions involving these countries, especially Iran and DPRK, where countermeasures are urged. While legitimate trade with Iran is not barred, the risk weightage for AML/CFT compliance increases. This could lead to additional reporting or transaction monitoring for affected relationships.
What you must do
- Update AML/CFT policies to include FATF's June 2011 list of high-risk jurisdictions.
- Conduct enhanced due diligence for any business with persons or entities from Iran, DPRK, and the newly flagged countries.
- Ensure staff are trained on the updated risk assessment for these jurisdictions.
- Review existing relationships with counterparties from these countries and document risk mitigation steps.
Who it affects
All Non-Banking Financial Companies (NBFCs), Residuary Non-Banking Companies (RNBCs), Compliance and AML teams within NBFCs
Which new countries are added compared to the May 2011 circular?
The June 24, 2011 FATF statement adds Bolivia, Cuba, Ethiopia, Kenya, Myanmar, Sri Lanka, Syria, and Turkey as jurisdictions with strategic AML/CFT deficiencies. The earlier list from May 2011 is referenced but not repeated in this circular.