What changed
RBI issued this circular to update authorised persons on FATF's latest statement (October 28, 2011) regarding jurisdictions with weak AML/CFT regimes. It builds on earlier September 2011 circulars and requires consideration of the enclosed FATF statement in money changing operations.
What it means for you
Banks and money changers must incorporate FATF's updated risk intelligence into their AML/CFT screening for cross-border money changing. While no ban is imposed, failure to consider these risks could expose institutions to regulatory action under FEMA and PMLA. The circular also extends compliance obligations to agents and franchisees.
What you must do
- Review the enclosed FATF statement and update your AML/CFT risk assessment for money changing activities.
- Ensure your Principal Officer acknowledges receipt of this circular.
- Communicate the updated guidelines to all agents and franchisees, and verify their adherence.
- Continue to allow legitimate transactions but apply enhanced due diligence for transactions involving identified high-risk jurisdictions.
Who it affects
All authorised persons (banks, money changers, etc.), Agents and franchisees of authorised persons, Principal Officers of authorised entities
Does this circular ban transactions with the listed jurisdictions?
No. The circular explicitly states it does not preclude legitimate transactions with those countries and jurisdictions.
Are agents and franchisees covered under this circular?
Yes. The guidelines apply mutatis mutandis to all agents and franchisees, and the franchiser is solely responsible for ensuring their compliance.
What legal authority backs this circular?
It is issued under sections 10(4) and 11(1) of FEMA, 1999, and under the PMLA, 2002 (as amended), along with related rules.