What changed
RBI issued A.P. (DIR Series) Circular No. 78 on February 15, 2012, requiring Indian Agents under MTSS to consider the FATF's October 28, 2011 statement on AML/CFT deficiencies in certain jurisdictions. This extends earlier September 2011 circulars and mandates that sub-agents also adhere to these guidelines, with Indian Agents bearing sole responsibility for compliance.
What it means for you
Banks and other authorised persons acting as Indian Agents must now integrate FATF's updated risk assessments into their AML/CFT screening for inward remittances. This increases due diligence obligations, especially for transactions involving flagged jurisdictions. Non-compliance by sub-agents will be attributed to the principal Indian Agent, raising operational and reputational risks.
What you must do
- Review FATF's October 28, 2011 statement and update your AML/CFT policies for cross-border inward remittances under MTSS.
- Ensure all sub-agents are informed and comply with these guidelines; document their adherence.
- Advise your Principal Officer to acknowledge receipt of this circular to RBI.
- Continue to allow legitimate transactions but apply enhanced scrutiny where FATF flags risks.
Who it affects
Indian Agents under Money Transfer Service Scheme (MTSS), Sub-agents of Indian Agents under MTSS, Banks and authorised persons handling cross-border inward remittances
Does this circular ban transactions with FATF-flagged jurisdictions?
No, it does not preclude legitimate transactions. It only requires Indian Agents to consider FATF's statement and apply appropriate AML/CFT measures.
Who is responsible for sub-agent compliance?
Indian Agents are solely responsible for ensuring their sub-agents adhere to these guidelines, as per paragraph 5 of the circular.
What legal basis does this circular have?
It is issued under FEMA sections 10(4) and 11(1), and the PMLA, 2002, along with related rules, as amended.