What changed
RBI issued a circular on December 2, 2009, advising NBFCs and RNBCs to consider risks from deficiencies in AML/CFT regimes of five specific countries. This was based on FATF's October 16, 2009 statement highlighting these risks.
What it means for you
NBFCs and RNBCs must now enhance due diligence for transactions or relationships involving these five countries. Lenders need to update their KYC and AML policies to mitigate potential exposure to money laundering or terrorism financing risks.
What you must do
- Update KYC/AML policies to include enhanced scrutiny for customers or transactions linked to Iran, Uzbekistan, Pakistan, Turkmenistan, and Sao Tome and Principe.
- Brief your Principal Officer to acknowledge receipt of this circular and ensure compliance.
- Review existing customer portfolios for any exposure to these jurisdictions and apply risk-based measures.
- Train staff on identifying red flags related to these high-risk countries.
Who it affects
All Non-Banking Financial Companies (NBFCs), Residuary Non-Banking Companies (RNBCs), Principal Officers of NBFCs/RNBCs
Which countries are flagged in this circular?
The circular highlights AML/CFT regime deficiencies in Iran, Uzbekistan, Pakistan, Turkmenistan, and Sao Tome and Principe, as per FATF's October 2009 statement.
Do I need to report anything to RBI after this circular?
Yes, the Principal Officer of your company must acknowledge receipt of this circular to RBI as advised.
What actions should my NBFC take immediately?
Update your KYC/AML procedures to incorporate enhanced due diligence for any dealings with the five listed countries and ensure your Principal Officer acknowledges the circular.