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NBFCs Alerted on AML/CFT Risks from Five Nations

Current · Source: Reserve Bank of India · RBI/2009-10/244 · issued 02 Dec 2009 · ~1 min read
Quick answerRBI has directed all NBFCs and RNBCs to factor in AML/CFT risks from Iran, Uzbekistan, Pakistan, Turkmenistan, and Sao Tome and Principe, following FATF's October 2009 statement on deficiencies in their regimes.
The rule, in the simplest words
How it plays out — a real example

A KYC & compliance officer in Indore reviews a new application from a customer who recently moved from Pakistan. Remembering the RBI circular, she flags the account for enhanced due diligence, asks for extra documents like a local address proof and source of funds, and updates the KYC file before approving the loan.

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

Who it affects

All Non-Banking Financial Companies (NBFCs), Residuary Non-Banking Companies (RNBCs), Principal Officers of NBFCs/RNBCs

❓ Common questions

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.

📜 Read the original circular — full text as issued by RBI
RBI/2009-10/244 DNBS(PD).CC. No 166 /03.10.42 /2009-10 December 2, 2009 All Non Banking Financial Companies / Residuary Non Banking Companies Dear Sir, Know Your Customer (KYC) Norms/ Anti- Money Laundering (AML) Standards/ Combating of Financing of Terrorism (CFT) Financial Action Task Force (FATF) has issued a Statement on October 16, 2009 on risks arising from the deficiencies in AML/CFT regime of Uzbekistan, Iran, Pakistan, Turkmenistan, Sao Tome and Principe on the subject ( copy enclosed ). All NBFCs and RNBCs are accordingly advised to take into account risks arising from the deficiencies in AML/CFT regime of Iran, Uzbekistan, Pakistan, Turkmenistan and Sao Tome and Principe. 2. Please advise the Principal Officer of your Company to acknowledge receipt of this circular. Yours faithfully, (A.Narayana Rao) Chief General Manager-in-Charge Encl: As above
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2009-10/244 · issued 02 Dec 2009. The plain-English explanation above is BankPulse’s own independent summary.
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Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (All Non-Banking Financial Companies (NBFCs), Residuary Non-Banking Companies (RNBCs), Principal Officers of NBFCs/RNBCs), your first concrete step on “NBFCs Alerted on AML/CFT Risks from Five Nations” is: “Update KYC/AML policies to include enhanced scrutiny for customers or transactions linked to Iran, Uzbekistan, Pakistan, Turkmenistan, and Sao Tome and Principe.” (RBI issued this 02 Dec 2009).

  1. Circular: RBI/2009-10/244 -- NBFCs Alerted on AML/CFT Risks from Five Nations
  2. Issued: 02 Dec 2009
  3. Action required: Update KYC/AML policies to include enhanced scrutiny for customers or transactions linked to Iran, Uzbekistan, Pakistan, Turkmenistan, and Sao Tome and Principe.
  4. Action required: Brief your Principal Officer to acknowledge receipt of this circular and ensure compliance.
  5. Action required: Review existing customer portfolios for any exposure to these jurisdictions and apply risk-based measures.
  6. Action required: Train staff on identifying red flags related to these high-risk countries.
  7. Owner: ____________ Target date: ____________
  8. Board/committee approval needed? Y / N
  9. Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

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Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=5396&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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