What changed
FATF updated its list of strategic AML/CFT deficient jurisdictions on February 18, 2010, dividing them into three groups: those requiring countermeasures (Iran), those without an action plan (Angola, DPRK, Ecuador, Ethiopia), and those with ongoing deficiencies (Pakistan, Turkmenistan, Sao Tome and Principe). RBI now requires UCBs to consider risks from these countries, superseding the earlier December 2009 circular.
What it means for you
UCBs must enhance due diligence for transactions or relationships involving these jurisdictions, as they pose higher money laundering and terrorist financing risks. Failure to adjust risk assessments could expose banks to regulatory action and reputational damage. This aligns with global FATF standards to protect the financial system.
What you must do
- Update your AML/CFT risk assessment to include the three FATF groups: Iran (countermeasures), Angola/DPRK/Ecuador/Ethiopia (no action plan), and Pakistan/Turkmenistan/Sao Tome and Principe (ongoing deficiencies).
- Apply enhanced due diligence or countermeasures for transactions linked to these countries, especially Iran.
- Ensure your Compliance Officer/Principal Officer acknowledges receipt of this circular to the respective RBI Regional Office.
- Review and strengthen internal controls to monitor and report suspicious transactions involving these jurisdictions.
Who it affects
All AD I category Urban Co-operative Banks (UCBs), Compliance Officers and Principal Officers of UCBs, Risk management teams handling cross-border transactions
What are the three groups of countries in the FATF statement?
Group 1: Iran (subject to countermeasures). Group 2: Angola, DPRK, Ecuador, Ethiopia (no action plan committed). Group 3: Pakistan, Turkmenistan, Sao Tome and Principe (previously identified, deficiencies remain).
What action must UCBs take for Iran?
UCBs must apply countermeasures to protect the financial system from ongoing ML/FT risks from Iran, as called by FATF.
Do UCBs need to report receipt of this circular?
Yes, the Compliance Officer/Principal Officer must acknowledge receipt to the concerned RBI Regional Office.