What changed
RBI issued a circular on April 13, 2010, updating the FATF statement of February 18, 2010, which categorizes jurisdictions with strategic AML/CFT deficiencies into three groups. This replaces the earlier December 22, 2009, reference and requires operators to consider risks from these countries.
What it means for you
Banks and payment operators must enhance due diligence for transactions involving these jurisdictions, potentially applying countermeasures for Iran. Non-compliance could expose institutions to regulatory action and reputational risk. This aligns with global FATF standards to curb money laundering and terrorist financing.
What you must do
- Update AML/CFT risk assessment frameworks to include the three FATF-listed groups.
- Apply enhanced due diligence or countermeasures for transactions with Iran and other listed jurisdictions.
- Communicate this circular to all constituents and ensure compliance with FATF recommendations.
- Monitor FATF updates regularly to adjust risk mitigation strategies promptly.
Who it affects
All payment system operators authorized under PSS Act, 2007, Banks and financial institutions involved in cross-border payments, Compliance and AML/CFT teams in Indian financial entities
What are the three FATF groups mentioned in this circular?
Group 1: Iran (subject to countermeasures). Group 2: Angola, DPRK, Ecuador, Ethiopia (no action plan). Group 3: Pakistan, Turkmenistan, Sao Tome and Principe (unaddressed deficiencies).
Does this circular apply to all payment systems or only specific ones?
It applies to all payment system operators authorized under the Payment and Settlement Systems Act, 2007, covering all digital payment systems including UPI.
What action should banks take for transactions with Iran?
Banks should apply countermeasures as called by FATF to protect the financial system from ML/FT risks, which may include enhanced scrutiny, restrictions, or transaction monitoring.