What changed
FATF issued a new statement on February 18, 2010, categorizing jurisdictions with strategic AML/CFT deficiencies into three groups: Iran (countermeasures required), Angola, DPRK, Ecuador, Ethiopia (no action plan committed), and Pakistan, Turkmenistan, Sao Tome and Principe (previously identified deficiencies remain). RBI updated its earlier December 2009 advisory to include this revised FATF classification for cooperative banks.
What it means for you
Cooperative banks must now apply enhanced due diligence or countermeasures for transactions involving these jurisdictions, especially Iran. The three-tier FATF grouping signals varying risk levels, requiring banks to tailor their AML/CFT controls accordingly. Non-compliance could expose banks to regulatory action and reputational risk.
What you must do
- Update your bank's AML/CFT risk assessment to include the three FATF jurisdiction groups from the February 2010 statement.
- Apply appropriate countermeasures for Iran and enhanced scrutiny for Angola, DPRK, Ecuador, Ethiopia, Pakistan, Turkmenistan, and Sao Tome and Principe.
- Ensure the Principal Officer acknowledges receipt of this circular to the concerned RBI Regional Office.
- Review and strengthen transaction monitoring systems for cross-border flows involving these countries.
Who it affects
State Co-operative Banks (StCBs), Central Co-operative Banks (CCBs), Principal Officers of co-operative banks, AML/CFT compliance teams
What are the three FATF jurisdiction groups mentioned in this circular?
Group 1: Iran (countermeasures to protect financial system). Group 2: Angola, DPRK, Ecuador, Ethiopia (deficiencies, no action plan). Group 3: Pakistan, Turkmenistan, Sao Tome and Principe (previously identified deficiencies remain).
Do we need to apply the same level of controls for all listed countries?
No. Iran requires countermeasures due to substantial ML/FT risks. For Group 2 and 3 countries, banks must consider risks and apply enhanced due diligence as appropriate, based on the FATF call.
What action is required from the Principal Officer?
The Principal Officer must acknowledge receipt of this circular to the concerned RBI Regional Office, as stated in paragraph 4 of the circular.