FATF-flagged jurisdictions: NBFCs must update KYC/AML checks
Current · Source: Reserve Bank of India · RBI/2010-11/226 · issued 04 Oct 2010 · ~2 min read
Quick answerRBI directs all NBFCs and RNBCs to factor in FATF's June 2010 statement identifying jurisdictions with strategic AML/CFT deficiencies. Firms must review the enclosed FATF list and ensure their KYC/AML processes account for these high-risk geographies.
The rule, in the simplest words
NBFCs (companies that give loans but are not banks) and RNBCs (a special type of NBFC) must check a list from FATF (a global group that fights money laundering) of countries with weak rules against money laundering and terrorism funding.
When a customer or transaction is linked to a country on that FATF list, the NBFC must do extra checks (called enhanced due diligence) to make sure it's safe.
The compliance officer (the person in charge of following rules) must send a signed receipt of this rule to the regional DNBS office (the RBI's local office for NBFCs).
NBFCs must train their staff to spot and handle customers or money from those high-risk countries.
How it plays out — a real example
A KYC & compliance officer in Indore receives a loan application from a customer whose business address is in a country on the FATF list. Following this rule, the officer pauses the application, flags it for extra checks, and asks the compliance team to verify the customer's source of funds before approving the loan.
What changed
FATF issued a statement on June 25, 2010, naming jurisdictions with strategic AML/CFT deficiencies and calling for action plan implementation. RBI now requires all NBFCs and RNBCs to consider this FATF information in their KYC/AML/CFT compliance frameworks.
What it means for you
NBFCs and RNBCs must integrate the FATF-identified jurisdictions into their risk assessment and enhanced due diligence procedures. This circular reinforces that ignoring FATF alerts could expose lenders to regulatory action and reputational risk. Compliance officers must formally acknowledge receipt to their regional DNBS office.
What you must do
Obtain and review the enclosed FATF statement dated June 25, 2010, listing deficient jurisdictions.
Update your KYC/AML/CFT policies to incorporate enhanced screening for customers or transactions linked to those jurisdictions.
Ensure your compliance officer or principal officer submits an acknowledged receipt of this circular to the concerned DNBS regional office.
Train frontline and compliance teams on the updated risk parameters arising from FATF's findings.
Who it affects
All Non-Banking Financial Companies (NBFCs), All Residuary Non-Banking Companies (RNBCs), Compliance officers and principal officers of NBFCs/RNBCs, Regional offices of the Department of Non-Banking Supervision (DNBS)
❓ Common questions
What is the FATF statement referenced in this circular?
The FATF issued a statement on June 25, 2010, identifying jurisdictions with strategic deficiencies in their AML/CFT regimes. The statement calls on those jurisdictions to complete action plans within a set timeframe and advises members to consider the information.
Do we need to submit any proof of compliance to RBI?
Yes. The circular requires the compliance officer or principal officer of each NBFC/RNBC to submit an acknowledged receipt of this circular to the concerned regional office of DNBS.
Does this circular apply to all NBFCs or only certain categories?
It applies to all Non-Banking Financial Companies and all Residuary Non-Banking Companies, as addressed in the circular.
📜 Read the original circular — full text as issued by RBI
RBI/2010-11/226
DNBS(PD).CC. No 202 /03.10.42 /2010-11
October 4, 2010
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) as a part of its ongoing review of compliance with the AML / CFT standards, has identified certain jurisdictions which have strategic AML /CFT deficiencies.
2. FATF, has issued a statement dated June 25, 2010 ( copy enclosed ) and has called upon jurisdictions listed in the statement to complete the implementation of their action plan within the timeframe and has called upon its members to consider the information given in the statement.
3. All NBFCs/RNBCs are accordingly advised to consider the information contained in the enclosed statement.
4. An acknowledged receipt of this circular may be submitted by the Compliance officer/ Principal Officer of the NBFCs to the concerned Regional Office of DNBS in whose jurisdiction the NBFC/RNBC is functioning.
Yours faithfully,
(Uma Subramaniam)
Chief General Manager-in-Charge
Encl:as above
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2010-11/226 · issued 04 Oct 2010. The plain-English explanation above is BankPulse’s own independent summary.
Example: if you are a Compliance officer at a bank this circular applies to (All Non-Banking Financial Companies (NBFCs), All Residuary Non-Banking Companies (RNBCs), Compliance officers and principal officers of NBFCs/RNBCs, Regional offices of the Department of Non-Banking Supervision (DNBS)), your first concrete step on “FATF-flagged jurisdictions: NBFCs must update KYC/AML checks” is: “Obtain and review the enclosed FATF statement dated June 25, 2010, listing deficient jurisdictions.” (RBI issued this 04 Oct 2010).
Circular: RBI/2010-11/226 -- FATF-flagged jurisdictions: NBFCs must update KYC/AML checks
Issued: 04 Oct 2010
Action required: Obtain and review the enclosed FATF statement dated June 25, 2010, listing deficient jurisdictions.
Action required: Update your KYC/AML/CFT policies to incorporate enhanced screening for customers or transactions linked to those jurisdictions.
Action required: Ensure your compliance officer or principal officer submits an acknowledged receipt of this circular to the concerned DNBS regional office.
Action required: Train frontline and compliance teams on the updated risk parameters arising from FATF's findings.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
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.
💬 Banker Discussion
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BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=6026&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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