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RBI Tightens KYC/AML Rules for Money Changers on FATF Non-Applicable Countries

Current · Source: Reserve Bank of India · RBI/2010-11/292 · issued 30 Nov 2010 · ~2 min read
Quick answerRBI directs Authorised Persons to go beyond FATF statements and use public info to identify high-risk jurisdictions for money changing. Enhanced monitoring and documentation are now mandatory for transactions from countries with weak AML/CFT regimes.
The rule, in the simplest words
How it plays out — a real example

Rahul, a KYC & compliance officer in Indore, uses public sources to identify a country with a weak AML/CFT regime. He examines a transaction from this country, but finds no apparent economic or lawful purpose. Rahul writes down his findings and keeps the records, ready for RBI inspection.

What changed

RBI expanded the scope of risk assessment for money changing activities: Authorised Persons must now use publicly available information, in addition to FATF statements, to identify countries that insufficiently apply FATF recommendations. Ongoing monitoring of transactions from such jurisdictions is reinforced, requiring examination of background and purpose, with written findings retained for authorities.

What it means for you

Banks and money changers must adopt a more proactive, risk-based approach to KYC/AML compliance. They cannot rely solely on FATF lists; they need to independently screen jurisdictions using public sources. This increases operational burden but strengthens India's anti-money laundering framework, reducing exposure to illicit flows.

What you must do

Who it affects

Authorised Persons (banks, money changers, forex dealers), Agents and franchisees of Authorised Persons, Compliance and AML teams in financial institutions, Customers transacting with high-risk jurisdictions

❓ Common questions

What does 'publicly available information' mean for identifying high-risk countries?

It refers to credible sources like government sanctions lists and international body reports (e.g., FATF, UN) that indicate a country's AML/CFT deficiencies. Banks must use these alongside FATF statements.

Are these rules applicable to all foreign exchange transactions or only money changing?

The circular specifically addresses money changing activities by Authorised Persons. The enhanced due diligence and monitoring requirements apply only to transactions related to money changing activities involving high-risk jurisdictions.

📜 Read the original circular — full text as issued by RBI
RBI/2010-11/292 A.P. (DIR Series) Circular No.20 A.P. (FL/RL Series) Circular No.03 November 30, 2010 To, All Authorised Persons Madam/ Sir, Know Your Customer (KYC) norms/ Anti-Money Laundering (AML) standards/ Combating the Financing of Terrorism (CFT)/ Obligation of Authorised Persons under Prevention of Money Laundering Act, (PMLA), 2002, as amended by Prevention of Money Laundering (Amendment) Act, 2009- Money changing activities Attention of the Authorized Persons is invited to the A.P. (DIR Series) Circular No. 17 [A.P.(FL/ RL Series) Circular No. 04] dated November 27, 2009 on Know Your Customer (KYC) norms/ Anti-Money Laundering (AML) standards/ Combating the Financing of Terrorism (CFT)/ Obligation of Authorised Persons under Prevention of Money Laundering Act, (PMLA), 2002, as amended by Prevention of Money Laundering (Amendment) Act, 2009 in respect of money changing activities. Countries which do not or insufficiently apply the FATF recommendations 2.  In F-Part-I, paragraph 4.10 (b) of the circular dated November 27, 2009 referred to above, Authorised Persons (APs) have been advised to take into account the risks arising from the deficiencies in the AML/ CFT regime of certain jurisdictions, as identified in the Financial Action Task Force (FATF) Statement, issued from time to time, while dealing with the individuals or businesses from these jurisdictions. It is advised that APs should, in addition to the FATF Statements, issued from time to time, also consider using publicly available information for identifying countries, which do not or insufficiently apply the FATF Recommendations. Further, it is clarified that APs should also give special attention to business relationships and transactions with persons (including legal persons and other financial institutions) from or in countries that do not or insufficiently apply the FATF recommendations and jurisdictions included in FATF Statements. 3. In terms of F-Part-I, paragraph 4.6 of the circular dated November 27, 2009 referred to above, it is advised that ongoing monitoring is an essential element of effective KYC procedures. In this regard, it is advised that APs should examine the background and purpose of transactions with persons (including legal persons and other financial institutions) from jurisdictions included in FATF Statements and countries that do not or insufficiently apply the FATF Recommendations. Further, if the transactions have no apparent economic or visible lawful purpose, the background and purpose of such transactions should, as far as possible, be examined and written findings together with all the documents should be retained and made available to the Reserve Bank/ other relevant authorities, on request. 4. These guidelines would also be applicable mutatis mutandis to all agents/ franchisees of Authorised Persons and it will be the sole responsibility of the Authorised Persons (franchisers) to ensure that their agents/ franchisees also adhere to these guidelines. 5. Authorised Persons should bring the contents of this circular to the notice of their constituents concerned. 6. The directions contained in this Circular are issued under Section 10(4) and Section 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and also under the Prevention of Money Laundering Act, (PMLA), 2002, as amended by Prevention of Money Laundering (Amendment) Act, 2009 and Prevention of Money-Laundering (Maintenance of Records of the Nature and Value of Transactions, the Procedure and Manner of Maintaining and Time for Furnishing Information and Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Rules, 2005, as amended from time to time. Non-compliance with the guidelines would attract penal provisions of the Acts concerned or Rules made there under. Yours faithfully, (Salim Gangadharan) Chief General Manager-in-Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2010-11/292 · issued 30 Nov 2010. 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 (Authorised Persons (banks, money changers, forex dealers), Agents and franchisees of Authorised Persons, Compliance and AML teams in financial institutions, Customers transacting with high-risk jurisdictions), your first concrete step on “RBI Tightens KYC/AML Rules for Money Changers on FATF Non-Applicable Countries” is: “Update internal KYC/AML policies to include public information sources for identifying high-risk jurisdictions beyond FATF statements.” (RBI issued this 30 Nov 2010).

  1. Circular: RBI/2010-11/292 -- RBI Tightens KYC/AML Rules for Money Changers on FATF Non-Applicable Countries
  2. Issued: 30 Nov 2010
  3. Action required: Update internal KYC/AML policies to include public information sources for identifying high-risk jurisdictions beyond FATF statements.
  4. Action required: Implement enhanced due diligence and ongoing monitoring for all transactions involving persons or entities from countries with weak AML/CFT regimes.
  5. Action required: Document written findings on transactions lacking apparent economic or lawful purpose and retain records for RBI/authority inspection.
  6. Action required: Ensure all agents and franchisees comply with these enhanced KYC/AML guidelines, with franchisers taking full responsibility.
  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=6122&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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