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RBI Tightens KYC/AML for Cross-Border Remittances Under MTSS

Current · Source: Reserve Bank of India · RBI/2010-11/293 · issued 30 Nov 2010 · ~1 min read
Quick answerRBI directs Indian Agents under MTSS to use public info to identify high-risk jurisdictions, monitor transactions from such countries, and ensure sub-agents comply with enhanced KYC/AML norms.
The rule, in the simplest words
How it plays out — a real example

A compliance officer in Mumbai, working for a bank that handles cross-border remittances, must now regularly check public information to identify countries that are at high risk of money laundering. She must then closely monitor all transactions from these countries and ensure that sub-agents are also following these rules to prevent any suspicious activity. This helps in detecting and preventing cross-border remittances that could be used for illegal activities.

What changed

RBI expanded the list of jurisdictions requiring enhanced due diligence beyond FATF statements to include publicly available information. It mandated ongoing monitoring of transactions from countries that insufficiently apply FATF recommendations, with written findings retained for authorities.

What it means for you

Banks acting as Indian Agents under MTSS must now proactively identify and monitor high-risk jurisdictions using public sources, not just FATF lists. This increases compliance burden and requires robust transaction monitoring systems to detect suspicious cross-border remittances.

What you must do

Who it affects

Authorised Persons (Indian Agents) under Money Transfer Service Scheme, Sub-agents of Indian Agents under MTSS, Banks handling cross-border inward remittances

❓ Common questions

What additional sources can we use to identify high-risk jurisdictions?

RBI now allows using publicly available information, such as government reports or international assessments, in addition to FATF statements, to identify countries that insufficiently apply FATF recommendations.

What must we do if a transaction has no apparent lawful purpose?

Examine the background and purpose, document written findings, retain all related documents, and make them available to RBI or other authorities upon request.

Are sub-agents also required to follow these guidelines?

Yes, these guidelines apply mutatis mutandis to all sub-agents, and Indian Agents are solely responsible for ensuring their sub-agents comply.

📜 Read the original circular — full text as issued by RBI
RBI/2010-11/293 A.P. (DIR Series) Circular No.21 A.P. (FL Series) Circular No. 04 November 30, 2010 To All Authorised Persons, who are Indian Agents under the Money Transfer Service Scheme. 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- Cross Border Inward Remittance under Money Transfer Service Scheme Attention of all the Authorised Persons, who are Indian Agents [APs (Indian Agents)] under the Money Transfer Service Scheme (MTSS) is invited to the A.P. (DIR Series) Circular No. 18 [ A.P. (FL/ RL Series) Circular No. 05] 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 cross border inward remittances under Money Transfer Service Scheme (MTSS). Countries which do not or insufficiently apply the FATF recommendations 2. In Annex – I, paragraph 5.10 (b) of the circular dated November 27, 2009 referred to above, Authorised Persons (Indian Agents) [APs (Indian Agents)] have been advised to take into account the risks arising from the deficiencies in AML/ CFT regime of the jurisdictions as identified in the FATF Statement issued from time to time, while dealing with individuals from these jurisdictions. It is advised that APs (Indian Agents) should, in addition to the FATF Statements issued from time to time, also consider using publicly available information for identifying the countries, which do not or insufficiently apply the FATF Recommendations. Further, it is clarified that APs (Indian Agents) 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 Annex – I, paragraph 5.6 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 (Indian Agents) should examine the background and purpose of transactions with persons (including legal persons and other financial institutions) from jurisdictions included in the 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 Sub-agents of the Indian Agents under MTSS and it will be the sole responsibility of the APs (Indian Agents) to ensure that their Sub-agents also adhere to these guidelines. 5. Authorised Persons (Indian Agents) should bring the contents of this circular to the notice of their constituents concerned. 6. The directions contained in this circular have been 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/2010-11/293 · 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 (Indian Agents) under Money Transfer Service Scheme, Sub-agents of Indian Agents under MTSS, Banks handling cross-border inward remittances), your first concrete step on “RBI Tightens KYC/AML for Cross-Border Remittances Under MTSS” is: “Update KYC/AML policies to include publicly available information for identifying high-risk jurisdictions.” (RBI issued this 30 Nov 2010).

  1. Circular: RBI/2010-11/293 -- RBI Tightens KYC/AML for Cross-Border Remittances Under MTSS
  2. Issued: 30 Nov 2010
  3. Action required: Update KYC/AML policies to include publicly available information for identifying high-risk jurisdictions.
  4. Action required: Implement ongoing monitoring of transactions from countries that do not or insufficiently apply FATF recommendations.
  5. Action required: Ensure sub-agents under MTSS adhere to these enhanced KYC/AML guidelines.
  6. Action required: Retain written findings and documents for transactions with no apparent lawful purpose and make them available to RBI on request.
  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=6123&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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