RBI flags AML/CFT risks from Iran and North Korea for MTSS agents
Current · Source: Reserve Bank of India · RBI/2010-11/469 · issued 06 Apr 2011 · ~1 min read
Quick answerRBI has directed all Authorised Persons under MTSS to factor in AML/CFT deficiencies of Iran and North Korea when dealing with entities from these jurisdictions, following FATF's October 2010 statement.
The rule, in the simplest words
If you send or receive money from Iran or North Korea, you must check extra carefully because these countries have weak rules against money laundering (hiding dirty money) and terrorism funding.
The RBI says all money-transfer agents in India must treat Iran and North Korea as very risky places, so they need to ask more questions and check more documents before doing any business with them.
You must update your company's rules to clearly mark Iran and North Korea as high-risk, and tell your compliance officer (the person in charge of following rules) about this new rule.
If you don't follow these rules, you could get in trouble under Indian laws like FEMA (foreign exchange rules) and PMLA (anti-money laundering law).
How it plays out — a real example
A KYC & compliance officer in Indore receives a request from a customer to send money to a relative in Iran. Remembering the RBI's rule, she pauses the transaction and asks for extra proof of the relative's identity and the reason for the transfer, then checks the customer's background more thoroughly before approving it, ensuring her bank stays safe from money-laundering risks.
What changed
RBI issued a circular on April 6, 2011, updating earlier MTSS guidelines (November 2009) to incorporate FATF's October 2010 statement. The FATF statement categorised Iran as requiring countermeasures due to substantial ML/FT risks, and DPRK as having strategic deficiencies without a committed action plan. Authorised Persons must now assess these risks in business relationships and transactions.
What it means for you
Indian banks and MTSS agents must exercise enhanced due diligence for any cross-border inward remittance or business involving Iran or North Korea. Non-compliance with these AML/CFT guidelines could attract penal provisions under FEMA and PMLA. This reinforces the need for robust KYC/AML frameworks to mitigate regulatory and reputational risks.
What you must do
Update internal AML/CFT policies to explicitly flag Iran and DPRK as high-risk jurisdictions per FATF guidance.
Conduct enhanced due diligence on all transactions and relationships involving persons or entities from these countries.
Ensure Principal Officer acknowledges receipt of this circular and disseminates it to relevant constituents.
Review existing MTSS agent networks and correspondent relationships for any exposure to these jurisdictions.
Who it affects
All Authorised Persons acting as Indian Agents under Money Transfer Service Scheme, Banks handling cross-border inward remittances, Compliance and AML teams of financial institutions
❓ Common questions
What specific action does RBI require for Iran and North Korea?
RBI mandates that Authorised Persons consider the AML/CFT deficiencies of Iran and DPRK when entering into business relationships or transactions with entities from these jurisdictions, applying appropriate countermeasures or risk assessments as per FATF's call.
What are the consequences of non-compliance with this circular?
Non-compliance attracts penal provisions under the Foreign Exchange Management Act, 1999, and the Prevention of Money Laundering Act, 2002, as amended, along with related rules.
📜 Read the original circular — full text as issued by RBI
RBI/2010-11/469
A.P. (DIR Series) Circular No. 50
A.P. (FL Series) Circular No. 12
April 06, 2011
To,
All Authorised Persons, who are Indian Agents under Money Transfer Service Scheme.
Madam/ Dear 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 Authorised Persons, who are Indian Agents under Money Transfer Service Scheme (MTSS) is invited to Paragraph 5.10 (b) of Annex-I, Annex to A.P. (DIR Series) Circular No.18 {A.P. (FL Series) Circular No.5} dated November 27, 2009 on the captioned subject.
2. Financial Action Task Force (FATF) has issued a further Statement on October 22, 2010 on the subject ( copy enclosed ). It may be observed that the statement divides the strategic AML/CFT deficient jurisdictions into two groups as under:
Jurisdictions subject to FATF call on its members and other jurisdictions to apply countermeasures to protect the international financial system from the ongoing and substantial money laundering and terrorist financing (ML/FT) risks emanating from the jurisdiction : Iran
Jurisdictions with strategic AML/CFT deficiencies that have not committed to an action plan developed with the FATF to address key deficiencies as of October 2010. The FATF calls on its members to consider the risks arising from the deficiencies associated with each jurisdiction: Democratic People's Republic of Korea (DPRK).
3. All Authorised Persons (Indian Agents) are accordingly advised to take into account risks arising from the deficiencies in AML/CFT regime of these countries, while entering into business relationships and transactions with persons (including legal persons and other financial institutions) from or in these countries/ jurisdictions.
4. Authorised Persons (Indian Agents) may bring the contents of this circular to the notice of their constituents concerned.
5. Please advise your Principal Officer to acknowledge receipt of this circular letter.
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,
(Smt. Sujatha Elizabeth Prasad)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2010-11/469 · issued 06 Apr 2011. 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 Authorised Persons acting as Indian Agents under Money Transfer Service Scheme, Banks handling cross-border inward remittances, Compliance and AML teams of financial institutions), your first concrete step on “RBI flags AML/CFT risks from Iran and North Korea for MTSS agents” is: “Update internal AML/CFT policies to explicitly flag Iran and DPRK as high-risk jurisdictions per FATF guidance.” (RBI issued this 06 Apr 2011).
Circular: RBI/2010-11/469 -- RBI flags AML/CFT risks from Iran and North Korea for MTSS agents
Issued: 06 Apr 2011
Action required: Update internal AML/CFT policies to explicitly flag Iran and DPRK as high-risk jurisdictions per FATF guidance.
Action required: Conduct enhanced due diligence on all transactions and relationships involving persons or entities from these countries.
Action required: Ensure Principal Officer acknowledges receipt of this circular and disseminates it to relevant constituents.
Action required: Review existing MTSS agent networks and correspondent relationships for any exposure to these jurisdictions.
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.
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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=6333&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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