FATF-flagged jurisdictions: NBFCs must update KYC/AML checks
Current · Source: Reserve Bank of India · RBI/2010-11/495 · issued 02 May 2011 · ~2 min read
Quick answerRBI directs all NBFCs and RNBCs to factor in FATF’s February 2011 statement on jurisdictions with strategic AML/CFT deficiencies when conducting customer due diligence and KYC reviews.
The rule, in the simplest words
All NBFCs (companies that give loans but are not banks) and RNBCs must look at the FATF (global money‑rules group) list of countries with big AML (stop illegal money) and CFT (stop money for terrorism) problems when they check customers.
When a customer or a transaction is linked to one of those countries, the company must do extra checks called enhanced due diligence (more careful looking).
The company should update its KYC (know who the customer is) policies to include these extra checks and keep a record of what was done.
Staff in compliance and operations need training on the new risk rules and must document the changes for future audits.
How it plays out — a real example
Rohit, a loan officer at an NBFC in Indore, receives an application from a client whose business is based in a country named in the FATF 2011 list. Remembering the RBI guidance, Rohit runs extra background checks, updates the client’s file with the enhanced due diligence notes, and informs his compliance team, ensuring the loan process follows the new rules.
What changed
FATF identified certain jurisdictions with strategic AML/CFT deficiencies and issued a statement on February 25, 2011, calling for action plan implementation. RBI now advises all NBFCs and RNBCs to consider the information in that FATF statement for their KYC/AML/CFT processes.
What it means for you
NBFCs and RNBCs must incorporate FATF’s updated list of high-risk jurisdictions into their risk assessment frameworks. This may require enhanced due diligence for customers or transactions linked to those jurisdictions. Lenders should review their existing KYC policies to ensure alignment with the latest FATF guidance.
What you must do
Obtain and review the enclosed FATF statement dated February 25, 2011, for the list of jurisdictions with strategic deficiencies.
Update your KYC/AML/CFT policies to reflect heightened scrutiny for customers or transactions from those jurisdictions.
Train compliance and operations teams on the revised risk parameters and enhanced due diligence requirements.
Document the steps taken to incorporate the FATF statement into your internal controls for audit readiness.
Who it affects
All Non-Banking Financial Companies (NBFCs), Residuary Non-Banking Companies (RNBCs), Compliance and KYC/AML teams at NBFCs/RNBCs
❓ Common questions
What is the FATF statement referenced in this circular?
The FATF issued a statement on February 25, 2011, identifying jurisdictions with strategic AML/CFT deficiencies and calling for action plan implementation. The circular advises NBFCs to consider this information.
Do I need to take any immediate action beyond reviewing the statement?
Yes, you should update your KYC/AML policies to incorporate enhanced due diligence for customers or transactions linked to the listed jurisdictions, and train your staff accordingly.
Is this circular still applicable today?
The circular is from 2011 and may have been superseded by later updates. However, the principle of following FATF guidance remains relevant. Check for the latest RBI master circular on KYC/AML for current requirements.
📜 Read the original circular — full text as issued by RBI
RBI/2010-11/495
DNBS(PD).CC. No.216 /03.10.42/2010-11
May 02, 2011
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 February 25, 2011 ( copy enclosed ) calling upon jurisdictions listed in the statement to complete the implementation of their action plan within the timeframe. The FATF, in the statement, 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.
Yours faithfully,
(Uma Subramaniam)
Chief General Manager-in-Charge
Encl: as above
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2010-11/495 · issued 02 May 2011. The plain-English explanation above is BankPulse’s own independent summary.
Train compliance and operations teams on the revised risk parameters and enhanced due diligence requirements.
📜 Compliance
Obtain and review the enclosed FATF statement dated February 25, 2011, for the list of jurisdictions with strategic deficiencies.
Update your KYC/AML/CFT policies to reflect heightened scrutiny for customers or transactions from those jurisdictions.
Document the steps taken to incorporate the FATF statement into your internal controls for audit readiness.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Compliance officer at a bank this circular applies to (All Non-Banking Financial Companies (NBFCs), Residuary Non-Banking Companies (RNBCs), Compliance and KYC/AML teams at NBFCs/RNBCs), your first concrete step on “FATF-flagged jurisdictions: NBFCs must update KYC/AML checks” is: “Obtain and review the enclosed FATF statement dated February 25, 2011, for the list of jurisdictions with strategic deficiencies.” (RBI issued this 02 May 2011).
Circular: RBI/2010-11/495 -- FATF-flagged jurisdictions: NBFCs must update KYC/AML checks
Issued: 02 May 2011
Action required: Obtain and review the enclosed FATF statement dated February 25, 2011, for the list of jurisdictions with strategic deficiencies.
Action required: Update your KYC/AML/CFT policies to reflect heightened scrutiny for customers or transactions from those jurisdictions.
Action required: Train compliance and operations teams on the revised risk parameters and enhanced due diligence requirements.
Action required: Document the steps taken to incorporate the FATF statement into your internal controls for audit readiness.
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
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
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=6367&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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