Current · Source: Reserve Bank of India · RBI/2010-11/503 · issued 02 May 2011 · ~2 min read
Quick answerRBI directs all AD Category I Primary Urban Co-operative Banks to factor in AML/CFT risks from Iran and DPRK when dealing with persons or entities from those jurisdictions, following FATF's February 2011 call for counter-measures.
The rule, in the simplest words
Banks must check for money‑laundering risks (AML/CFT) when dealing with people or companies from Iran or North Korea (DPRK).
Add extra checks before starting any new business or transaction with those countries.
The bank’s compliance officer must confirm receipt of this notice and keep the RBI office updated.
Staff need training to spot and flag any Iran or DPRK related activity.
Keep an eye on new FATF (global watchdog) statements and adjust rules as needed.
How it plays out — a real example
A gold‑loan officer in Indore sees a customer wanting to transfer money to an Iranian company. She uses the new extra checks, flags the transaction for review, and explains to the customer why the bank is taking extra steps, making the process smooth and reassuring.
What changed
RBI issued this circular on May 2, 2011, updating earlier guidance from March 17, 2011. It incorporates FATF's February 25, 2011 statement urging members to apply counter-measures against Iran and DPRK due to ongoing money laundering and terrorist financing risks.
What it means for you
Urban Co-operative Banks must now explicitly assess and mitigate AML/CFT risks linked to Iran and DPRK before entering any business relationship or transaction. This adds a layer of due diligence for cross-border dealings with these jurisdictions, potentially increasing compliance costs and scrutiny for affected accounts.
What you must do
Review and update your bank's AML/CFT policies to specifically address risks from Iran and DPRK.
Train compliance staff to identify and flag transactions or relationships involving persons or entities from these countries.
Ensure the Compliance Officer/Principal Officer acknowledges receipt of this circular to the respective RBI Regional Office.
Monitor FATF updates regularly to stay aligned with evolving counter-measures.
Who it affects
All AD Category I Primary (Urban) Co-operative Banks, Compliance Officers and Principal Officers of UCBs, Customers or counterparties with links to Iran or DPRK
❓ Common questions
What triggered this circular from RBI?
The circular follows FATF's February 25, 2011 statement calling for counter-measures against Iran and DPRK due to deficiencies in their AML/CFT regimes, which pose ongoing money laundering and terrorist financing risks.
Do these requirements apply to all transactions or only new ones?
The circular advises banks to consider these risks while entering into business relationships and transactions, implying both new and existing relationships should be reviewed for exposure to Iran or DPRK.
What should a UCB do if it already has customers from Iran or DPRK?
Banks should reassess those relationships for AML/CFT risks and apply enhanced due diligence or counter-measures as appropriate, in line with FATF guidance and RBI's instructions.
📜 Read the original circular — full text as issued by RBI
RBI/2010-11/503
UBD.CO.BPD (PCB) Cir.No. 9/14.01.062/2010-11
May 02, 2011
The Chief Executive Officer of
All AD Category I Primary (Urban) Co-operative Banks
Dear Sir,
Anti-Money Laundering (AML)/Combating of Financing of Terrorism (CFT) – Standards – Primary (Urban) Co-operative Banks
Please refer to our circular UBD. CO.BPD (PCB).Cir.No.6/14.01.062/2010-11 dated March 17, 2011 on risks arising from the deficiencies in AML/CFT regime of Iran and Democratic People’s Republic of Korea (DPRK).
2. Financial Action Task Force (FATF) has issued a further Statement on February 25, 2011 on the subject ( copy enclosed ) calling its members and other jurisdictions to apply counter-measures to protect the international financial system from the ongoing and substantial money laundering and terrorist financing risks emanating from Iran and DPRK.
3. Urban Co-operative Banks 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. The Compliance Officer/Principal Officer of the bank should acknowledge receipt of this circular to our Regional Office concerned .
Yours faithfully,
(M. Nanda Kumar)
General Manager
Encl: As above
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2010-11/503 · issued 02 May 2011. The plain-English explanation above is BankPulse’s own independent summary.
Monitor FATF updates regularly to stay aligned with evolving counter-measures.
📜 Compliance
Review and update your bank's AML/CFT policies to specifically address risks from Iran and DPRK.
Train compliance staff to identify and flag transactions or relationships involving persons or entities from these countries.
Ensure the Compliance Officer/Principal Officer acknowledges receipt of this circular to the respective RBI Regional Office.
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 AD Category I Primary (Urban) Co-operative Banks, Compliance Officers and Principal Officers of UCBs, Customers or counterparties with links to Iran or DPRK), your first concrete step on “UCBs: Enhanced AML/CFT Checks for Iran and DPRK” is: “Review and update your bank's AML/CFT policies to specifically address risks from Iran and DPRK.” (RBI issued this 02 May 2011).
Circular: RBI/2010-11/503 -- UCBs: Enhanced AML/CFT Checks for Iran and DPRK
Issued: 02 May 2011
Action required: Review and update your bank's AML/CFT policies to specifically address risks from Iran and DPRK.
Action required: Train compliance staff to identify and flag transactions or relationships involving persons or entities from these countries.
Action required: Ensure the Compliance Officer/Principal Officer acknowledges receipt of this circular to the respective RBI Regional Office.
Action required: Monitor FATF updates regularly to stay aligned with evolving counter-measures.
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=6379&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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