Current · Source: Reserve Bank of India · RBI/2010-11/513 · issued 04 May 2011 · ~1 min read
Quick answerRBI directs all NBFCs and RNBCs to factor in AML/CFT risks from Iran and North Korea when dealing with entities from those jurisdictions, following FATF's February 2011 call for countermeasures.
The rule, in the simplest words
Treat business relationships and transactions with Iran and North Korea as high-risk.
Apply enhanced due diligence on customers, legal entities, and financial institutions from or linked to these countries.
Monitor existing accounts and transactions for any exposure to Iran or North Korea and apply appropriate countermeasures.
Update AML/CFT policies to flag Iran and DPRK as high-risk jurisdictions.
How it plays out — a real example
As a KYC & compliance officer in Indore, Rohan must carefully review the loan application of a customer who wants to borrow against a gold ornament. If the customer is from Iran, Rohan must treat the loan application as high-risk and conduct enhanced due diligence to ensure the customer is not involved in any money laundering or terrorist financing activities. Rohan must also monitor the loan account closely and apply appropriate countermeasures to protect the financial system.
What changed
RBI issued a circular on May 4, 2011, updating earlier guidance from January 2011. It now specifically requires NBFCs to apply countermeasures against Iran and DPRK due to ongoing ML/FT risks flagged by FATF.
What it means for you
NBFCs must treat business relationships and transactions involving Iran and North Korea as high-risk. This means enhanced due diligence, stricter monitoring, and potentially refusing transactions to protect the financial system.
What you must do
Update your AML/CFT policies to explicitly flag Iran and DPRK as high-risk jurisdictions.
Conduct enhanced due diligence on all customers, legal entities, and financial institutions from or linked to these countries.
Monitor existing accounts and transactions for any exposure to Iran or DPRK and apply appropriate countermeasures.
Train compliance and front-line staff on the updated FATF guidance and RBI's expectations.
Who it affects
All Non-Banking Financial Companies (NBFCs), Residuary Non-Banking Companies (RNBCs), Compliance and AML teams at NBFCs
❓ Common questions
Which countries are specifically mentioned for countermeasures?
Iran and the Democratic People's Republic of Korea (DPRK) are the two countries for which FATF called for countermeasures due to ongoing money laundering and terrorist financing risks.
Does this circular apply to banks as well?
No, this circular is addressed only to NBFCs and RNBCs. Banks would have received separate instructions from RBI on similar AML/CFT measures.
What should we do if we already have business with entities from Iran or DPRK?
You must immediately review those relationships, apply enhanced due diligence, and consider whether to terminate or restrict transactions to comply with the countermeasures advised by FATF and RBI.
📜 Read the original circular — full text as issued by RBI
RBI/2010-11/513
DNBS(PD).CC. No 218/03.10.42/2010-11
May 04, 2011
All Non Banking Financial Companies /
Residuary Non Banking Companies
Dear Sir,
Anti- Money Laundering (AML) / Combating of Financing of Terrorism (CFT) Standards
Please refer to Company Circular No 209 dated January 28, 2011 on Anti- Money Laundering (AML) Standards / Combating of Financing of Terrorism (CFT) giving details about risk arising from the deficiencies in AML / CFT regime of Iran, Angola, Democratic People's Republic of Korea (DPRK), Ecuador, Ethiopia, Pakistan, Turkmenistan and Sao Tome and Principe.
2. Financial Action Task Force (FATF) has issued a further statement dated February 25, 2011 on the subject ( copy enclosed ), calling 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 Iran and Democratic People's Republic of Korea (DPRK).
3. All NBFCs (including RNBCs) 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 entities and other financial institutions) from or in these countries/ jurisdictions.
Yours faithfully,
(Uma Subramaniam)
Chief General Manager-in-Charge
Encl:as above
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2010-11/513 · issued 04 May 2011. The plain-English explanation above is BankPulse’s own independent summary.
Monitor existing accounts and transactions for any exposure to Iran or DPRK and apply appropriate countermeasures.
📜 Compliance
Update your AML/CFT policies to explicitly flag Iran and DPRK as high-risk jurisdictions.
Conduct enhanced due diligence on all customers, legal entities, and financial institutions from or linked to these countries.
Train compliance and front-line staff on the updated FATF guidance and RBI's expectations.
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 AML teams at NBFCs), your first concrete step on “NBFCs: Enhanced AML/CFT Checks for Iran, DPRK” is: “Update your AML/CFT policies to explicitly flag Iran and DPRK as high-risk jurisdictions.” (RBI issued this 04 May 2011).
Circular: RBI/2010-11/513 -- NBFCs: Enhanced AML/CFT Checks for Iran, DPRK
Issued: 04 May 2011
Action required: Update your AML/CFT policies to explicitly flag Iran and DPRK as high-risk jurisdictions.
Action required: Conduct enhanced due diligence on all customers, legal entities, and financial institutions from or linked to these countries.
Action required: Monitor existing accounts and transactions for any exposure to Iran or DPRK and apply appropriate countermeasures.
Action required: Train compliance and front-line staff on the updated FATF guidance and RBI's expectations.
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=6389&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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