RBI Tightens AML/CFT Norms for Iran and DPRK Transactions
Current · Source: Reserve Bank of India · RBI/2010-11/534 · issued 20 May 2011 · ~2 min read
Quick answerRBI directs all authorised persons to apply FATF counter-measures against Iran and DPRK due to ongoing ML/FT risks. Banks must update KYC/AML policies, screen transactions, and report suspicious activity involving these jurisdictions immediately.
The rule, in the simplest words
Banks must treat any money coming from or going to Iran and North Korea (DPRK) as very risky and check it extra carefully.
If you see a transaction linked to Iran or North Korea, you must watch it closely and tell the special police (FIU-IND) if it looks suspicious.
Banks have to update their rules to follow the FATF (a global group that fights dirty money) orders for Iran and North Korea.
The person in charge of following these rules (Principal Officer) must say they got this circular and keep a record of it.
How it plays out — a real example
A KYC & compliance officer in Indore receives a request from a customer who wants to send a large payment to a company in Iran. Remembering the RBI rule, the officer flags the transaction as high-risk, checks the customer's background more deeply, and reports it to the compliance team for extra monitoring, just as the circular requires.
What changed
RBI issued this circular on May 20, 2011, referencing FATF's February 25, 2011 statement, which called for counter-measures to protect the international financial system from money laundering and terrorist financing risks from Iran and DPRK. It supersedes earlier guidance from April 6, 2011, and mandates that authorised persons consider the FATF statement and apply enhanced due diligence.
What it means for you
Banks and authorised persons must treat transactions linked to Iran and DPRK as high-risk and apply counter-measures such as enhanced customer due diligence, transaction monitoring, and reporting. Non-compliance with these AML/CFT guidelines attracts penal provisions under FEMA and PMLA. This raises compliance costs and operational scrutiny for lenders dealing with these jurisdictions.
What you must do
Review and update your AML/CFT policies to incorporate FATF counter-measures for Iran and DPRK.
Screen all existing and new customers for any links to Iran or DPRK and apply enhanced due diligence.
Train staff on identifying and reporting suspicious transactions involving these jurisdictions.
Ensure your Principal Officer acknowledges receipt of this circular and maintains records.
Report any suspicious transactions to the Financial Intelligence Unit (FIU-IND) promptly.
Who it affects
All authorised persons (banks, forex dealers, money changers), Compliance and AML/CFT teams, Principal Officers of authorised entities, Customers with exposure to Iran or DPRK
❓ Common questions
What specific counter-measures does FATF require for Iran and DPRK?
The circular does not list specific counter-measures but refers to FATF's February 25, 2011 statement. Banks should refer to that statement for details, which typically include enhanced due diligence, transaction restrictions, and reporting obligations.
Does this circular apply to all types of authorised persons?
Yes, it applies to all authorised persons under FEMA, including banks, forex dealers, and money changers, as per the definition in the circular.
What are the penalties for non-compliance?
Non-compliance attracts penal provisions under the Foreign Exchange Management Act, 1999, and the Prevention of Money Laundering Act, 2002, as amended.
📜 Read the original circular — full text as issued by RBI
RBI/2010-11/534
A.P. (DIR Series) Circular No. 63
May 20, 2011
All Authorised Persons
Madam/ Dear Sir,
Anti-Money Laundering (AML) standards/Combating the Financing of Terrorism (CFT) Standards - Money Changing Activities
Please refer to our A.P. (DIR Series) Circular No.49 {A.P. (FL/RL Series) Circular No.11} dated April 6, 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 (ML/FT) risks emanating from Iran and Democratic People’s Republic Korea (DPRK).
3. Authorised Persons are accordingly advised to consider the information contained in the enclosed Statement.
4. Authorised Persons may bring the contents of this circular to the notice of their constituents and customers 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,
(Meena Hemchandra)
Chief General Manager-in-Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2010-11/534 · issued 20 May 2011. The plain-English explanation above is BankPulse’s own independent summary.
Review and update your AML/CFT policies to incorporate FATF counter-measures for Iran and DPRK.
📜 Compliance
Screen all existing and new customers for any links to Iran or DPRK and apply enhanced due diligence.
Train staff on identifying and reporting suspicious transactions involving these jurisdictions.
Ensure your Principal Officer acknowledges receipt of this circular and maintains records.
Report any suspicious transactions to the Financial Intelligence Unit (FIU-IND) promptly.
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 Branch Manager at a bank this circular applies to (All authorised persons (banks, forex dealers, money changers), Compliance and AML/CFT teams, Principal Officers of authorised entities, Customers with exposure to Iran or DPRK), your first concrete step on “RBI Tightens AML/CFT Norms for Iran and DPRK Transactions” is: “Review and update your AML/CFT policies to incorporate FATF counter-measures for Iran and DPRK.” (RBI issued this 20 May 2011).
Circular: RBI/2010-11/534 -- RBI Tightens AML/CFT Norms for Iran and DPRK Transactions
Issued: 20 May 2011
Action required: Review and update your AML/CFT policies to incorporate FATF counter-measures for Iran and DPRK.
Action required: Screen all existing and new customers for any links to Iran or DPRK and apply enhanced due diligence.
Action required: Train staff on identifying and reporting suspicious transactions involving these jurisdictions.
Action required: Ensure your Principal Officer acknowledges receipt of this circular and maintains records.
Action required: Report any suspicious transactions to the Financial Intelligence Unit (FIU-IND) promptly.
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=6421&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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