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RBI Tightens AML/CFT Checks on Iran, North Korea Remittances

Current · Source: Reserve Bank of India · RBI/2010-11/535 · issued 20 May 2011 · ~1 min read
Quick answerRBI directs Indian agents under MTSS to apply FATF counter-measures against Iran and DPRK due to ongoing ML/FT risks. Agents must review the enclosed FATF statement and ensure compliance with PMLA and FEMA provisions.
The rule, in the simplest words
How it plays out — a real example

A KYC & compliance officer in Mumbai named Priya handles money transfers for a customer who wants to receive ₹50,000 from a relative in Iran. She remembers the RBI's new rule and checks the FATF statement, so she asks extra questions about the source of the money and reports it to her compliance team before approving the transfer.

What changed

RBI issued a circular on May 20, 2011, referencing a February 25, 2011 FATF statement, requiring Indian agents to apply counter-measures for cross-border inward remittances from Iran and DPRK. This follows an earlier April 6, 2011 circular on AML/CFT deficiencies in these jurisdictions.

What it means for you

Indian agents handling money transfers must now treat remittances from Iran and DPRK with heightened scrutiny, implementing FATF-recommended counter-measures. Non-compliance risks penal action under FEMA and PMLA, increasing operational and legal exposure for banks and authorized persons.

What you must do

Who it affects

All Authorised Persons acting as Indian Agents under Money Transfer Service Scheme, Banks and financial institutions handling cross-border inward remittances, Compliance and AML/CFT teams in Indian banks

❓ Common questions

What specific counter-measures does the FATF statement require?

The circular does not detail the counter-measures; it advises agents to consider the information in the enclosed FATF statement. Agents should refer to the FATF statement for specific actions.

Does this circular apply to all remittances or only those from Iran and DPRK?

It specifically addresses risks from Iran and DPRK, as highlighted by FATF. Agents must apply counter-measures to protect the financial system from ML/FT risks emanating from these two countries.

What are the penalties for non-compliance?

Non-compliance attracts penal provisions under FEMA 1999, PMLA 2002, and related rules, as amended. Specific penalties are not listed in this circular.

📜 Read the original circular — full text as issued by RBI
RBI/2010-11/535 A.P. (DIR Series) Circular No. 64 May 20, 2011 To, All Authorised Persons, who are Indian Agents under Money Transfer Service Scheme. Madam/ Dear Sir, Anti-Money Laundering (AML) standards/Combating the Financing of Terrorism (CFT) Standards - Cross Border Inward Remittance under Money Transfer Service Scheme Please refer to our A.P. (DIR Series) Circular No.50 {A.P. (FL/RL Series) Circular No.12} 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 of Korea (DPRK). 3. All Authorised Persons (Indian Agents) are accordingly advised to consider the information contained in the enclosed Statement. 4. Authorised Persons (Indian Agents) 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/2010-11/535 · issued 20 May 2011. The plain-English explanation above is BankPulse’s own independent summary.
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Worked example & action-note template

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 and financial institutions handling cross-border inward remittances, Compliance and AML/CFT teams in Indian banks), your first concrete step on “RBI Tightens AML/CFT Checks on Iran, North Korea Remittances” is: “Review the enclosed FATF statement and update AML/CFT policies for Iran and DPRK transactions.” (RBI issued this 20 May 2011).

  1. Circular: RBI/2010-11/535 -- RBI Tightens AML/CFT Checks on Iran, North Korea Remittances
  2. Issued: 20 May 2011
  3. Action required: Review the enclosed FATF statement and update AML/CFT policies for Iran and DPRK transactions.
  4. Action required: Ensure Principal Officer acknowledges receipt of this circular.
  5. Action required: Communicate these requirements to all constituents and customers involved in cross-border remittances.
  6. Action required: Strengthen monitoring and reporting mechanisms for inward remittances from these jurisdictions.
  7. Owner: ____________ Target date: ____________
  8. Board/committee approval needed? Y / N
  9. 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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Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=6422&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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