What changed
FATF updated its statement on June 24, 2011, calling for counter-measures against Iran and DPRK due to ongoing ML/FT risks. It also flagged eight jurisdictions with strategic AML/CFT deficiencies that haven't made sufficient progress. RBI now requires RRBs to account for these risks in business relationships and transactions.
What it means for you
RRBs must enhance due diligence for any transactions or relationships involving Iran, DPRK, or the eight listed jurisdictions. While legitimate trade with Iran is not prohibited, banks need to assess and mitigate the heightened AML/CFT risks. This aligns with global FATF standards to protect the financial system.
What you must do
- Update your AML/CFT risk assessment framework to include the specific risks from Iran, DPRK, and the eight listed jurisdictions.
- Instruct relationship managers and compliance teams to apply enhanced due diligence for any transactions or accounts linked to these countries.
- Ensure the Principal Officer acknowledges receipt of this circular to the concerned RBI Regional Office.
- Review and, if needed, revise internal policies to reflect FATF's updated counter-measures and deficiency list.
Who it affects
All Regional Rural Banks (RRBs), Principal Officers of RRBs, Compliance and AML/CFT teams at RRBs
Does this circular ban all transactions with Iran?
No. The circular explicitly states it does not preclude Indian banks from entering into legitimate trade and business transactions with Iran. However, RRBs must account for the elevated ML/FT risks.
Which jurisdictions are newly flagged for strategic AML/CFT deficiencies?
FATF identified eight jurisdictions: Bolivia, Cuba, Ethiopia, Kenya, Myanmar, Sri Lanka, Syria, and Turkey. RRBs must consider risks from these countries in business dealings.
What action is required from the Principal Officer?
The Principal Officer of each RRB must acknowledge receipt of this circular letter to the concerned RBI Regional Office.