What changed
FATF updated its statement on June 24, 2011, urging members to apply counter‑measures against Iran and DPRK because of ongoing ML/FT risks, and highlighted eight jurisdictions with strategic AML/CFT deficiencies. RBI now advises banks to factor these risks into their business relationships and transactions.
What it means for you
Banks should enhance due diligence for transactions involving these countries to mitigate ML/FT risks. The advisory does not block legitimate trade with Iran, but banks are expected to consider the identified risks when entering business relationships.
What you must do
- Update your AML/CFT risk assessment to include Iran, DPRK, and the eight listed jurisdictions.
- Instruct relationship managers to apply enhanced due diligence for transactions with persons or entities from these countries.
- Ensure your Principal Officer acknowledges receipt of this circular to the concerned RBI Regional Office.
- Review and strengthen transaction monitoring systems for cross-border flows involving these jurisdictions.
Who it affects
State and Central Co-operative Banks, Principal Officers of banks, Compliance and AML teams, Trade finance departments
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.
Which countries are newly flagged for strategic AML/CFT deficiencies?
Bolivia, Cuba, Ethiopia, Kenya, Myanmar, Sri Lanka, Syria, and Turkey are identified as having strategic deficiencies that have not been sufficiently addressed.
What action must banks take immediately?
Banks must consider the AML/CFT risks from these jurisdictions in all business relationships and transactions, and the Principal Officer must acknowledge receipt to the RBI Regional Office.