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AML/CFT Risks: FATF Statement on High-Risk Jurisdictions

Current · Source: Reserve Bank of India · RBI/2011-12/397 · issued 15 Feb 2012 · ~1 min read
Quick answerRBI directs authorised persons to factor in FATF's October 2011 statement on AML/CFT deficiencies in certain jurisdictions when handling money changing activities. Legitimate transactions remain allowed, but enhanced due diligence is expected.
The rule, in the simplest words
How it plays out — a real example

A KYC & compliance officer in Indore receives a request from a customer to exchange rupees for dollars to send to a country on the FATF high-risk list. The officer remembers the RBI circular and asks for extra documents, like proof of the customer's income and the purpose of the transfer, before approving the transaction. This way, the officer follows the enhanced due diligence rule while still allowing the legitimate money change.

What changed

RBI issued this circular to update authorised persons on FATF's latest statement (October 28, 2011) regarding jurisdictions with weak AML/CFT regimes. It builds on earlier September 2011 circulars and requires consideration of the enclosed FATF statement in money changing operations.

What it means for you

Banks and money changers must incorporate FATF's updated risk intelligence into their AML/CFT screening for cross-border money changing. While no ban is imposed, failure to consider these risks could expose institutions to regulatory action under FEMA and PMLA. The circular also extends compliance obligations to agents and franchisees.

What you must do

Who it affects

All authorised persons (banks, money changers, etc.), Agents and franchisees of authorised persons, Principal Officers of authorised entities

❓ Common questions

Does this circular ban transactions with the listed jurisdictions?

No. The circular explicitly states it does not preclude legitimate transactions with those countries and jurisdictions.

Are agents and franchisees covered under this circular?

Yes. The guidelines apply mutatis mutandis to all agents and franchisees, and the franchiser is solely responsible for ensuring their compliance.

What legal authority backs this circular?

It is issued under sections 10(4) and 11(1) of FEMA, 1999, and under the PMLA, 2002 (as amended), along with related rules.

📜 Read the original circular — full text as issued by RBI
RBI/2011-12/397 A.P. (DIR Series) Circular No. 77 February 15, 2012 To, All Authorised Persons Madam/ Dear Sir, Anti-Money Laundering (AML) standards/Combating the Financing of Terrorism (CFT) Standards - Money changing activities Attention of the Authorised Persons is invited to the A.P.(DIR Series) Circular Nos.21 and 23 dated September 19, 2011 on the risks arising from the deficiencies in AML/CFT regime of certain jurisdictions. 2. The Financial Action Task Force (FATF) has issued a further Statement on October 28, 2011 on the subject ( copy enclosed ). 3. Authorised Persons are accordingly advised to consider the information contained in the enclosed statement. 4. This, however, does not preclude Authorised Persons from legitimate transactions with these countries and jurisdictions. 5. These guidelines are also applicable mutatis mutandis to all agents/ franchisees of Authorised Persons and it will be the sole responsibility of the franchisers to ensure that their agents / franchisees also adhere to these guidelines. 6. Authorised Persons may bring the contents of this circular to the notice of their constituents concerned. 7. Please advise your Principal Officer to acknowledge receipt of this circular letter. 8. The directions contained in this Circular have been issued under sections 10(4) and 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 and are without prejudice to permission /approvals, if any, required under any other law. Yours faithfully, (Meena Hemchandra) Chief General Manager-in-Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2011-12/397 · issued 15 Feb 2012. 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 (banks, money changers, etc.), Agents and franchisees of authorised persons, Principal Officers of authorised entities), your first concrete step on “AML/CFT Risks: FATF Statement on High-Risk Jurisdictions” is: “Review the enclosed FATF statement and update your AML/CFT risk assessment for money changing activities.” (RBI issued this 15 Feb 2012).

  1. Circular: RBI/2011-12/397 -- AML/CFT Risks: FATF Statement on High-Risk Jurisdictions
  2. Issued: 15 Feb 2012
  3. Action required: Review the enclosed FATF statement and update your AML/CFT risk assessment for money changing activities.
  4. Action required: Ensure your Principal Officer acknowledges receipt of this circular.
  5. Action required: Communicate the updated guidelines to all agents and franchisees, and verify their adherence.
  6. Action required: Continue to allow legitimate transactions but apply enhanced due diligence for transactions involving identified high-risk 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.

💬 Banker Discussion

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Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=7006&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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