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RBI Tightens AML/CFT Checks on Cross-Border Remittances via MTSS

Current · Source: Reserve Bank of India · RBI/2011-12/398 · issued 15 Feb 2012 · ~1 min read
Quick answerRBI directs Indian Agents under MTSS to apply FATF's October 2011 statement on high-risk jurisdictions to cross-border inward remittances. Sub-agents must also comply, with Indian Agents fully responsible. Legitimate transactions remain allowed.
The rule, in the simplest words
How it plays out — a real example

As a KYC & compliance officer in Indore, Rohan must review FATF's updated risk assessments and update his AML/CFT policies for cross-border inward remittances. He ensures that his sub-agents comply with these guidelines and documents their adherence. Rohan continues to allow legitimate transactions but applies enhanced scrutiny where FATF flags risks, ensuring that his bank remains compliant with RBI regulations.

What changed

RBI issued A.P. (DIR Series) Circular No. 78 on February 15, 2012, requiring Indian Agents under MTSS to consider the FATF's October 28, 2011 statement on AML/CFT deficiencies in certain jurisdictions. This extends earlier September 2011 circulars and mandates that sub-agents also adhere to these guidelines, with Indian Agents bearing sole responsibility for compliance.

What it means for you

Banks and other authorised persons acting as Indian Agents must now integrate FATF's updated risk assessments into their AML/CFT screening for inward remittances. This increases due diligence obligations, especially for transactions involving flagged jurisdictions. Non-compliance by sub-agents will be attributed to the principal Indian Agent, raising operational and reputational risks.

What you must do

Who it affects

Indian Agents under Money Transfer Service Scheme (MTSS), Sub-agents of Indian Agents under MTSS, Banks and authorised persons handling cross-border inward remittances

❓ Common questions

Does this circular ban transactions with FATF-flagged jurisdictions?

No, it does not preclude legitimate transactions. It only requires Indian Agents to consider FATF's statement and apply appropriate AML/CFT measures.

Who is responsible for sub-agent compliance?

Indian Agents are solely responsible for ensuring their sub-agents adhere to these guidelines, as per paragraph 5 of the circular.

What legal basis does this circular have?

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

📜 Read the original circular — full text as issued by RBI
RBI/2011-12/398 A.P. (DIR Series) Circular No. 78 February 15, 2012 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 Attention of all the Authorised Persons, who are Indian Agents under Money Transfer Service Scheme (MTSS) is invited to A.P.(DIR Series) Circular Nos.22 and 24 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 (Indian Agents) are accordingly advised to consider the information contained in the enclosed statement. 4. This, however, does not preclude Authorised Persons (Indian Agents) from legitimate transactions with these countries and jurisdictions. 5. These guidelines would also be applicable mutatis mutandis to all Sub-agents of the Indian Agents under MTSS and it will be the sole responsibility of the APs (Indian Agents) to ensure that their Sub-agents also adhere to these guidelines. 6. Authorised Persons (Indian Agents) 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/2011-12/398 · 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 (Indian Agents under Money Transfer Service Scheme (MTSS), Sub-agents of Indian Agents under MTSS, Banks and authorised persons handling cross-border inward remittances), your first concrete step on “RBI Tightens AML/CFT Checks on Cross-Border Remittances via MTSS” is: “Review FATF's October 28, 2011 statement and update your AML/CFT policies for cross-border inward remittances under MTSS.” (RBI issued this 15 Feb 2012).

  1. Circular: RBI/2011-12/398 -- RBI Tightens AML/CFT Checks on Cross-Border Remittances via MTSS
  2. Issued: 15 Feb 2012
  3. Action required: Review FATF's October 28, 2011 statement and update your AML/CFT policies for cross-border inward remittances under MTSS.
  4. Action required: Ensure all sub-agents are informed and comply with these guidelines; document their adherence.
  5. Action required: Advise your Principal Officer to acknowledge receipt of this circular to RBI.
  6. Action required: Continue to allow legitimate transactions but apply enhanced scrutiny where FATF flags risks.
  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=7007&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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