What changed
RBI issued a circular on February 23, 2012, referencing an earlier August 2011 circular on AML/CFT deficiencies. It now requires urban co-operative banks to consider FATF's updated October 28, 2011 statement on high-risk jurisdictions.
What it means for you
Urban co-operative banks must integrate FATF's latest findings into their AML/CFT frameworks, enhancing scrutiny of transactions with flagged jurisdictions. This does not ban legitimate business but demands stronger due diligence. Banks should ensure their compliance teams are aligned with global standards to avoid regulatory gaps.
What you must do
- Review FATF's October 28, 2011 statement and update your AML/CFT risk assessment for relevant jurisdictions.
- Ensure your Principal Officer acknowledges receipt of this circular to the respective RBI Regional Office.
- Communicate the updated guidelines to compliance and operations teams handling cross-border transactions.
- Do not restrict legitimate trade but enhance monitoring of transactions with flagged countries.
Who it affects
All AD Category I Primary (Urban) Co-operative Banks, Principal Officers of these banks, Compliance and AML/CFT teams
Does this circular ban transactions with the listed jurisdictions?
No, it explicitly states that legitimate trade and business transactions with these countries should not be precluded.
What is the key action required from banks?
Banks must consider the information in FATF's updated statement and incorporate it into their AML/CFT procedures.