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RBI Alert: FATF Statement on AML/CFT Risks – Money Changing Activities

Current · Source: Reserve Bank of India · RBI/2011-12/507 · issued 17 Apr 2012 · ~1 min read
Quick answerRBI directs authorised persons to consider FATF's February 16, 2012 statement on AML/CFT deficiencies in certain jurisdictions, while not prohibiting legitimate transactions. Agents and franchisees must also comply.
The rule, in the simplest words
How it plays out — a real example

When a customer from a flagged jurisdiction comes to take a gold loan, the KYC & compliance officer in Indore must consider FATF's statement on AML/CFT deficiencies and assess the risk before proceeding with the transaction. The officer must also communicate these guidelines to the customer and ensure that the customer understands the enhanced due diligence required.

What changed

RBI issued this circular to update authorised persons on FATF's latest statement regarding AML/CFT risks from certain jurisdictions. It follows a prior circular from February 15, 2012, and requires consideration of the enclosed FATF statement.

What it means for you

Banks and money changers must factor in FATF's updated risk assessment when dealing with transactions involving flagged jurisdictions. While legitimate business is not barred, enhanced due diligence may be needed. The responsibility extends to all agents and franchisees, placing compliance onus on franchisers.

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 mentioned jurisdictions?

No, it explicitly states that it does not preclude legitimate transactions with those countries and jurisdictions.

Who is responsible for ensuring agents and franchisees comply?

The franchiser (authorised person) bears sole responsibility for ensuring their agents and franchisees adhere to these AML/CFT guidelines.

📜 Read the original circular — full text as issued by RBI
RBI/2011-12/507 A. P. (DIR Series) Circular No. 107 April 17, 2012 To, All Authorised Persons Madam/ Dear Sir, Anti-Money Laundering (AML) / Combating the Financing of Terrorism (CFT) Standards - Money changing activities Please refer to our A.P. (DIR Series) Circular No. 77 dated February 15, 2012 on risks arising from the deficiencies in AML/CFT regime of certain jurisdiction. 2. Financial Action Task Force (FATF) has issued a further Statement on February 16, 2012 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 Section 10(4) and Section 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, (Rudra Narayan Kar) Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2011-12/507 · issued 17 Apr 2012. The plain-English explanation above is BankPulse’s own independent summary.
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Who does what — compliance checklist
⚙️ Operations
  • Review the enclosed FATF statement dated February 16, 2012, and assess its implications for your money changing operations.
📜 Compliance
  • Ensure your AML/CFT policies account for risks from jurisdictions highlighted by FATF.
  • Communicate these guidelines to all agents and franchisees, and verify their adherence.
  • Have your Principal Officer acknowledge receipt of this circular to RBI.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template

Example: if you are an Operations 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 “RBI Alert: FATF Statement on AML/CFT Risks – Money Changing Activities” is: “Review the enclosed FATF statement dated February 16, 2012, and assess its implications for your money changing operations.” (RBI issued this 17 Apr 2012).

  1. Circular: RBI/2011-12/507 -- RBI Alert: FATF Statement on AML/CFT Risks – Money Changing Activities
  2. Issued: 17 Apr 2012
  3. Action required: Review the enclosed FATF statement dated February 16, 2012, and assess its implications for your money changing operations.
  4. Action required: Ensure your AML/CFT policies account for risks from jurisdictions highlighted by FATF.
  5. Action required: Communicate these guidelines to all agents and franchisees, and verify their adherence.
  6. Action required: Have your Principal Officer acknowledge receipt of this circular to RBI.
  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=7141&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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