What changed
RBI issued a circular on August 23, 2012, referencing FATF's June 22, 2012 statement on AML/CFT risks. It advises authorised persons (Indian agents) to consider FATF's updated information when handling cross-border inward remittances under MTSS. The guidelines extend to all sub-agents, with agents bearing sole responsibility for compliance.
What it means for you
Indian banks acting as MTSS agents must update their AML/CFT screening processes to reflect FATF's latest jurisdictional risks. This does not ban legitimate transactions but requires enhanced due diligence. Banks must ensure their sub-agents also follow these guidelines, increasing operational oversight and compliance burden.
What you must do
- Review FATF's June 22, 2012 statement and incorporate its risk information into your AML/CFT checks for cross-border inward remittances.
- Ensure all sub-agents under MTSS are informed and comply with these guidelines, with documented evidence of adherence.
- Advise your Principal Officer to acknowledge receipt of this circular to RBI.
- Communicate these requirements to all relevant constituents handling MTSS transactions.
Who it affects
Authorised Persons (Indian agents) under Money Transfer Service Scheme, Sub-agents of Indian agents under MTSS, Banks and financial institutions handling cross-border inward remittances
Does this circular ban transactions with the jurisdictions flagged by FATF?
No, it does not preclude legitimate transactions. It only requires authorised persons to consider FATF's risk information and apply enhanced due diligence where necessary.
Who is responsible for sub-agent compliance under these guidelines?
The authorised person (Indian agent) has sole responsibility to ensure their sub-agents adhere to these AML/CFT guidelines.
What legal authority backs this circular?
It is issued under Section 10(4) and Section 11(1) of FEMA, 1999, and under PMLA, 2002, as amended, along with related rules.