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RBI Updates AML/CFT Rules for Cross-Border Remittances Under MTSS

Current · Source: Reserve Bank of India · RBI/2012-13/175 · issued 23 Aug 2012 · ~1 min read
Quick answerRBI directs Indian agents under MTSS to factor in FATF's June 2012 statement on AML/CFT deficiencies in certain jurisdictions when processing cross-border inward remittances. Sub-agents must also comply, with agents fully responsible for adherence.
The rule, in the simplest words
How it plays out — a real example

Priya, a compliance officer at a bank in Mumbai that acts as an MTSS agent, receives a daily batch of inward remittances. She now checks each transaction against FATF's June 2012 statement, and when she spots a transfer from a listed jurisdiction, she asks the sender for extra documents to prove the money is from a legitimate source, ensuring her bank and its sub-agents stay compliant.

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

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

❓ Common questions

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.

📜 Read the original circular — full text as issued by RBI
RBI/2012-13/175 A. P. (DIR Series) Circular No. 18 August 23, 2012 To All Authorised Persons, who are Indian agents under Money Transfer Service Scheme Madam / Sir, Anti-Money Laundering (AML) / Combating the Financing of Terrorism (CFT) Standards - Cross Border Inward Remittance under Money Transfer Service Scheme (MTSS) Please refer to our A.P. (DIR Series) Circular No. 108 dated April 17, 2012 on risks arising from the deficiencies in AML/CFT regime of certain jurisdictions. 2. Financial Action Task Force (FATF) has issued a further Statement on June 22, 2012 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 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/2012-13/175 · issued 23 Aug 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 (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), your first concrete step on “RBI Updates AML/CFT Rules for Cross-Border Remittances Under MTSS” is: “Review FATF's June 22, 2012 statement and incorporate its risk information into your AML/CFT checks for cross-border inward remittances.” (RBI issued this 23 Aug 2012).

  1. Circular: RBI/2012-13/175 -- RBI Updates AML/CFT Rules for Cross-Border Remittances Under MTSS
  2. Issued: 23 Aug 2012
  3. Action required: Review FATF's June 22, 2012 statement and incorporate its risk information into your AML/CFT checks for cross-border inward remittances.
  4. Action required: Ensure all sub-agents under MTSS are informed and comply with these guidelines, with documented evidence of adherence.
  5. Action required: Advise your Principal Officer to acknowledge receipt of this circular to RBI.
  6. Action required: Communicate these requirements to all relevant constituents handling MTSS transactions.
  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=7522&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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