What changed
RBI issued a circular on September 17, 2012, referencing an earlier April 2012 circular on AML/CFT risks. It communicated FATF's updated June 22, 2012 statement on high-risk and non-cooperative jurisdictions, advising NBFCs/RNBCs to factor this information into their compliance processes.
What it means for you
NBFCs and RNBCs must stay alert to evolving global AML/CFT standards and adjust their risk assessments accordingly. The circular does not ban transactions with listed jurisdictions but expects enhanced due diligence. Lenders should integrate FATF updates into their internal controls to avoid regulatory gaps.
What you must do
- Review FATF's June 2012 statement on high-risk jurisdictions and update your AML/CFT policies accordingly.
- Ensure your compliance team monitors the FATF website for ongoing updates on non-cooperative jurisdictions.
- Continue legitimate business with listed countries but apply enhanced due diligence where warranted.
- Document your risk assessment process for dealing with these jurisdictions to demonstrate regulatory compliance.
Who it affects
All Non-Banking Financial Companies (NBFCs), Residuary Non-Banking Companies (RNBCs)
Does this circular ban transactions with the listed jurisdictions?
No, the circular explicitly states it does not preclude legitimate trade and business transactions with those countries. However, NBFCs must consider the AML/CFT risks highlighted by FATF.
Where can I find the FATF statement referenced in the circular?
The circular provides URLs to FATF's website: http://www.fatf-gafi.org/documents/repository/fatfpublicstatement-22june2012.html and a related page on improving global AML/CFT compliance.
What was the previous circular on this topic?
RBI had issued DNBS(PD).CC.No.270/03.10.42/2011-12 dated April 4, 2012, which also addressed risks from AML/CFT deficiencies in certain jurisdictions.