What changed
FATF released an updated public statement and compliance document on October 19, 2012, highlighting jurisdictions with AML/CFT deficiencies. RBI has forwarded this update to all scheduled commercial banks and financial institutions, advising them to consider the information in their risk assessments.
What it means for you
Banks must incorporate FATF's latest findings into their AML/CFT frameworks, particularly for transactions involving flagged jurisdictions. This does not prohibit legitimate business but requires enhanced scrutiny. Non-compliance could expose banks to regulatory action and reputational risk.
What you must do
- Review FATF's October 2012 statement and compliance document for updated high-risk jurisdictions.
- Update your AML/CFT risk assessment and customer due diligence procedures accordingly.
- Ensure your Principal Officer acknowledges receipt of this circular to RBI.
- Brief compliance and trade finance teams on the revised risk parameters.
Who it affects
All scheduled commercial banks (excluding RRBs), Local Area Banks, All India Financial Institutions
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, banks must apply enhanced due diligence based on FATF's findings.
What should our Principal Officer do?
The Principal Officer must acknowledge receipt of this circular letter to RBI, as stated in paragraph 5 of the notification.