What changed
RBI issued a circular referencing FATF's October 19, 2012 updated statement on AML/CFT compliance gaps in specific jurisdictions. This supersedes the earlier September 17, 2012 guidance. NBFCs/RNBCs are now required to consider the latest FATF information in their operations.
What it means for you
NBFCs must update their AML/CFT risk frameworks to reflect FATF's latest findings on high-risk jurisdictions. While legitimate business is not barred, enhanced due diligence may be needed for transactions involving these countries. Non-compliance could expose firms to regulatory scrutiny.
What you must do
- Access and review the enclosed FATF statement dated October 19, 2012 from the provided URLs.
- Update your AML/CFT policies to incorporate the updated list of jurisdictions with deficiencies.
- Ensure transaction monitoring systems flag dealings with identified high-risk jurisdictions.
- Document risk assessments and due diligence measures for any continued business with these countries.
Who it affects
All Non-Banking Financial Companies (NBFCs), Residuary Non-Banking Companies (RNBCs)
Does this circular prohibit all 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 FATF statement and apply appropriate risk mitigation.
Where can I find the FATF statement referenced in the circular?
The statement is enclosed with the circular and can also be accessed at the FATF website URLs provided in the RBI notification: http://www.fatf-gafi.org/media/fatf/documents/FATF%20Public%20Statement%2019%20October%202012.pdf and the related compliance page.
What should I do if my NBFC already has dealings with a jurisdiction on the updated list?
You should reassess the AML/CFT risks associated with that jurisdiction using the latest FATF information, enhance due diligence as needed, and document your compliance measures. Continue monitoring for any further updates.