What changed
RBI issued a circular on April 18, 2013, referencing FATF's February 22, 2013 update on high-risk and non-cooperative jurisdictions. NBFCs must now consider this updated FATF statement in their AML/CFT processes.
What it means for you
NBFCs must incorporate the latest FATF guidance into their risk assessment frameworks for cross-border transactions. While legitimate business continues, lenders face increased scrutiny on transactions with flagged jurisdictions, requiring enhanced monitoring and reporting.
What you must do
- Review the enclosed FATF statement and update your AML/CFT policies accordingly.
- Ensure your compliance team assesses risks from transactions with listed jurisdictions.
- Maintain records of due diligence for transactions with high-risk countries.
- Do not halt legitimate trade but apply enhanced monitoring where needed.
Who it affects
All Non-Banking Financial Companies (excluding Residuary Non-Banking Companies), Compliance and risk management teams at NBFCs, NBFCs engaged in cross-border transactions
Does this circular ban transactions with the listed jurisdictions?
No, the circular explicitly states it does not preclude NBFCs from legitimate trade and business transactions with these countries.
What is the source of the updated guidance?
The Financial Action Task Force (FATF) issued an updated statement on February 22, 2013, which RBI has enclosed for NBFCs to consider.
Which NBFCs are covered by this circular?
All Non-Banking Financial Companies are covered, except Residuary Non-Banking Companies.