RBI Updates NBFCs on FATF AML/CFT Jurisdiction Risks
Current · Source: Reserve Bank of India · RBI/2013-14/426 · issued 01 Jan 2014 · ~1 min read
Quick answerRBI directs all NBFCs to review the updated FATF statement on AML/CFT compliance deficiencies in certain jurisdictions. This does not block legitimate trade but requires enhanced awareness of risks from listed countries.
The rule, in the simplest words
NBFCs (companies that lend money but are not banks) must check the FATF (a global group that fights money laundering) list of risky countries.
This rule does not stop NBFCs from doing normal business with those countries, but they must be extra careful.
NBFCs must update their risk checks for customers from listed countries to avoid breaking anti-money-laundering rules.
NBFCs must keep records of their review and any actions taken for audits (checks by regulators).
How it plays out — a real example
A KYC & compliance officer in Indore reviews the FATF list and sees Country X is flagged. She does not stop a regular customer from sending money to a relative there, but she asks for extra documents to confirm the reason for the transfer, and notes it in the file for the regulator's next visit.
What changed
RBI issued a circular on January 1, 2014, referencing FATF's October 18, 2013 update on high-risk and non-cooperative jurisdictions. It refers to the earlier July 23, 2013 guidance and provides a new FATF statement for NBFCs to consider.
What it means for you
NBFCs must stay alert to AML/CFT risks from jurisdictions flagged by FATF. While legitimate transactions are not prohibited, lenders need to factor these risks into their due diligence and compliance frameworks to avoid regulatory penalties.
What you must do
Review the enclosed FATF statement and update your AML/CFT risk assessment for relevant jurisdictions.
Ensure your compliance team monitors FATF updates regularly for changes in high-risk country lists.
Do not restrict legitimate trade transactions but apply enhanced due diligence where needed.
Document your review process and any actions taken for audit and regulatory inspection.
Who it affects
All Non-Banking Financial Companies (NBFCs) excluding Residuary Non-Banking Companies
❓ Common questions
Does this circular ban transactions with FATF-flagged jurisdictions?
No, the circular explicitly states it does not preclude legitimate trade and business transactions with those countries. However, NBFCs must consider the risks outlined in the FATF statement.
What should NBFCs do with the FATF statement?
NBFCs are advised to consider the information in the statement for their AML/CFT compliance. This includes updating risk assessments and due diligence processes for transactions involving listed jurisdictions.
📜 Read the original circular — full text as issued by RBI
RBI/2013-14/426
DNBS(PD).CC. No 364/03.10.42/2013-14
January 1, 2014
All Non Banking Financial Companies excluding
Residuary Non Banking Companies
Dear Sir/Madam,
Anti-Money Laundering (AML)/Combating of Financing of Terrorism (CFT) - Standards
Please refer to DNBS (PD).CC.No.352/03.10.42/2012-13 dated July 23, 2013 on risks arising from the deficiencies in AML/CFT regime of certain jurisdictions.
2. Financial Action Task Force (FATF) has updated its Statement on October 18, 2013 on the captioned subject and document ‘Improving Global AML/CFT Compliance: On-Going Process’ ( copy enclosed ). The statement /document can be accessed from the following URL also:
http://www.fatf-gafi.org/media/fatf/documents/statements/18-October-2013.pdf
and
http://www.fatf-gafi.org/topics/high-riskandnon-cooperativejurisdictions/documents/fatf-compliance-oct-2013.html
3. All NBFCs are accordingly advised to consider the information contained in the enclosed statement. This, however, does not preclude NBFCs from legitimate trade and business transactions with these countries and jurisdictions.
Yours faithfully,
(Sindhu Pancholy)
Deputy General Manager
Encl: as above
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-14/426 · issued 01 Jan 2014. The plain-English explanation above is BankPulse’s own independent summary.
Example: if you are a Compliance officer at a bank this circular applies to (All Non-Banking Financial Companies (NBFCs) excluding Residuary Non-Banking Companies), your first concrete step on “RBI Updates NBFCs on FATF AML/CFT Jurisdiction Risks” is: “Review the enclosed FATF statement and update your AML/CFT risk assessment for relevant jurisdictions.” (RBI issued this 01 Jan 2014).
Action required: Review the enclosed FATF statement and update your AML/CFT risk assessment for relevant jurisdictions.
Action required: Ensure your compliance team monitors FATF updates regularly for changes in high-risk country lists.
Action required: Do not restrict legitimate trade transactions but apply enhanced due diligence where needed.
Action required: Document your review process and any actions taken for audit and regulatory inspection.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
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.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=8664&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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