What changed
FATF updated its public statement and compliance document on February 14, 2014, highlighting jurisdictions with AML/CFT regime deficiencies. RBI now requires banks to factor this updated information into 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. While legitimate business is not prohibited, enhanced due diligence may be needed. Non-compliance could expose banks to regulatory and reputational risks.
What you must do
- Review FATF's February 2014 statement and compliance document for updated high-risk jurisdictions.
- Update your AML/CFT risk assessment and transaction monitoring systems accordingly.
- Ensure your Principal Officer acknowledges receipt of this circular to RBI.
- Advise relationship managers to apply enhanced scrutiny for transactions with flagged jurisdictions without disrupting legitimate trade.
Who it affects
All scheduled commercial banks (excluding RRBs), Local Area Banks, All India Financial Institutions, Principal Officers responsible for AML/CFT compliance
Does this circular ban transactions with the flagged jurisdictions?
No. The circular explicitly states it does not preclude legitimate trade and business transactions with those countries and jurisdictions.
What should our Principal Officer do after receiving this circular?
The Principal Officer must acknowledge receipt of this circular letter to RBI, as advised in paragraph 5 of the circular.