What changed
FATF updated its public statement on February 14, 2014, regarding jurisdictions with weak AML/CFT regimes. RBI has forwarded this update to all NBFCs (excluding residuary non-banking companies) for their reference and action.
What it means for you
NBFCs must factor in the latest FATF list when assessing customer risk and transaction monitoring. While legitimate business with these jurisdictions is not prohibited, lenders need to apply enhanced due diligence to avoid regulatory penalties.
What you must do
- Review the enclosed FATF statement and update your AML/CFT risk assessment frameworks accordingly.
- Ensure your compliance team is aware of the jurisdictions flagged in the February 2014 FATF update.
- Continue to allow legitimate trade transactions but apply enhanced monitoring for customers linked to these jurisdictions.
- Document your due diligence measures for any exposure to high-risk jurisdictions.
Who it affects
All Non-Banking Financial Companies (NBFCs) excluding Residuary Non-Banking Companies, Compliance and risk management teams of NBFCs, NBFC customers with cross-border transactions
Does this circular ban business with the listed jurisdictions?
No. The circular explicitly states that it does not preclude NBFCs from legitimate trade and business transactions with these countries and jurisdictions.
What should NBFCs do with the FATF statement?
NBFCs are advised to consider the information in the statement for their AML/CFT compliance, meaning they should update their risk assessments and monitoring procedures accordingly.