RBI/2012-13/353

DNBS (PD).CC. No 319/03.10.42/2012-13

December 28, 2012

All Non-Banking Financial Companies/Residuary Non-Banking Companies

Dear Sir/Madam,

Please refer to DNBS (PD).CC.No.304/03.10.42/2011-12 dated September 17, 2012 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 19, 2012 on the subject (copy enclosed).

3. All NBFCs/RNBCs are accordingly advised to consider the information contained in the enclosed statement.

4. This, however, does not preclude NBFCs from legitimate trade and business transactions with these countries and jurisdictions.

Yours faithfully,

(Chandana Dasgupta)

Deputy General Manager

Encl: as above

Enhanced AML/CFT due diligence required for transactions with FATF identified high risk jurisdictions to mitigate cross border ML/TF risks. NBFCs/RNBCs are advised to consider the FATF public statement identifying jurisdictions with strategic AML/CFT deficiencies or subject to calls for counter measures and to apply enhanced scrutiny and proportionate risk mitigation in business relationships and transactions with those jurisdictions; this guidance does not preclude legitimate trade. The FATF highlights deficiencies including criminalisation of terrorist financing, suspicious transaction reporting, FIU functionality, frameworks to identify and freeze terrorist assets, supervisory regimes, customer due diligence, and international cooperation, and monitors progress under agreed action plans, reserving escalation where insufficient progress is made.