Told by US to bend on Iran curbs, Govt orders RBI & Sebi to crawl
8 July 2013 10:50 PM GMT
To check flow of Iran money into the Indian banking system and capital markets, financial regulators RBI and Sebi will soon issue fresh warnings asking entities under their respective jurisdictions to remain vigilant about the entities and funds with Iranian links.
The warnings, which are expected to be issued in the next few days, would follow directions issued by a global inter-government watchdog against money laundering and terror financing activities, the Financial Action Task Force (FATF), on Iran late last month.
Iran continues to face stiff economic sanctions by the US and many European countries due to the alleged links between its nuclear programme and the suspected terror activities.
India and a few other countries have been exempted from certain sanctions such as oil imports. India being a member of FATF, which recently lauded its attempts to check money laundering and terror financing activities in the country, takes the global warnings issued by the Paris-based global watchdog very seriously and the government has forwarded its Iran advisory to RBI and Sebi for further action, a senior official said.
RBI and Sebi regulate a major part of the country's financial sector activities and these businesses are globally seen as prone to the risks of money laundering and terror funding.
FATF is the global standard setting body for anti-money laundering and combating the financing of terrorism (AML/CFT) and it has identified Iran as a jurisdiction with 'strategic deficiencies' that pose a risk to the international financial system.As per FATF's latest warning issued late last month, India and other member countries need to 'apply counter-measures to protect the international financial system from the on-going and substantial money laundering and terrorist financing (ML/TF) risks emanating from' Iran and North Korea.
'The FATF remains particularly and exceptionally concerned about Iran's failure to address the risk of terrorist financing and the serious threat this poses to the integrity of the international financial system, despite Iran's previous engagement with the FATF and recent submission of information.
'The FATF reaffirms its call on members and urges all jurisdictions to advise their financial institutions to give special attention to business relationships and transactions with Iran, including Iranian companies and financial institutions,' FATF has told its member countries including India.
FATF also asked these countries to 'protect against correspondent relationships being used to bypass or evade counter-measures and risk mitigation practices and to take into account ML/FT risks when considering requests by Iranian financial institutions to open branches and subsidiaries in their jurisdiction.
'Due to the continuing terrorist financing threat emanating from Iran, jurisdictions should consider the steps already taken and possible additional safeguards or strengthen existing ones,' it added.
At the same time, FATF has also asked Iran to 'immediately and meaningfully address its AML/CFT deficiencies, in particular by criminalising terrorist financing and effectively implementing suspicious transaction reporting (STR) requirements.
'If Iran fails to take concrete steps to continue to improve its CFT regime, the FATF will consider calling on its members and urging all jurisdictions to strengthen counter-measures in October 2013,' the global watchdog said.
Similar warnings have been issued with regard to North Korea as well.In a report on India, FATF lauded the efforts made by regulators such as RBI, Sebi and IRDA, as also the Finance Ministry, to ring-fence various financial activities from the money laundering and terror funding risks.
The warnings, which are expected to be issued in the next few days, would follow directions issued by a global inter-government watchdog against money laundering and terror financing activities, the Financial Action Task Force (FATF), on Iran late last month.
Iran continues to face stiff economic sanctions by the US and many European countries due to the alleged links between its nuclear programme and the suspected terror activities.
India and a few other countries have been exempted from certain sanctions such as oil imports. India being a member of FATF, which recently lauded its attempts to check money laundering and terror financing activities in the country, takes the global warnings issued by the Paris-based global watchdog very seriously and the government has forwarded its Iran advisory to RBI and Sebi for further action, a senior official said.
RBI and Sebi regulate a major part of the country's financial sector activities and these businesses are globally seen as prone to the risks of money laundering and terror funding.
FATF is the global standard setting body for anti-money laundering and combating the financing of terrorism (AML/CFT) and it has identified Iran as a jurisdiction with 'strategic deficiencies' that pose a risk to the international financial system.As per FATF's latest warning issued late last month, India and other member countries need to 'apply counter-measures to protect the international financial system from the on-going and substantial money laundering and terrorist financing (ML/TF) risks emanating from' Iran and North Korea.
'The FATF remains particularly and exceptionally concerned about Iran's failure to address the risk of terrorist financing and the serious threat this poses to the integrity of the international financial system, despite Iran's previous engagement with the FATF and recent submission of information.
'The FATF reaffirms its call on members and urges all jurisdictions to advise their financial institutions to give special attention to business relationships and transactions with Iran, including Iranian companies and financial institutions,' FATF has told its member countries including India.
FATF also asked these countries to 'protect against correspondent relationships being used to bypass or evade counter-measures and risk mitigation practices and to take into account ML/FT risks when considering requests by Iranian financial institutions to open branches and subsidiaries in their jurisdiction.
'Due to the continuing terrorist financing threat emanating from Iran, jurisdictions should consider the steps already taken and possible additional safeguards or strengthen existing ones,' it added.
At the same time, FATF has also asked Iran to 'immediately and meaningfully address its AML/CFT deficiencies, in particular by criminalising terrorist financing and effectively implementing suspicious transaction reporting (STR) requirements.
'If Iran fails to take concrete steps to continue to improve its CFT regime, the FATF will consider calling on its members and urging all jurisdictions to strengthen counter-measures in October 2013,' the global watchdog said.
Similar warnings have been issued with regard to North Korea as well.In a report on India, FATF lauded the efforts made by regulators such as RBI, Sebi and IRDA, as also the Finance Ministry, to ring-fence various financial activities from the money laundering and terror funding risks.
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