'Apply enhanced due diligence in financial dealings with Iran'

Entities should apply "enhanced due diligence" in dealings with Iran as certain concerns have been flagged about the jurisdiction by FATF, Reserve Bank of India today said citing the inter-governmental body.
In this regard, the central bank today put out a public statement that was issued by FATF in October last year as a press release.
"Jurisdiction of Iran is subject to the FATF call on its members to apply enhanced due diligence measures proportionate to the risks arising from the jurisdiction," the release said.
This has been issued days after RBI prohibited Indian entities from making direct investments in any entity located in 'non cooperative countries and territories', as identified by FATF.

As per the October statement, FATF has called on its members and other jurisdictions to apply counter-measures to protect the international financial system from the on-going and substantial money laundering and terrorist financing (ML/FT) risks emanating from the jurisdiction of Democratic People's Republic of Korea (DPRK).
Besides, FATF had identified Afghanistan, Bosnia and Herzegovina, Iraq, Lao PDR, Syria, Uganda, Vanuatu and Yemen as jurisdictions having strategic deficiencies while action plan has also been developed.

The Financial Action Task Force (FATF) comprises two regional organisations and 35 member jurisdictions, including India, US, UK, China and the European Commission.
The prohibition on investment is "in order to align" instructions under FEMA with the objectives of the FATF, the central bank had said in a release on January 25.

At present, there is no restriction on an Indian entity with regard to the countries where it can undertake Overseas Direct Investment.
"...On a review, it has been decided to prohibit an Indian party from making direct investment in an overseas entity located in the countries identified by the FATF as 'non co-operative countries and territories'...," the RBI had said.
Direct investment in an overseas entity (set up or acquired abroad directly as joint ventures/wholly-owned subsidiaries or indirectly as step down subsidiary) has been prohibited.