FATF notice against N Korea, Iran: Sebi informs capital market stakeholders

Sebi on Thursday informed all capital market stakeholders about FATF (Financial Action Task Force) sanctions against Iran and North Korea, and also referred to global watchdog's observations about Pakistan being among the countries having strategic deficiencies.

The development comes following a global caution notice from the FATF, the global oversight and policy-framing body for rules to combat money laundering and terror funding risks to international financial market.

FATF periodically issues such public notices to various foreign governments, which subsequently forward the same to their respective financial regulators.

It has previously also issued such warnings for risks attached with Iran and North Korea, and the subsequent caution notices have been issued by Sebi and the Reserve Bank of India.

In the latest cautionary notice dated October 18, FATF has called on its members and other jurisdictions to apply "counter-measures to protect the international financial system from the ongoing and substantial money laundering and terrorist financing risks emanating from the jurisdiction of Democratic People's Republic of Korea".

Besides, FATF requested "to introduce enhanced relevant reporting mechanisms or systematic reporting of financial transactions; and require increased external audit requirements for financial groups with respect to any of their branches and subsidiaries located in Iran".

Also, the global oversight and policy-framing body suggested to conduct enhanced monitoring of business relationships and selecting patterns of transactions that need further examination.

It has identified countries such as Pakistan, Bahamas, Botswana, Cambodia, Ghana, Iceland, Mongolia, Panama, Syria, Trinidad and Tobago, Yemen and Zimbabwe "having strategic deficiencies which have developed an action plan with the FATF to deal with them".

However, Sri Lanka, Ethiopia and and Tunisia are no longer subject to such monitoring, it added.