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.