The RBI has notified financial institutions of the designation of a terrorist organization under Section 35(1)(a) of the UAPA, 1967, and directed strict enforcement of asset-freezing and reporting obligations under the First Schedule of the Act.
RBI Circular on UAPA Designation of Terrorist Organisation
On September 24, 2026, the Reserve Bank of India issued a directive to all commercial banks, cooperative banks, non-banking financial companies (NBFCs), and financial institutions, notifying the designation of a terrorist organisation under clause (a) of sub-section (1) of Section 35 of the Unlawful Activities (Prevention) Act, 1967 (UAPA). The entity has been added to the First Schedule of the Act, triggering mandatory compliance under anti-money laundering (AML) and counter-terrorism financing (CTF) frameworks.
The circular, issued under reference DOR.AML.REC.233/14.06.001/2026-27, directs all regulated entities to immediately freeze assets, accounts, and economic resources linked to the designated organisation. Institutions are required to conduct immediate screening of their customer databases, report any matches to the Financial Intelligence Unit (FIU-IND), and ensure ongoing vigilance. The directive underscores the obligation of banks to comply with the UAPA as part of their systemic AML/CFT responsibilities.
This update strengthens enforcement mechanisms under India’s designated individual and entity regime. Legal teams must ensure their client due diligence (CDD) and enhanced due diligence (EDD) protocols are updated to reflect the latest UAPA designations. Non-compliance may attract regulatory penalties and reputational risk.
Citations
- Notification RBI/2026-2027/270DOR.AML.REC.233/14.06.001/2026-27