Can Indian Exporters Receive Payments from Sanctioned or High-Risk Countries?
- Author:
- Manoj Sharma
- Verified by:
- Editorial team
- Published:
- Last modified:
Short answer
Indian exporters can usually receive payments from sanctioned or high-risk countries if the buyer, the goods or services and the banks involved are not themselves sanctioned. Banks must refuse transactions with persons on UN-based designated lists. Payments linked to FATF high-risk countries get enhanced due diligence, which means more questions and documents.
| Applies to | Governed by | Deadline | Penalty | Last verified |
|---|---|---|---|---|
| Freelancers, service exporters and goods exporters in India who are paid by a client, or through a bank, located in a country under UN sanctions or named in FATF public statements | UAPA section 51A and WMD Act section 12A orders, applied through RBI (Commercial Banks – Know Your Customer) Directions, 2025; FEMA (Export and Import of Goods and Services) Regulations, 2026; Foreign Trade Policy 2023 paras 2.16 to 2.20 | No separate deadline for the exporter. Normal FEMA timelines apply: EDF for services within 30 days of the end of the invoice month and realisation within nine months of the invoice date | No penalty only for having a buyer in a high-risk country. Funds of designated persons can be frozen, and unrealised exports past one year from the due date restrict further exports to full advance or a letter of credit | 9 Oct 2026 |
What counts as a sanctioned or high-risk country for payments received in India?
A sanctioned or high-risk country, for payments received in India, is a country covered by a UN Security Council sanctions regime or named by the FATF as a high-risk jurisdiction. Indian banks act on UN-based lists notified by the Government and on FATF statements. Sanctions imposed by other countries also matter because foreign banks in the payment chain apply them.
- UN sanctions: The UN Security Council runs 15 active sanctions regimes, covering areas such as nuclear non-proliferation and counter-terrorism (UN Security Council sanctions information). Most are targeted at named persons, entities or goods rather than whole countries.
- Designated lists: Indian banks must check the UNSC ISIL (Da'esh) and Al-Qaida list, the Taliban list and the lists in the Schedules to the Prevention and Suppression of Terrorism Order, 2007, every day (KYC Directions, paragraph 56(2)). They also check the UNSCR 1718 list for North Korea daily (paragraph 58).
- FATF black list: As of 19 June 2026, the FATF calls for countermeasures on the Democratic People's Republic of Korea (DPRK) and Iran, and for enhanced due diligence on Myanmar (FATF call for action, June 2026).
- FATF grey list: The FATF also publishes a list of jurisdictions under increased monitoring after each plenary in February, June and October (FATF high-risk and monitored jurisdictions). Countries on that list are working with the FATF to fix deficiencies.
- Foreign sanctions: Other governments run their own programmes. The US Treasury, for example, lists programmes for Iran, North Korea, Cuba, Russia-related activities, Venezuela and others (OFAC sanctions programs). These are not Indian law, but banks subject to them apply them to payments they handle.
In short, the country label alone rarely decides whether you can be paid. What matters is who the payer is, what you sold, which banks carry the money and whether any of them is on a list. For the AML side of these checks, see AML checks on export receipts.
Which payments from sanctioned or high-risk countries face extra checks by Indian banks?
Any payment where the payer, its bank or the underlying trade is linked to a sanctioned or high-risk country faces extra checks by Indian banks. Banks set each customer's risk category using factors including geographical risk of customers and transactions (KYC Directions, paragraph 20(3)). The table shows how common cases are treated.
| Payment situation | Can it be received? | Why | Best for |
|---|---|---|---|
| Payer or bank appears on a UN-based designated list | No | Banks must not process cross-border transactions of designated persons and entities (paragraph 74(3)(ii)) | Understanding why some payments cannot be accepted at all |
| Client in a FATF countermeasures country (DPRK, Iran) | Only where the bank's policy and Indian rules allow, after enhanced due diligence | Banks must apply countermeasures when called on by a body India belongs to and the Central Government accepts it (paragraph 60) | Exporters approached by buyers in these two countries |
| Client in Myanmar or another FATF-listed jurisdiction | Yes, with enhanced due diligence | FATF statements do not stop legitimate trade, but banks examine the purpose and keep written findings (paragraph 61) | Freelancers and exporters with occasional clients in listed jurisdictions |
| Client in a country under other countries' sanctions, such as Russia | Yes under Indian law, if no designated party is involved | Indian rules focus on designated persons; foreign correspondent banks may still reject the payment (OFAC FAQ 5) | Exporters paid in US dollars or euros through foreign banks |
| Goods covered by FTP country prohibitions | No for the prohibited items | FTP 2023 prohibits listed trade with Iraq (arms), ISIL and Al-Qaida linked parties and DPRK, and limits listed items for Iran (FTP 2023, paras 2.16 to 2.19) | Goods exporters checking product and destination |
| Payment settled in INR through a Special Rupee Vostro Account | Yes, as an additional arrangement | RBI allows invoicing, payment and settlement of exports in INR through SRVAs (A.P. (DIR Series) Circular No. 19, para 4) | Exporters whose buyers' banks cannot send US dollars or euros |
How do you receive a payment from a sanctioned or high-risk country in India?
You receive a payment from a sanctioned or high-risk country by checking the buyer and goods before you accept the order, then giving your AD bank complete documents so it can finish its checks. Your bank credits an export receipt only after it is satisfied the transaction is genuine (FEMA Export and Import Regulations 2026, Regulation 4(2)).
- Check the buyer's name and its bank against the public lists your bank uses: the UNSC consolidated lists and, for North Korea, the UNSCR 1718 list published through the Ministry of External Affairs (MEA, Implementation of UNSC Sanctions (DPRK)).
- For goods, check the destination and product against the FTP prohibitions on Iraq, ISIL and Al-Qaida, DPRK, Iran and Somalia (FTP 2023, paras 2.16 to 2.20).
- Talk to your AD bank before you sign the contract. Ask whether it will accept payments from that country and which currency and route it prefers.
- Put the buyer's full legal name, address and country on the contract and invoice, and describe the goods or services clearly.
- Ask the buyer to pay from an account in its own name, so the sender on the wire matches your invoice.
- File the EDF for services within 30 days of the end of the month in which you raised the invoice (Regulation 3(2)). See the EDF form guide.
- Answer the bank's enhanced due diligence questions in one reply, with the contract, invoice, proof of delivery and correspondence.
- Keep copies of every document and message, because the bank keeps written findings of its review.
What does enhanced due diligence on a payment from a FATF-listed country involve?
Enhanced due diligence on a payment from a FATF-listed country means the bank looks harder at the business relationship and the transaction. The bank must apply measures that are effective and proportionate to the risk, and must examine the background and purpose of the transaction (KYC Directions, paragraph 61).
- The bank considers FATF statements circulated by RBI and publicly available information to identify the countries concerned (paragraph 61(1)).
- It gives special attention to transactions with persons from or in those countries (paragraph 61(2)).
- It keeps written findings with all documents and makes them available to RBI and other authorities on request (paragraph 61(3)).
- The FATF asks that Myanmar-related enhanced due diligence should increase monitoring to spot unusual or suspicious activity, while not disrupting humanitarian flows and remittances (FATF call for action, June 2026).
Do US or EU sanctions apply to an Indian exporter's bank account?
US or EU sanctions are not part of Indian law, so they do not directly govern an Indian account. They still affect payments that pass through banks bound by them. OFAC guidance says a US institution must block property where a listed person is involved and reject transactions involving a sanctioned jurisdiction with no blocked person (OFAC FAQ 5).
- A US dollar wire usually passes through a correspondent bank abroad, which can stop it before it reaches India.
- A returned or frozen wire is a decision of that foreign bank, and your Indian bank may not be able to release it.
- See what is a correspondent bank for how wires route.
Can a buyer in a high-risk country pay an Indian exporter in Indian rupees?
A buyer in a high-risk country can pay in Indian rupees through a Special Rupee Vostro Account (SRVA) where its bank holds one with an Indian AD bank. RBI describes SRVA settlement as an additional arrangement for invoicing, payment and settlement of exports and imports in INR (A.P. (DIR Series) Circular No. 19, para 4).
- For exports invoiced or settled in INR, the realisation period is twelve months instead of nine (Regulation 5(1)).
- FTP 2023 allows export proceeds realised in INR against exports to Iran to count for FTP benefits, subject to para 2.19 (FTP 2023, para 2.53(i)).
- An SRVA does not remove sanctions screening. See Special Rupee Vostro Accounts.
Which documents should you keep for a payment from a sanctioned or high-risk country?
Keep documents that prove who paid you, what you supplied and why the money moved. Your bank will ask for most of them during enhanced due diligence, and it must keep its own written findings. The table lists the usual set and why each one matters.
| Document | What it shows | Who asks for it | Best for |
|---|---|---|---|
| Signed contract or order | The buyer's full legal name, address and the work agreed | AD bank during enhanced due diligence | All exporters with new clients in listed countries |
| Invoice | Amount, currency, description of goods or services | AD bank to match the inward remittance | Freelancers and service exporters |
| EDF or shipping bill | Declared export value, filed under Regulation 3 | AD bank and EDPMS | Goods and services exporters |
| Proof of delivery | Shipping documents, delivery emails, client acceptance | AD bank if the purpose is unclear | Exporters of services delivered online |
| Screening record | Your own check of the buyer and its bank against public UN-based lists | Your own file, in case the bank asks | Exporters with buyers in Iran, Myanmar or DPRK-adjacent trade |
| Purpose code confirmation | The service or goods category for the remittance | AD bank for FETERS reporting | Anyone unsure of the code; see purpose code for freelancers |
What happens if a payment from a sanctioned or high-risk country is blocked or frozen?
If a payment from a sanctioned or high-risk country is blocked, it may be held, returned or frozen, depending on which bank stopped it and why. Where a designated person is involved, Indian banks follow the freezing procedures under UAPA section 51A and WMD Act section 12A (KYC Directions, paragraphs 56 and 57).
- Held payment: Your AD bank will not credit the receipt until it is satisfied the transaction is genuine (Regulation 4(2)).
- Rejected wire: A foreign bank bound by OFAC rules must reject a transaction involving a sanctioned jurisdiction even when no listed person is involved (OFAC FAQ 5). The client then has to find another route.
- Frozen funds: If a bank believes beyond doubt that a customer's funds fall under section 12A of the WMD Act, it must stop that person's financial transactions and inform the Central Nodal Officer (paragraph 57(7)).
- Enforcement referral: RBI directs AD banks to inform any doubtful export or import transaction to the Directorate of Enforcement (A.P. (DIR Series) Circular No. 20, para 3).
- Unrealised exports: If export value stays unrealised for more than one year past the due date or extended date, further exports must be against full advance or an irrevocable letter of credit (Regulation 13).
Ask your bank in writing why the payment is held and what it needs. If a foreign bank returned the wire, ask the client to use another route, such as INR settlement through an SRVA, where lawful. If realisation is delayed, ask your AD bank for an extension before the deadline. See extension of the export realisation period and international payment stuck.
What is the timeline for checks and filings on payments from sanctioned or high-risk countries?
The timeline for checks and filings on payments from sanctioned or high-risk countries mixes your own FEMA deadlines with fixed duties on banks. Your deadlines are the same as for any export. The bank's screening and reporting run on their own clock, which the table lists.
| Trigger event | Due date | Filed where | Best for |
|---|---|---|---|
| You raise an invoice for services | EDF within 30 days from the end of that month (Regulation 3(2)) | With your AD bank | Freelancers and service exporters |
| Export invoice or shipment date | Realise within nine months, or twelve if invoiced or settled in INR (Regulation 5(1)) | Credit to your account through an AD bank | Exporters with slow-paying buyers |
| UN-based designated lists change | Bank checks the lists daily (KYC Directions, paragraphs 56(2) and 58) | Bank's internal screening | Understanding why a previously accepted buyer is now refused |
| Cross-border wire above Rs 5 lakh | Bank reports monthly by the 15th of the next month (PML Rules, rules 3(1)(E) and 8(1)) | FIU-IND, filed by the bank | Exporters receiving larger payments |
| Bank finds a match with the WMD Act designated list | Bank informs the Central Nodal Officer immediately (paragraph 57(4)) | Director, FIU-IND as Central Nodal Officer, with copies to the State Nodal Officer and RBI | Understanding sudden freezes |
| You apply to unfreeze funds under the WMD Act order | Bank forwards your application to the Central Nodal Officer within two working days (paragraph 57(9)) | Through your bank to the Central Nodal Officer | Anyone whose funds were frozen by mistake |
| US bank blocks or rejects a payment | Report to OFAC within 10 business days (OFAC FAQ 5) | OFAC, filed by the US institution | Exporters paid in US dollars |
| FATF plenary ends | New statements in February, June and October (FATF high-risk and monitored jurisdictions) | FATF website; RBI circulates the statements to banks | Exporters tracking which countries are listed |
What mistakes do Indian exporters make with payments from sanctioned or high-risk countries?
- Assuming legality: Treating a country as fully open or fully banned. Most rules target named persons, entities and goods, so check the buyer and the product.
- Skipping the bank: Signing a contract before asking your AD bank whether it will accept payments from that country and route.
- Third-party payers: Accepting payment from an unrelated account in another country. Third-party receipts need the bank to be satisfied with bona fides (Regulation 8). See third-party payments for exports.
- Vague invoices: Writing only "services" or a generic product name, which gives the bank nothing to check against its lists.
- Old lists: Relying on a screening check done months ago. The lists change, and banks check them daily.
- Ignoring deadlines: Letting a held payment run past the realisation date without asking for an extension. See export realisation period.
- Hiding the origin: Asking a buyer to route money through another country to avoid questions. Banks look for unusual complexity and may report it as suspicious.
How did we verify this?
Every rule, deadline and form on this page is linked to its official source, checked on the dates below.
- Reserve Bank of India (Commercial Banks – Know Your Customer) Directions, 2025, RBI/DOR/2025-26/169 (updated as on October 1, 2026), Paragraphs 20(3), 56, 57, 58, 59, 60, 61 and 74(3)(ii) (checked 9 Oct 2026)
- Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, Notification FEMA 23(R)/2026-RB, amended up to 22 September 2026, Regulations 3(2), 4(2), 5(1), 8 and 13 (checked 9 Oct 2026)
- RBI A.P. (DIR Series) Circular No. 20, RBI/2025-26/194: Export and Import of Goods and Services, 16 January 2026, Paragraph 3 (checked 9 Oct 2026)
- RBI A.P. (DIR Series) Circular No. 19, RBI/2026-27/203: Special Rupee Vostro Accounts (SRVAs), 17 July 2026, Paragraph 4 (checked 9 Oct 2026)
- FATF: High-Risk Jurisdictions subject to a Call for Action, 19 June 2026, DPRK and Iran (countermeasures); Myanmar (enhanced due diligence) (checked 9 Oct 2026)
- FATF: High-risk and other monitored jurisdictions, Public identification; statements in February, June and October (checked 9 Oct 2026)
- Foreign Trade Policy 2023, Chapter 2: General Provisions Regarding Imports and Exports (DGFT), Paras 2.16 to 2.20 and 2.53(i) (checked 9 Oct 2026)
- Prevention of Money-laundering (Maintenance of Records) Rules, 2005, as published by FIU-IND, Rules 3(1)(E) and 8(1) (checked 9 Oct 2026)
- United Nations Security Council: Sanctions information, 15 current sanctions regimes (checked 9 Oct 2026)
- Ministry of External Affairs: Implementation of UNSC Sanctions (DPRK) (checked 9 Oct 2026)
- US Treasury OFAC: Sanctions Programs and Country Information, Active sanctions programs list (checked 9 Oct 2026)
- US Treasury OFAC: Assessing OFAC Name Matches, FAQ 5, Steps 5 and 6: block, reject, report within 10 business days (checked 9 Oct 2026)
Frequently asked questions
Is Russia on the FATF call-for-action list as of June 2026?
No. The FATF call-for-action list published on 19 June 2026 names only the Democratic People's Republic of Korea, Iran and Myanmar (FATF call for action, June 2026). Payments from Russia can still face questions because foreign banks apply their own sanctions. See receiving payments from Russia for the rules specific to that country.
Can an Indian freelancer accept a client from Iran under FEMA?
FEMA rules do not name Iran, but your bank must apply effective countermeasures where the FATF calls for them and the Central Government accepts this (KYC Directions, paragraph 60). The FATF calls for countermeasures on Iran, including limiting business relationships on a risk basis (FATF call for action, June 2026). Ask your AD bank before you accept the work.
What is the UNSCR 1718 list and why do Indian banks check it?
The UNSCR 1718 list is the UN Security Council list of individuals and entities designated under the North Korea sanctions regime. Indian banks must verify it every day and comply with the Implementation of Security Council Resolution on DPRK Order, 2017 (KYC Directions, paragraph 58). A payer on that list cannot be paid through an Indian bank.
Does a FATF grey list country block export payments to India?
No. Being under FATF increased monitoring does not block payments. The FATF says these jurisdictions are working with it to address deficiencies (FATF high-risk and monitored jurisdictions). Your bank may still ask more questions because geographical risk feeds into a customer's risk category (KYC Directions, paragraph 20(3)).
Will enhanced due diligence stop my bank from processing Myanmar payments?
Not by itself. RBI's KYC Directions say enhanced due diligence on FATF-listed jurisdictions does not preclude legitimate trade and business transactions with those countries (KYC Directions, paragraph 61). The bank will examine the background and purpose of each payment and keep written findings, so send the contract and invoice early.
Can export proceeds from Iran be received in Indian rupees under FTP 2023?
Yes, FTP 2023 allows export proceeds realised in Indian rupees against exports to Iran to count for FTP benefits and export obligations, at par with freely convertible currency, subject to para 2.19 (FTP 2023, para 2.53(i)). Para 2.19 restricts items listed in the referenced UN and IAEA documents. Check with your AD bank on the route.
Who does an Indian bank tell when a payer matches a UAPA list?
An Indian bank reports accounts resembling any listed individual or entity to FIU-IND and also advises the Ministry of Home Affairs, as required under the UAPA order dated 2 February 2021 (KYC Directions, paragraph 56(3)). It then follows the freezing procedure in that order. The bank does not need your consent to report.