1. What is KYC? - adcbindia.com · 1. Single document for proof of identity and proof of address...

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1. What is KYC? KYC is an acronym for “Kn process. It involves making ownership of accounts, reasonableness of operatio which in turn helps the ban guidelines is to prevent ba elements for money launde KYC has two components address may change and records. 2. Is there any legal back Yes. Reserve Bank of Indi Banking Regulation Act, (Maintenance of Records o Manner of Maintaining an Maintenance of Records Financial Institutions and In compliance shall attract pen 3. Why does the Bank as The identification of a cus customer interests by prev forge signature to underta cheques, dividend warran unwittingly used for the tra financing terrorism. Identific identify money laundering a value cash transactions. 4. I want to keep a fixed d Yes. KYC is applicable to c the ‘Customers of the bank a person or entity th with the bank; one on whose behal beneficiaries of tran Stock Brokers, Char and now your Customer”, a term used for cu g reasonable efforts to determine true id source of funds, the nature of cu ons in the account in relation to the custo nks to manage their risks prudently. The o anks being used, intentionally or uninte ering. - Identity and Address. While identity rem hence the banks are required to perio king for verifying identity of clients? ia has issued guidelines to banks under 1949 and Rule 7 of Prevention of of the Nature and Value of Transactions nd Time for Furnishing Information a of the Identity of the Clients of the B ntermediaries) Rules, 2005. Any contrave nalties under Banking Regulation Act. sk you for proof of your identity and ad stomer is a very critical process with a venting from fraudsters who may use the ake illegal business activities, encashme nts, etc. This also helps to safeguard ansfer of deposit of funds derived from c cation of customers will also help to con and suspicious activities, and for scrutiny deposit in a bank. Is KYC - applicable t customers of the bank. For the purpose o k. hat maintains an account and/or has a b lf the account is maintained (i.e. the bene nsactions conducted by professional inte rtered Accountants, Solicitors etc. as perm ustomer identification dentity and beneficial ustomer’s business, omer’s business, etc objective of the KYC entionally by criminal mains the same, the odically update their r Section 35A of the f Money-Laundering s, the Procedure and and Verification and Banking Companies, ention thereof or non- ddress? view to protect the e name, address and ent of stolen drafts, d banks from being riminal activity or for ntrol financial frauds, y / monitoring of large to me? of KYC following are business relationship eficial owner); ermediaries, such as mitted under the law,

Transcript of 1. What is KYC? - adcbindia.com · 1. Single document for proof of identity and proof of address...

Page 1: 1. What is KYC? - adcbindia.com · 1. Single document for proof of identity and proof of address There is now no requirement of submitting two separate documents for proof of identity

1. What is KYC?

KYC is an acronym for “Knprocess. It involves makingownership of accounts, reasonableness of operatiowhich in turn helps the banguidelines is to prevent baelements for money launde

KYC has two components address may change and records.

2. Is there any legal back

Yes. Reserve Bank of IndiBanking Regulation Act, (Maintenance of Records oManner of Maintaining anMaintenance of Records Financial Institutions and Incompliance shall attract pen

3. Why does the Bank as

The identification of a cuscustomer interests by preveforge signature to undertacheques, dividend warranunwittingly used for the trafinancing terrorism. Identificidentify money laundering avalue cash transactions.

4. I want to keep a fixed d

Yes. KYC is applicable to cthe ‘Customers of the bank.

• a person or entity thwith the bank;

• one on whose behalf• beneficiaries of tran

Stock Brokers, Charand

Know your Customer”, a term used for cung reasonable efforts to determine true id, source of funds, the nature of cutions in the account in relation to the custonks to manage their risks prudently. The o

banks being used, intentionally or uninteering.

s - Identity and Address. While identity remd hence the banks are required to perio

cking for verifying identity of clients?

dia has issued guidelines to banks undert, 1949 and Rule 7 of Prevention of of the Nature and Value of Transactionsand Time for Furnishing Information a of the Identity of the Clients of the B

Intermediaries) Rules, 2005. Any contraveenalties under Banking Regulation Act.

ask you for proof of your identity and ad

ustomer is a very critical process with a venting from fraudsters who may use thetake illegal business activities, encashmeants, etc. This also helps to safeguardransfer of deposit of funds derived from crification of customers will also help to con and suspicious activities, and for scrutiny

deposit in a bank. Is KYC - applicable t

customers of the bank. For the purpose ok.

that maintains an account and/or has a b

alf the account is maintained (i.e. the benensactions conducted by professional inte

artered Accountants, Solicitors etc. as perm

customer identification identity and beneficial customer’s business, stomer’s business, etc e objective of the KYC tentionally by criminal

emains the same, the riodically update their

er Section 35A of the of Money-Laundering s, the Procedure and and Verification and Banking Companies, ention thereof or non-

address?

a view to protect the e name, address and

ment of stolen drafts, rd banks from being criminal activity or for ontrol financial frauds, y / monitoring of large

e to me?

of KYC following are

business relationship

eficial owner); termediaries, such as rmitted under the law,

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• any person or entitsignificant reputationhigh value demand d

5. Is there any procedure

Customer identification meusing reliable, independentadvised to lay down Custostages i.e. while establishinor when the bank has a dpreviously obtained custom

6. Once KYC requirementhe bank can again ask

Yes. To ensure that the labeen advised to periodicallycategory of the customers.

Banks create a customsocial/financial status, natuand their location, the purpof the funds to be used wisources of wealth or inwithdrawals etc. When the the profile, bank may ask foto confirm that the Laundering/Terrorist/Crimin

7. Can my wife who is account with the bank

Yes. In such cases where name of the person who wdaughter anddaughter andson, as the case may be) whom the prospective custthe said person (prospectivstaying with him/her is acletter received through post

8. I am a daily wage eaidentity and address. C

tity connected with a financial transactioonal or other risks to the bank, say, a wire t draft as a single transaction.

re specified for Customer Identification

eans identifying the customer and verifyinnt source documents, data or information

stomer Identification Procedure to be caring a banking relationship; carrying out a

doubt about the authenticity/veracity or tmer identification data.

nts are complied with while opening thsk for KYC compliance from me?

latest details about the customer are avlly update the customer identification data

mer profile based on details about ture of business activity, information about rpose and reason for opening the account,within the relationship and details of occuincome, expected monthly remittance, e transactions in the account are observed for any additional details / documents as account is not being used inal activities.

s not having any address proof in hk?

e the utility bills required for address verifi wants to open an account ( close relatd parents etc. who live with their husband

e) , an identity document and a utility billstomer is living along with a declaration ftive customer) wanting to open an accouncceptable. As supplementary evidence bst for further confirmation.

earner without any document to satis. Can I open a bank account?

tion which can pose e transfer or issue of a

n?

ing his/her identity by ion. Banks have been arried out at different a financial transaction r the adequacy of the

the account, whether

available, banks have ta based upon the risk

t the customer like ut his clients’ business nt, the expected origin cupation/employment, e, expected monthly ed not consistent with s required. This is just

for any Money

her name, open an

ification are not in the atives, e.g. wife, son, nd, father/mother and ill of the relative with from the relative that unt is a relative and is bank may ask for a

isfy the bank about

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A customer belonging to losatisfy the bank about hiintroduction from another aprovided that the balance iRupees Fifty Thousand (Rtogether is not expected tointroducer’s account with thsatisfactory transactions. account and also his addres

or

any other evidence as to ththe bank.

If at any point of time, the bexceeds Rupees Fifty ThoRupees One Lakh (Rs. 1,0until the full KYC procedure

In order not to inconvenienbalance reaches Rupees Freaches Rupees Eighty tconducting the KYC must stopped.

9. Whether a certificate address proof for open

Banks rely on such certificathat they are aware of the to issue such certificate. documents indicated aboveCard etc. or utility bills femployees of corporate and

10. Whether the informatconfidential?

Yes. The information collecis treated as confidential aother similar purposes.

11. If I refuse to give infobank can take against

low income group who is not able to prohis identity and address, can open ban account holder who has been subjected to in all his accounts taken together is not (Rs. 50,000/-) and the total credit in all to exceed Rupees One Lakh (Rs. 1,00,0 the bank should be at least six months o. Photograph of the customer who proress needs to be certified by the introducer

the identity and address of the customer

balance in all his/her accounts with the bousand (Rs. 50,000/-) or total credit in th,00,000/-) in a year, no further transactiore is completed.

ence the customer, the bank will notify the Forty Thousand (Rs. 40,000/-) or the to thousand (Rs. 80,000/-) that approprist be submitted otherwise operations in

e from my employer is sufficient as iening an account?

cation only from corporate and other entitiee competent authority designated by the c. In addition, banks also require at leave viz. Passport, Driving Licence, PAN C for KYC purposes for opening bank nd other entities.

ation given by me to the bank under

ected from the customer for the purpose ol and details thereof are not divulged for

formation on KYC asked for by the banst me?

roduce documents to ank account with an to full KYC procedure ot expected to exceed ll the accounts taken ,000/-) in a year. The old and should show roposes to open the er,

r to the satisfaction of

bank (taken together) the account exceeds tions will be permitted

he customer when the total credit in a year priate documents for n the account will be

identity as well as

ties of repute provided concerned employer ast one of the valid

Card, Voter's Identity account of salaried

r KYC is treated as

of opening of account r cross selling or any

ank, what action the

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Where the bank is unable t

information and /or non-coo

account or terminating the

customer explaining the rea

12. What is Money Launde

Money Laundering refers to

if it originated from a leg

launderers worldwide to con

trafficking, terrorism and ex

money laundering.

13. What has this got to d

The first step in the laund

account with a Bank, often

will be transferred to othe

services. These transactio

becomes difficult to trace i

prevent this, but should sto

the ill-gotten money from ill

14. How could this affect y

A key defense against mon

identities. Anyone wishing

identity and address. Thes

the type of account to be op

The fact that these docum

you are suspected of mo

abiding customers, for exam

amounts of money. Hence

customers. Anybody includ

documents are not obtained

15. Help us to Help You

Please help us to prevent

evasion by being patient

identity. You can also help

confidentiality of your accou

e to apply appropriate KYC measures due

ooperation by the customer, the bank can

e banking/business relationship after issui

easons for taking such a decision.

dering?

to conversion of money illegally obtained t

egitimate source. Money laundering is

onceal criminal activity associated with it s

extortion. All crimes that produce a financia

do with opening bank accounts?

ndering process for criminals is to get t

n using a false identity and address. The

her accounts locally or abroad or used f

ions would appear to be like any legally

it back to its criminal past. Banks under

top criminals who wish to use the banking

illegal / criminal activities.

t you as a customer?

oney laundering is to prevent accounts be

g to open an account will therefore be ask

se documents have to be essentially obta

opened and the purpose for which the acco

ments are asked for opening of account

oney laundering. Criminals try to appea

ample they may try to open a number of a

e it is necessary to identify all prospective

ding a criminal could falsely use your iden

ed.

t crime and the laundering of the procee

t when staff asks you to provide docum

p prevent crime against yourself and other

ount details and identity documents.

e to non-furnishing of

n consider closing the

uing due notice to the

d to make it appear as

being employed by

t such as drugs / arms

cial benefit give rise to

t their money into an

he funds so deposited

for buying goods or

ly earned money and

r law should not only

ing channel to launder

being opened in false

sked for proof of their

btained irrespective of

count is opened for.

t does not mean that

ear to be normal law

f accounts using small

ive account holders or

entity, if these identity

eeds of such crime or

ments to prove your

ers by maintaining the

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1. Single document for proof of identity and proof of address

There is now no requirement of submitting two separate documents for proof of identity and proof of

address. If the officially valid document submitted for opening a bank account has both, identity and

address of the person, there is no need for submitting any other documentary proof.

Officially valid documents (OVDs) for KYC purpose include: Passport, driving licence, voters’ ID card, PAN

card, Aadhaar letter issued by UIDAI and Job Card issued by NREGA signed by a State Government

official.

To further ease the process, the information containing personal details like name, address, age, gender,

etc., and photographs made available from UIDAI as a result of e-KYC process can also be treated as an

‘Officially Valid Document’.

2. No separate proof of address is required for current address

Since migrant workers, transferred employees, etc., often face difficulties while submitting a proof of

current address for opening a bank account, such customers can submit only one proof of address

(either current or permanent) while opening a bank account or while undergoing periodic updation. If

the current address is different from the address mentioned on the proof of address submitted by the

customer, a simple declaration by her/him about her/his current address would be sufficient.

3. No separate KYC documentation is required while transferring accounts from one branch to

another of the same bank

Once KYC is done by one branch of the bank, it is valid for transfer of the account to any other branch of

the same bank. The customer would be allowed to transfer her/his account from one branch to another

branch without restrictions and on the basis of declaration of his/her local address for communication.

4. Small Accounts

Those persons who do not have any of the ‘officially valid documents’ can open ‘small accounts’ with

banks. A ‘small account’ can be opened on the basis of a self-attested photograph and putting her/his

signature or thumb print in the presence of an official of the bank. Such accounts have limitations

regarding the aggregate credits (not more than Rupees one lakh in a year), aggregate withdrawals (not

more than Rupees ten thousand in a month) and balance in the accounts (not more than Rupees fifty

thousand at any point in time). These small accounts would be valid normally for a period of twelve

months. Thereafter, such accounts would be allowed to continue for a further period of twelve more

months, if the account holder provides a document showing that she/he has applied for any of the

officially valid document, within twelve months of opening the small account.

5. Relaxation regarding officially valid documents (OVDs) for low risk customers

If a person does not have any of the ‘officially valid documents’ mentioned above, but if is categorised

as ‘low risk’ by the banks, then she/he can open a bank account by submitting any one of the following

documents:

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(a) identity card with applicant's photograph issued by Central/State Government Departments,

Statutory/Regulatory Authorities, Public Sector Undertakings, Scheduled Commercial Banks, and Public

Financial Institutions;

(b) letter issued by a gazetted officer, with a duly attested photograph of the person.

6. Periodic updation of KYC

Time intervals for periodic updation of KYC for existing low/medium and high risk customers have been

increased from 5/2 years to 10/8/2 years, respectively.

7. Other relaxations

KYC verification of all the members of Self Help Groups (SHGs) is not required while opening the savings

bank account of the SHG and KYC verification of only the officials of the SHGs would suffice. No separate

KYC verification is needed at the time of credit linking the SHG.

Foreign students have been allowed a time of one month for furnishing the proof of local address.

In case a customer categorised as low risk is unable to submit the KYC documents due to genuine

reasons, she/he may submit the documents to the bank within a period of six months from the date of

opening account.

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