KYC norms for financial entities: RBI updates

KYC norms for financial entities: RBI updates

BE/RBI  NOTE/15/2018

Updates on KYC Norms (Know Your Customer Norms) have now come out from Reserve Bank of India for Banks and financial entities.  RBI for the first time since 2016 has strictly regulated these institutions from opening fictitious named accounts.  The guideline adds:

  1. The REs (Regulated Entities) should ensure that no accounts are opened, wherever RE is not able to apply necessary CDD (Customer Due Diligence) measures, which could arise either due to non-cooperation of the customer or non-reliability of the documents/information furnished by the customer.
  2. The guideline adds that Banks and also NBFCs should not allow any transaction or account relationship without following the CDD procedure and the basic mandatory details required for KYC during opening an account and also during regular updates of customer records.
  3. Banks should be more cautious to obtain additional details with necessary customer acceptance.
  4. If a RE customer who is KYC compliant is willing to open another account, with the same RE, fresh CDD exercise need not be insisted, the guideline adds.
  5. CDD procedure is also to be followed for all the account holders while opening a joint account.
  6. In case where a customer is required to act on behalf of another person/entity (like power of attorney or mandate holders), the necessary circumstances, under which these people are acting on behalf of the main customer, should be duly followed, to ensure proper identification of such personnel/entity.

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