RBI has amended the ‘Master’ guidelines regarding KYC after review. Under this, banks, non-banking financial companies (NBFC) and other entities under the purview of RBI will have to investigate their customers as per the prescribed procedures.
In view of the increasing cases of online fraud and money laundering in the country, the Reserve Bank of India has decided to further strengthen the KYC (Know Your Customer) of customers. Another initiative has been taken in this regard, under which banks and non-banking finance companies have been asked to adopt the KYC system from time to time.
RBI has amended the ‘Master’ guidelines regarding KYC after review. Under this, banks, non-banking financial companies (NBFC) and other entities under the purview of RBI will have to investigate their customers as per the prescribed procedures. According to the revised norms, principal officers of regulated entities (REs) will be responsible for furnishing the information.
What was the amendment?
As per the amendment, the “Principal Officer” will be a management level officer nominated by the Regulated Entities (RE). These changes also relate to the requirement of Beneficial Owner (BO) identification for “Partnership Firms”. Customer Due Diligence (CDD) has also been mentioned in the changes.
This will include customer identification and verification of their identity using reliable and independent sources. Regulated Entities (RE) will need to obtain information about the purpose and function of the business relationship. Now Regulated Entities (RE) and concerned authorities will have to take appropriate steps to understand the business of the customer and its ownership and control structure.
They must determine whether the customer is acting on behalf of a BO, as well as identify that BO. RBI said that regulated entities (RE) and concerned authorities will have to verify the identity of the BO using reliable and independent sources.
Amendments have also been made in ‘On-going Due Diligence’. Under this, Regulated Entities (RE) will have to ensure that the transactions in the customers’ accounts, the business and risk profile of the customers and the source of funds or funds are known to them.
