Table of Contents
What are KYC norms?
KYC or know your customer is a process that individuals need to complete before they purchase any kind of financial product such as a mutual fund, insurance policy, stock or even before they can open a bank account. It involves verification of the individual’s identity, address and other key details.
What are KYC norms Why are the important?
Definition of KYC Know Your Customer is the process of verifying the identity of customer. The objective of KYC guidelines is to prevent banks from being used, by criminal elements for money laundering activities.
What is KYC norms of RBI?
As part of ‘Know Your Customer’ (KYC) principle, RBI has issued several guidelines relating to identification of depositors and advised the banks to put in place systems and procedures to help control financial frauds, identify money laundering and suspicious activities, and for scrutiny/monitoring of large value cash …
What are the four elements of KYC?
Banks should frame their KYC policies incorporating the following four key elements:
- Customer Acceptance Policy;
- Customer Identification Procedures;
- Monitoring of Transactions; and.
- Risk Management.
Who introduced KYC norms?
the RBI
In 2004, the RBI had come up with more specific guidelines regarding KYC. These were divided into four parts: Customer Acceptance Policy: All banks shall develop criteria for accepting any person as their customer to restrict any anonymous accounts and ensure documentation mentioned in KYC.
In which cases KYC norms are applicable?
KYC is required to be done once in every two years for high risk customers, once in every eight years for medium risk customers and once in every ten years for low risk customers. This exercise would involve all formalities normally taken at the time of opening the account.
What are the 3 stages of anti-money laundering?
There are three major steps in money laundering (placement, layering, and integration), and various controls are put in place to monitor suspicious activity that could be involved in money laundering.
What is KYC (Know Your Client)?
KYC is a regulatory process of ascertaining the identity and other information of a financial services user. The Know Your Client (KYC) process helps against money laundering and prevents the financing of terrorist activities.
Why KYC norms are made compulsory?
KYC Norms were made compulsory, aiming to restrict money laundering and to stop terrorist financing. RBI issues guidelines for KYC, through Banking Regulation Act, 1949 Section 35A along with Prevention of Money Laundering (Maintenance of Records) Rules, 2005.
What are the different types of KYC regulations?
Some major KYC regulations: 1 The European Union’s Anti-Money Laundering Directives – 5AMLD and 6AMLD 2 The Financial Conduct Authority (FCA) in the UK 3 The Bank secrecy act in the USA 4 Hong Kong Monetary Authority (HKMA) and the Monetary Authority of Singapore (MAS) for Asia 5 AUSTRAC in Australia More
What is the Central KYC registry?
With uniform norms and inter-usability, central KYC registry across all financial sectors has been set up as a depository for KYC records. This new process, without asking customers to provide multiple KYC undertakings will help banks, mutual funds, brokerage firms and depository participants offer services.