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Know your Customer (KYC)?

Know Your Customer(KYC) 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. It also enables us to understand our customers and their financial dealings to serve them better and manage its risks well.

Purpose
The KYC guidelines have been put in place by the Reserve Bank of India in the context of the recommendations made by the Financial Action Task Force (FATF) on Anti Money Laundering (AML) standards and on Combating Financing of Terrorism (CFT). The Prevention of Money Laundering Act requires banks, financial institutions and intermediaries to ensure that they follow certain minimum standard of KYC and AML.

Importance of KYC
KYC is the means of identifying and verifying the identity of the customer through independent and reliance source of documents, data or information. For the purpose of verifying the identity of:

  • Individual customers, CR-I will obtain the customer’s identity information, address and recent photograph.
  • Non-Individual customers – CR-I will obtain identification data to verify the legal status of the entity, operating address, the authorized signatories and beneficial owners.
  • Individuals (Documents acceptable as proof of identity/address)
  • Passport
  • Voter’s Identity Card
  • Driving Licence
  • Aadhaar Letter/Card
  • NREGA Card
  • PAN Card
  • Any one document towards proof of identity and proof of address (either permanent or current )

NRIs

  • Passport and Residence Visa Copies, duly attested by (Foreign offices, Notary Public, Indian Embassy officers of correspondent banks whose signatures are verifiable through an authorized(A/B category Forex handling branch) branch of the Bank

Proprietary concerns

Proof of the name, address and activity of the concern

  • Registration certificate (in the case of a registered concern).
  • Income tax returns
  • GST /VAT/CST certificate·
  • Certificate /registration document issued by Sales Tax/Service Tax/Professional Tax authorities.
  • The complete Income Tax return (not just the acknowledgement) in the name of the sole proprietor where the firm’s income is reflected, duly authenticated/ acknowledged by the Income Tax Authorities.
  • Utility bills such as electricity, water, and landline telephone bills in the name of the proprietary concern.
  • Any two of the above documents would suffice. These documents should be in the name of the proprietary concern.

Plus

ID and address proof of the proprietor

Partnership firms

  • Registration certificate
  • Partnership deed
  • An officially valid document in respect of the person holding a power of attorney to transact on its behalf
  • GST /VAT/CST certificate·
  • income tax returns
  • Utility bills such as electricity, water, and landline telephone bills in the name of the proprietary concern.

Plus

Proof of identity & address of all the partners / beneficial owners – natural persons if beneficial owners are non individuals (owning 15% capital or entitled for 15% profits)

Companies

  • Certificate of incorporation
  • Memorandum & Articles of Association
  • A resolution from the Board of Directors and power of attorney granted to its managers, officers or employees to transact on its behalf; and
  • An officially valid document in respect of managers, officers or employees holding an attorney to transact on its behalf
  • GST /VAT/CST certificate·
  • income tax returns
  • Utility bills such as electricity, water, and landline telephone bills in the name of the proprietary concern.

Plus

Proof of identity & address of all the beneficial owners (natural persons if beneficial owners are non -individuals) ( owning 25% share or capital or entitled for 25% profits in case of company which is not listed in a Stock Exchange (Submission of Proof of identity & address by beneficial owners of a company listed in stock exchange or is a company majority owned one by such listed company is not warranted)

Trusts & foundations

  • Certificate of registration;
  • Trust Deed; and
  • An officially valid document in respect of the person holding a power of attorney to transact on its behalf
  • GST /VAT/CST certificate·
  • income tax returns
  • Utility bills such as electricity, water, and landline telephone bills in the name of the proprietary concern.

Plus

Proof of identity and address of persons like trustees, executors, administrators etc. ( beneficial owners – natural persons)

Unincorporated association or body of individuals

  • Resolution of the managing body of such association or body of individuals;
  • Power of attorney granted to him to transact on its behalf;
  • An officially valid document in respect of the person holding an attorney to transact on its behalf