Customer identification procedure to be conducted for new and existing customers as per (RBI) dated July 14th,2014
|In Case of Individual||(I) Passport /PAN card / Voter’s Identity Card / Driving licence / Aadhar card
(II) Telephone bill / Bank account statement / Electricity bill / Letter from employer / Permanent Address Proof
|In case of Companies||(i) Certificate of incorporation and Memorandum & Articles of Association
(ii) Resolution of the Board of Directors to open an account and identification of those who have authority to operate the account
(iii) Power of Attorney granted to its managers, officers or employees to transact business on its behalf
(iv) Copy of PAN allotment letter
(v) Copy of the telephone bill
|In case of Partnership Firms||(i) Registration certificate, if registered
(ii) Partnership deed
(iii) Power of Attorney granted to a partner or an employee of the firm to transact business on its behalf
(iv) Any officially valid document identifying the partners and the persons holding the Power of Attorney and their addresses
(v) Telephone bill in the name of firm/partners
|In case of Trusts and Foundations||(i) Certificate of registration, if registered
(ii) Power of Attorney granted to transact business on its behalf
(iii) Any officially valid document to identify the trustees, settlors, beneficiaries and those holding Power of Attorney, founders/managers/ directors and their addresses
(iv) Resolution of the managing body of the foundation/association
(v) Telephone bill
GUIDELINES ON ‘KNOW YOUR CUSTOMER’ NORMS AND ANTI-MONEY LAUNDERING SERVICES
- The Company endeavors to frame a proper policy framework on ‘Know Your Customer’ (KYC) and Anti-Money Laundering as per RBI guidelines. The Board of Directors and the management team of the Company are responsible for the implementation of the KYC norms, whenever required and to ensure that its operations reflect its initiatives to prevent money-laundering activities.
- The Reserve Bank of India (RBI) has issued guidelines vide circular DNBS(PD).CC NO.400/03/.10.42/2014-15 dated JULY 14th,2014 on ‘Know Your Customer” Guidelines – Anti Money Laundering Standards for Non-Banking Finance Companies (NBFCs) thereby setting standards for prevention of money laundering activities and Corporate Practices while dealing with their customers. The Company shall adopt all practices prescribed by the RBI from time to time and shall make appropriate modifications if any so prescribed.
- The objective of KYC guidelines is to prevent the Company from being used, intentionally or unintentionally, by criminal elements for money laundering activities. KYC procedures also enable Company to know/understand their customers and their financial dealings better, which in turn help them, manage their risks prudently. The Company hereunder framing its KYC policies incorporating the following four key elements:
- Customer Acceptance Policy;
- Customer Identification Procedures;
- Monitoring of Transactions; and
- Risk management
Customer Acceptance Policy
The Company would develop a clear Customer Acceptance Policy laying down explicit criteria for acceptance of customers. The Customer Acceptance Policy must ensure that explicit guidelines are in place on the following aspects of customer relationship in the company
- No account is opened in anonymous or fictitious / benami name(s).
- Classification of customers into various categories on the basis of risk perception.
- Identification of the customers as per customer Identification procedures before acceptance of customers.
- Obtaining the relevant information from the customers at the time of truncations carried out for the purpose of risk categorization.
Customer Identification Procedures
- The policy approved by the Board of Directors should clearly spell out the Customer Identification Procedure to be carried out at different stages i.e. while establishing a business relationship; carrying out a financial transaction or when the Company has a doubt about the authenticity/veracity or the adequacy of the previously obtained customer identification data. Customer identification means identifying the customer and verifying his/ her identity by using reliable, independent source documents, data or information. The Company will obtain sufficient information necessary to establish, to its satisfaction, the identity of each new customer, whether regular or occasional, and the purpose of the intended nature of business relationship. Being satisfied means that the Company must be able to satisfy the competent authorities that due diligence was observed based on the risk profile of the customer in compliance with the extant guidelines in place. Such risk-based approach is considered necessary to avoid disproportionate cost to Company and a burdensome regime for the customers. Besides risk perception, the nature of information/documents required would also depend on the type of customer (individual, corporate etc).
- For customers, the Company will obtain sufficient identification data to verify the identity of the customer, his address/location, and also his recent photograph. The Company has framed its own internal guidelines based on their experience of dealing with such persons/entities, normal lender’ prudence and the legal requirements as per established practices. Company will take reasonable measures to identify the Customers and verify his/her/their identity. An indicative list of the nature and type of documents/information that may be relied upon for customer identification is given in the Annex-I. In the view of emerging business environment, the documents requirement will be reviewed periodically as and when require updating. The Board of Directors and management team is empowered to make amendment as and when required to the list of document required for Customer Identification Procedure.
Monitoring of Transactions
- The Company will ensure that a record of transactions is preserved and maintained as required in terms of section 12 of the PML Act, 2002. It may also be ensured that transactions of suspicious nature and/ or any other type of transaction notified under section 12 of the PML Act, 2002, shall be reported to the appropriate law enforcement authority by the Principal Officer.
- The Board of Directors of the Company ensure that an effective KYC is put in place by establishing appropriate procedures and ensuring their effective implementation. It will cover proper management oversight, systems and controls, segregation of duties, training and other related matters. Responsibility should be explicitly allocated within the Company for ensuring that the Company’s policies and procedures are implemented effectively. The Company may, in consultation with their boards, devise procedures for creating Risk Profiles of their existing and new customers and apply various Anti Money Laundering measures keeping in view the risks involved in a transaction, account or business relationship.
- The Company’s internal audit and compliance functions have an important role in evaluating and ensuring adherence to the KYC policies and procedures. As a general rule, the compliance function provides an independent evaluation of its own policies and procedures, including legal and regulatory requirements. The Company should ensure that its audit machinery is staffed adequately with individuals who are well versed in such policies and procedures when needed. Concurrent/ Internal Auditors should specifically check and verify the KYC procedures and comment on the lapses observed, if any, in this regard.
- The Company assure that the members of the staff are adequately trained in KYC procedures for frontline staff, compliance staff and staff dealing with new customers. It is crucial that all those concerned fully understand the rationale behind the KYC policies and implement them consistently.
- Implementation of KYC procedures requires Company to demand certain information from customers which may be of personal nature or which have hitherto never been called for. This can sometimes lead to a lot of questioning by the customer as to the motive and purpose of collecting such information. Therefore, the Company needs to prepare specific emails / letters etc. so as to educate the customer of the objectives of the KYC. The staff is specially trained to handle such situations while dealing with customers.