New Delhi: The Reserve Bank of India (RBI) has recently made changes in the Know Your Customer (KCC) norms to align them with the recent amendments in the Prevention of Money Laundering (Maintenance of Records) Rules and revised certain Existing instructions.
Under the 2016 Amendment to the Master Directive – Know Your Customer (KYC) Directive, regulated entities (REs) must apply customer due diligence (CDD) procedures at the Unique Customer Identifier Code (UCIC) level.
Revisions have also been made to CDD procedures and sharing of KYC information with the Central KYC Records Registry (CKYCR). CKYCR is an entity that receives, stores, protects and retrieves KYC records in digital form of customers.
KYC rules: 6 amendments announced by RBI take effect immediately
1. Paragraph 10 – Customer Acceptance Policy
Paragraph 10(f) of the main directive is modified as follows: RE shall apply the CDD procedure at the UCIC level. Therefore, if an existing KYC compliant customer of RE wishes to open another account or use any other product or service of the same RE, there is no need to conduct a new CDD exercise as far as the customer status is concerned.
2. Paragraph 37
The Interpretation that “high-risk accounts must be subject to tighter monitoring” applies to paragraphs 37(a) and (b), and therefore the Interpretation has changed.
3. Paragraph 38 – KYC Updates/Periodic Updates
For the sake of greater clarity, the words “update” and “periodic updates” are inserted in subparagraphs (ii) and (iv) of subparagraph (a); and subparagraphs (iii) and () of paragraph 38(c). Clause iv).
4. Paragraph 56 – CDD procedures and sharing of KYC information with the Central KYC Records Registry (CKYCR)
Paragraph 56(h) of the main instructions is amended to read as follows:
To ensure that all KYC records are progressively uploaded to CKYCR, REs shall upload/update KYC data relating to individual client and LE accounts opened before the above dates in accordance with clauses (e) and (f) respectively in paragraph 38 of these Master Instructions or earlier, upon obtaining/receiving updated KYC information from the client. Further, whenever RE obtains additional or updated information from any customer under clause (j) below this paragraph or Rule 9(1C) of the PML Rules, RE shall notify the Central Government within 7 days or such period as RE may notify Provide updated information to CKYCR and CKYCR shall update the KYC records of existing customers in CKYCR. Thereafter, CKYCR shall electronically notify all reporting entities that do business with the relevant customer to update the customer’s KYC record. Once CKYCR notifies RE about an update to an existing customer’s KYC record, RE shall retrieve the updated KYC record from CKYCR and update the KYC record maintained by RE.
Paragraph 56(j) of the General Instructions is amended to read as follows:
In order to establish an account-based relationship, renew/periodic updates or verify the identity of a customer, the RE shall seek a KYC identifier from the customer or retrieve the KYC identifier from the CKYCR (if available) and proceed to obtain the online KYC record using such KYC identifier, and the customer shall not be required to submit the same KYC records or information or any other additional identity documents or details unless –
The existing customer information in the CKYCR record changes; or
KYC records or retrieved information are incomplete or do not comply with currently applicable KYC specifications; or
The downloaded file has expired; or
RE deems it necessary to verify the customer’s identity or address (including current address) or to enhance due diligence or establish an appropriate customer risk profile.
5. KYC MD Appendix 2
As per the correction issued by the Government of India on April 22, 2024 to the order dated February 2, 2021 regarding the “Procedure for Implementation of Section 51A of the Unlawful Activities (Prevention) Act, 1967”, the duties of Designated Central Nodal Officer UAPA are entrusted to the “Additional Secretary” Changed to “Joint Secretary”.
6. The provisions of the Master’s Instructions may henceforth be read as “paragraphs” rather than “chapters”. All internal cross-references to “section” in the KYC primary direction have been replaced with “paragraph”.
