The objective of Know Your Customer (KYC) guidelines is to prevent banks from being used, intentionally or unintentionally, by criminal elements for money laundering activities. KYC procedures also enable banks to know/understand their customers and their financial dealings better which in turn help them manage their risks prudently. Banks should frame their KYC policies incorporating the following four key elements:

  • Customer Acceptance Policy;
  • Customer Identification Procedures;
  • Monitoring of Transactions; and
  • Risk management.

 

Customer Identification Procedure
Features to be verified and documents that may be obtained from customers

Features

Documents

Accounts of individuals

  • Legal name and any other names used
  • Correct permanent address
(i) Passport (ii) PAN card (iii) Voter’s Identity Card (iv) Driving license
(v) Identity card (subject to the bank’s satisfaction) (vi) Letter from a recognized public authority or public servant verifying the identity and residence of the customer to the satisfaction of bank(i) Telephone bill (ii) Bank account statement (iii) Letter from any recognized public authority(iv) Electricity bill (v) Ration card(vi) Letter from employer (subject to satisfaction of the bank)( any one document which provides customer information to the satisfaction of the bank will suffice )
Accounts of companies

  • Name of the company
  • Principal place of business
  • Mailing address of the company
  • Telephone/Fax Number
(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
Accounts of partnership firms

  • Legal name
  • Address
  • Names of all partners and their addresses
  • Telephone numbers of the firm and partners
(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
Accounts of trusts & foundations

  • Names of trustees, settlers, beneficiaries and signatories
  • Names and addresses of the founder, the managers/directors and the beneficiaries
  • Telephone/fax numbers
(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, settlers, 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