RBI/DBR/2015-16/18
Master Direction DBR.AML.BC.No.81/14.01.001/2015-16
February 25, 2016
(Updated as on April 20, 2018)
Master Direction - Know Your Customer (KYC) Direction, 2016
In terms of the provisions of Prevention of Money-Laundering Act, 2002 and the
Prevention of Money-Laundering (Maintenance of Records) Rules, 2005, Regulated
Entities (REs) are required to follow certain customer identification procedures while
undertaking a transaction either by establishing an account based relationship or
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otherwise and monitor their transactions. REs shall take steps to implement
provisions of Prevention of Money-Laundering Act, 2002 and the Prevention of
Money-Laundering (Maintenance of Records) Rules, 2005, as amended from time to
time, including operational instructions issued in pursuance of such amendment(s).
The revised Master Direction is in accordance with the changes carried out in the
PML Rules vide Gazette Notification GSR 538 (E) dated June 1, 2017 and thereafter
and is subject to the final judgment of the Hon'ble Supreme Court in the case of
Justice K.S. Puttaswamy (Retd.) & Anr. V. Union of India, W.P. (Civil) 494/2012 etc.
(Aadhaar cases).
2. Accordingly, in exercise of the powers conferred by Sections 35A of the Banking
Regulation Act, 1949 and the Banking Regulation Act (AACS), 1949, read with
Section 56 of the Act ibid and Rule 9(14) of Prevention of Money-Laundering
(Maintenance of Records) Rules, 2005 the Reserve Bank of India being satisfied
that it is necessary and expedient in the public interest to do so, hereby issues the
Directions hereinafter specified.
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CHAPTER I
PRELIMINARY
1. Short Title and Commencement.
(a) These Directions shall be called the Reserve Bank of India (Know Your
Customer (KYC)) Directions, 2016.
(b) These directions shall come into effect on the day they are placed on the
official website of the Reserve Bank of India.
2. Applicability
(a) The provisions of these Directions shall apply to every entity regulated by
Reserve Bank of India, more specifically as defined in 3 (b) (xiii) below, except
where specifically mentioned otherwise.
(b) These directions shall also apply to those branches and majority owned
subsidiaries of the REs which are located abroad, to the extent they are not
contradictory to the local laws in the host country, provided that:
i. where applicable laws and regulations prohibit implementation of these
guidelines, the same shall be brought to the notice of the Reserve Bank of
India.
ii. in case there is a variance in KYC/AML standards prescribed by the Reserve
Bank of India and the host country regulators, branches/ subsidiaries of REs
are required to adopt the more stringent regulation of the two.
iii. branches/ subsidiaries of foreign incorporated banks may adopt the more
stringent regulation of the two i.e. standards prescribed by the Reserve Bank
of India and their home country regulators.
Provided that this rule shall not apply to `small accounts' referred to in
Section 23 of Chapter VI
3. Definitions
In these Directions, unless the context otherwise requires, the terms herein shall
bear the meanings assigned to them below:
(a) Terms bearing meaning assigned in terms of Prevention of Money-Laundering
Act, 2002 and the Prevention of Money-Laundering (Maintenance of Records)
Rules, 2005:
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i. "Aadhaar number", as defined under sub-section (a) of section 2 of the
Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and
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Services) Act, 2016, henceforth `The Aadhaar Act', means an identification
number issued to an individual by Unique Identification Authority of India
(UIDAI) on receipt of the demographic information and biometric information
as per the provisions of the Aadhaar (Targeted Delivery of Financial and
Other Subsidies, Benefits and Services) Act, 2016.
Explanation 1: In terms of the Aadhaar Act, every resident shall be eligible to
obtain an Aadhaar number.
Explanation 2: Aadhaar will be the document for identity and address.
ii. "Act" and "Rules" means the Prevention of Money-Laundering Act, 2002 and
the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005,
respectively and amendments thereto.
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iii. "Authentication", as defined under sub-section (c) of section 2 of the Aadhaar
Act, means the process by which the Aadhaar number along with
demographic information or biometric information of an individual is submitted
to the Central Identities Data Repository (CIDR) for its verification and such
Repository verifies the correctness, or the lack thereof, on the basis of
information available with it;
iv. Beneficial Owner (BO)
a. Where the customer is a company, the beneficial owner is the natural
person(s), who, whether acting alone or together, or through one or more
juridical persons, has/have a controlling ownership interest or who exercise
control through other means.
Explanation- For the purpose of this sub-clause-
1. "Controlling ownership interest" means ownership of/entitlement to more
than 25 per cent of the shares or capital or profits of the company.
2. "Control" shall include the right to appoint majority of the directors or to
control the management or policy decisions including by virtue of their
shareholding or management rights or shareholders agreements or
voting agreements.
b. Where the customer is a partnership firm, the beneficial owner is the
natural person(s), who, whether acting alone or together, or through one or
more juridical person, has/have ownership of/entitlement to more than 15 per
cent of capital or profits of the partnership.
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c. Where the customer is an unincorporated association or body of
individuals, the beneficial owner is the natural person(s), who, whether
acting alone or together, or through one or more juridical person, has/have
ownership of/entitlement to more than 15 per cent of the property or capital
or profits of the unincorporated association or body of individuals.
Explanation: Term `body of individuals' includes societies. Where no natural
person is identified under (a), (b) or (c) above, the beneficial owner is the
relevant natural person who holds the position of senior managing official.
d. Where the customer is a trust, the identification of beneficial owner(s) shall
include identification of the author of the trust, the trustee, the beneficiaries
with 15% or more interest in the trust and any other natural person
exercising ultimate effective control over the trust through a chain of control
or ownership.
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v. "Biometric information", as defined in the Section 2(g) of the Aadhaar Act,
means photograph, finger print, Iris scan, or such other biological attributes of
an individual as may be specified by Aadhaar (authentication) regulations;
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vi. "Central Identities Data Repository" (CIDR), as defined in Section 2(h) of the
Aadhaar Act, means a centralised database in one or more locations
containing all Aadhaar numbers issued to Aadhaar number holders along with
the corresponding demographic information and biometric information of such
individuals and other information related thereto
vii. "Central KYC Records Registry" (CKYCR) means an entity defined under
Rule 2(1)(aa) of the Rules, to receive, store, safeguard and retrieve the KYC
records in digital form of a customer.
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viii. "Demographic information", as defined in Section 2(k) of the Aadhaar Act,
includes information relating to the name, date of birth, address and other
relevant information of an individual, as may be specified by regulations for
the purpose of issuing an Aadhaar number, but shall not include race, religion,
caste, tribe, ethnicity, language, records of entitlement, income or medical
history;
ix. "Designated Director" means a person designated by the RE to ensure
overall compliance with the obligations imposed under chapter IV of the PML
Act and the Rules and shall include:-
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a. the Managing Director or a whole-time Director, duly authorized by the
Board of Directors, if the RE is a company,
b. the Managing Partner, if the RE is a partnership firm,
c. the Proprietor, if the RE is a proprietorship concern,
d. the Managing Trustee, if the RE is a trust,
e. a person or individual, as the case may be, who controls and manages
the affairs of the RE, if the RE is an unincorporated association or a body
of individuals, and
f. a person who holds the position of senior management or equivalent
designated as a 'Designated Director' in respect of Cooperative Banks
and Regional Rural Banks.
Explanation. - For the purpose of this clause, the terms "Managing Director"
and "Whole-time Director" shall have the meaning assigned to them in the
Companies Act, 2013.
"
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x. Enrolment number" means "Enrolment ID" as defined in Section 2(1)(j) of the
Aadhaar (Enrolment and Update) Regulation, 2016 which means a 28 digit
Enrolment Identification Number allocated to residents at the time of
enrolment of Aadhaar.
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xi. "E-KYC authentication facility", as defined in Aadhaar (Authentication)
Regulations, 2016, means a type of authentication facility in which the
biometric information and/or OTP and Aadhaar number securely submitted
with the consent of the Aadhaar number holder through a requesting entity, is
matched against the data available in the CIDR, and the Authority returns a
digitally signed response containing e-KYC data along with other technical
details related to the authentication transaction;
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xii. "Identity information", as defined in sub-section (n) of section 2 of the
Aadhaar Act, in respect of an individual, includes individual's Aadhaar
number, biometric information and demographic information;
xiii. "Non-profit organisations" (NPO) means any entity or organisation that is
registered as a trust or a society under the Societies Registration Act, 1860
or any similar State legislation or a company registered under Section 8 of
the Companies Act,2013.
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xiv. "Officially Valid Document" (OVD) means the passport, the driving licence,
the Voter's Identity Card issued by the Election Commission of India, job card
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issued by NREGA duly signed by an officer of the State Government, letter
issued by the National Population Register containing details of name and
address.
Explanation 1.-For the purpose of this clause, a document shall be deemed to
be an OVD even if there is a change in the name subsequent to its issuance
provided it is supported by a marriage certificate issued by the State
Government or Gazette notification, indicating such a change of name.
xv. "Person" has the same meaning assigned in the Act and includes:
a. an individual,
b. a Hindu undivided family,
c. a company,
d. a firm,
e. an association of persons or a body of individuals, whether
incorporated or not,
f. every artificial juridical person, not falling within any one of the
above persons (a to e), and
g. any agency, office or branch owned or controlled by any of the
above persons (a to f).
xvi. "Principal Officer" means an officer nominated by the RE, responsible for
furnishing information as per rule 8 of the Rules.
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xvii. "Resident", as defined under sub-section (v) of section 2 of the Aadhaar Act,
means an individual who has resided in India for a period or periods
amounting in all to one hundred and eighty-two days or more in the twelve
months immediately preceding the date of application for enrolment for
Aadhaar;
xviii. "Suspicious transaction" means a "transaction" as defined below, including
an attempted transaction, whether or not made in cash, which, to a person
acting in good faith,:
a. gives rise to a reasonable ground of suspicion that it may involve
proceeds of an offence specified in the Schedule to the Act, regardless
of the value involved; or
b. appears to be made in circumstances of unusual or unjustified
complexity; or
c. appears to not have economic rationale or bona-fide purpose; or
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d. gives rise to a reasonable ground of suspicion that it may involve
financing of the activities relating to terrorism.
Explanation: Transaction involving financing of the activities relating to terrorism
includes transaction involving funds suspected to be linked or related to, or to be
used for terrorism, terrorist acts or by a terrorist, terrorist organization or those
who finance or are attempting to finance terrorism.
xix. A `Small Account' means a savings account in which:
a. the aggregate of all credits in a financial year does not exceed rupees one
lakh;
b. the aggregate of all withdrawals and transfers in a month does not
exceed rupees ten thousand; and
c. the balance at any point of time does not exceed rupees fifty thousand.
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Provided, that this limit on balance shall not be considered while making
deposits through Government grants, welfare benefits and payment
against procurements.
xx. "Transaction" means a purchase, sale, loan, pledge, gift, transfer, delivery or
the arrangement thereof and includes:
a. opening of an account;
b. deposit, withdrawal, exchange or transfer of funds in whatever currency,
whether in cash or by cheque, payment order or other instruments or by
electronic or other non-physical means;
c. the use of a safety deposit box or any other form of safe deposit;
d. entering into any fiduciary relationship;
e. any payment made or received, in whole or in part, for any contractual
or other legal obligation; or
f. establishing or creating a legal person or legal arrangement.
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xxi. "Yes/No authentication facility", as defined in Aadhaar (Authentication)
Regulations, 2016, means a type of authentication facility in which the identity
information and Aadhaar number securely submitted with the consent of the
Aadhaar number holder through a requesting entity, is then matched against
the data available in the CIDR, and the Authority responds with a digitally
signed response containing "Yes" or "No", along with other technical details
related to the authentication transaction, but no identity information.
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(b) "Terms bearing meaning assigned in this Directions, unless the context otherwise
requires, shall bear the meanings assigned to them below:
i. "Common Reporting Standards" (CRS) means reporting standards set for
implementation of multilateral agreement signed to automatically exchange
information based on Article 6 of the Convention on Mutual Administrative
Assistance in Tax Matters.
ii. "Customer" means a person who is engaged in a financial transaction or
activity with a Regulated Entity (RE) and includes a person on whose behalf
the person who is engaged in the transaction or activity, is acting.
iii. "Walk-in Customer" means a person who does not have an account based
relationship with the RE, but undertakes transactions with the RE.
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iv. "Customer Due Diligence (CDD)" means identifying and verifying the
customer and the beneficial owner.
v. "Customer identification" means undertaking the process of CDD.
vi. "FATCA" means Foreign Account Tax Compliance Act of the United States
of America (USA) which, inter alia, requires foreign financial institutions to
report about financial accounts held by U.S. taxpayers or foreign entities in
which U.S. taxpayers hold a substantial ownership interest.
vii. "IGA" means Inter Governmental Agreement between the Governments of
India and the USA to improve international tax compliance and to implement
FATCA of the USA.
viii. "KYC Templates" means templates prepared to facilitate collating and
reporting the KYC data to the CKYCR, for individuals and legal entities.
ix. "Non-face-to-face customers" means customers who open accounts without
visiting the branch/offices of the REs or meeting the officials of REs.
x. "On-going Due Diligence" means regular monitoring of transactions in
accounts to ensure that they are consistent with the customers' profile and
source of funds.
xi. "Periodic Updation" means steps taken to ensure that documents, data or
information collected under the CDD process is kept up-to-date and relevant
by undertaking reviews of existing records at periodicity prescribed by the
Reserve Bank.
xii. "Politically Exposed Persons" (PEPs) are individuals who are or have been
entrusted with prominent public functions in a foreign country, e.g., Heads of
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States/Governments, senior politicians, senior government/judicial/military
officers, senior executives of state-owned corporations, important political
party officials, etc.
xiii. "Regulated Entities" (REs) means
a. all Scheduled Commercial Banks (SCBs)/ Regional Rural Banks (RRBs)/
Local Area Banks (LABs)/ All Primary (Urban) Co-operative Banks (UCBs)
/State and Central Co-operative Banks (StCBs / CCBs) and any other entity
which has been licenced under Section 22 of Banking Regulation Act, 1949,
which as a group shall be referred as `banks'
b. All India Financial Institutions (AIFIs)
c. All Non-Banking Finance Companies (NBFC)s, Miscellaneous Non-Banking
Companies (MNBCs) and Residuary Non-Banking Companies (RNBCs).
d. All Payment System Providers (PSPs)/ System Participants (SPs) and
Prepaid Payment Instrument Issuers (PPI Issuers)
e. All authorised persons (APs) including those who are agents of Money
Transfer Service Scheme (MTSS), regulated by the Regulator.
xiv. "Shell bank" means a bank which is incorporated in a country where it has
no physical presence and is unaffiliated to any regulated financial group.
xv. "Wire transfer" means a transaction carried out, directly or through a chain of
transfers, on behalf of an originator person (both natural and legal) through a
bank by electronic means with a view to making an amount of money
available to a beneficiary person at a bank.
xvi. "Domestic and cross-border wire transfer": When the originator bank and the
beneficiary bank is the same person or different person located in the same
country, such a transaction is a domestic wire transfer, and if the `originator
bank' or `beneficiary bank' is located in different countries such a transaction
is cross-border wire transfer.
(c) All other expressions unless defined herein shall have the same meaning as have
been assigned to them under the Banking Regulation Act or the Reserve Bank of
India Act, or the Prevention of Money Laundering Act and Prevention of Money
Laundering (Maintenance of Records) Rules, any statutory modification or re-
enactment thereto or as used in commercial parlance, as the case may be.
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CHAPTER II
General
4. There shall be a Know Your Customer (KYC) policy duly approved by the Board
of Directors of REs or any committee of the Board to which power has been
delegated.
5. The KYC policy shall include following four key elements:
(a) Customer Acceptance Policy;
(b) Risk Management;
(c) Customer Identification Procedures (CIP); and
(d) Monitoring of Transactions
6. Designated Director:
(a) A "Designated Director" means a person designated by the RE to ensure
overall compliance with the obligations imposed under Chapter IV of the PML
Act and the Rules and shall be nominated by the Board.
(b) The name, designation and address of the Designated Director shall be
communicated to the FIU-IND.
(c) In no case, the Principal Officer shall be nominated as the 'Designated
Director'.
7. Principal Officer:
(a) The Principal Officer shall be responsible for ensuring compliance, monitoring
transactions, and sharing and reporting information as required under the
law/regulations.
(b) The name, designation and address of the Principal Officer shall be
communicated to the FIU-IND.
8. Compliance of KYC policy
(a) REs shall ensure compliance with KYC Policy through:
(i) Specifying as to who constitute `Senior Management' for the purpose of
KYC compliance.
(ii) Allocation of responsibility for effective implementation of policies and
procedures.
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(iii) Independent evaluation of the compliance functions of REs' policies and
procedures, including legal and regulatory requirements.
(iv) Concurrent/internal audit system to verify the compliance with KYC/AML
policies and procedures.
(v) Submission of quarterly audit notes and compliance to the Audit
Committee.
(b) 6REs shall ensure that decision-making functions of determining compliance
with KYC norms are not outsourced.
CHAPTER III
Customer Acceptance Policy
9. REs shall frame a Customer Acceptance Policy.
10. Without prejudice to the generality of the aspect that Customer Acceptance
Policy may contain, REs shall ensure that :
(a) No account is opened in anonymous or fictitious/benami name.
(b) No account is opened where the RE is unable to apply appropriate CDD
measures, either due to non-cooperation of the customer or non-reliability of
the documents/information furnished by the customer.
(c) No transaction or account based relationship is undertaken without following
the CDD procedure.
(d) The mandatory information to be sought for KYC purpose while opening an
account and during the periodic updation, is specified.
(e) `Optional'/additional information, is obtained with the explicit consent of the
customer after the account is opened.
(f) 7REs shall apply the CDD procedure at the UCIC level. Thus, if an existing
KYC compliant customer of a RE desires to open another account with the
same RE, there shall be no need for a fresh CDD exercise.
(g) CDD Procedure is followed for all the joint account holders, while opening a
joint account.
(h) Circumstances in which, a customer is permitted to act on behalf of another
person/entity, is clearly spelt out.
(i) Suitable system is put in place to ensure that the identity of the customer
does not match with any person or entity, whose name appears in the
sanctions lists circulated by Reserve Bank of India.
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11. Customer Acceptance Policy shall not result in denial of banking/financial facility
to members of the general public, especially those, who are financially or socially
disadvantaged.
CHAPTER IV
Risk Management
12. For Risk Management, REs shall have a risk based approach which includes the
following.
(a) Customers shall be categorised as low, medium and high risk category, based
on the assessment and risk perception of the RE.
(b) Risk categorisation shall be undertaken based on parameters such as
customer's identity, social/financial status, nature of business activity, and
information about the clients' business and their location etc. While
considering customer's identity, the ability to confirm identity documents
through online or other services offered by issuing authorities may also be
factored in.
Provided that various other information collected from different categories of
customers relating to the perceived risk, is non-intrusive and the same is specified in
the KYC policy.
Explanation: FATF Public Statement, the reports and guidance notes on KYC/AML
issued by the Indian Banks Association (IBA), guidance note circulated to all
cooperative banks by the RBI etc., may also be used in risk assessment.
Chapter V
Customer Identification Procedure (CIP)
13. REs shall undertake identification of customers in the following cases:
(a) Commencement of an account-based relationship with the customer.
(b) Carrying out any international money transfer operations for a person who is not
an account holder of the bank.
(c) When there is a doubt about the authenticity or adequacy of the customer
identification data it has obtained.
(d) Selling third party products as agents, selling their own products, payment of
dues of credit cards/sale and reloading of prepaid/travel cards and any other
product for more than rupees fifty thousand.
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(e) Carrying out transactions for a non-account based customer, that is a walk-in
customer, where the amount involved is equal to or exceeds rupees fifty
thousand, whether conducted as a single transaction or several transactions
that appear to be connected.
(f) When a RE has reason to believe that a customer (account- based or walk-in) is
intentionally structuring a transaction into a series of transactions below the
threshold of rupees fifty thousand.
14. For the purpose of verifying the identity of customers at the time of
commencement of an account-based relationship, REs, shall at their option, rely
on customer due diligence done by a third party, subject to the following
conditions:
(a) 8Records or the information of the customer due diligence carried out by the
third party is obtained within two days from the third party or from the Central
KYC Records Registry.
(b) Adequate steps are taken by REs to satisfy themselves that copies of
identification data and other relevant documentation relating to the customer
due diligence requirements shall be made available from the third party upon
request without delay.
(c) The third party is regulated, supervised or monitored for, and has measures
in place for, compliance with customer due diligence and record-keeping
requirements in line with the requirements and obligations under the PML
Act.
(d) The third party shall not be based in a country or jurisdiction assessed as
high risk.
(e) The ultimate responsibility for customer due diligence and undertaking
enhanced due diligence measures, as applicable, will be with the RE.
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Chapter VI
Customer Due Diligence (CDD) Procedure
15. 9Procedure for obtaining Identification Information
For undertaking CDD, REs shall obtain the following information from an individual
while establishing an account based relationship or while dealing with the individual
who is a beneficial owner, authorised signatory or the power of attorney holder
related to any legal entity:
a) From an individual who is eligible for enrolment of Aadhaar, the Aadhaar
number; the Permanent Account Number (PAN) or Form No. 60 as defined in
Income-tax Rules, 1962, as amended from time to time;
Provided, where an Aadhaar number has not been assigned to an
individual, proof of application of enrolment for Aadhaar shall be obtained
wherein the enrolment is not older than 6 months and in case PAN is not
submitted, certified copy of an OVD containing details of identity and
address and one recent photograph shall be obtained.
"Explanation- Obtaining a certified copy by reporting entity shall mean
comparing the copy of officially valid document so produced by the client with
the original and recording the same on the copy by the authorised officer of
the reporting entity"
Provided further, that from an individual, who is a resident in the State of
Jammu and Kashmir or Assam or Meghalaya, and who does not submit
Aadhaar or proof of application of enrolment for Aadhaar, the following
shall be obtained:
i. certified copy of an OVD containing details of identity and address and
ii. one recent photograph
b) From an individual who is not eligible to be enrolled for an Aadhaar number, or
who is not a resident, the following shall be obtained
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i. PAN or Form No. 60 as defined in Income-tax Rules, 1962, as
amended from time to time.
ii. one recent photograph and
iii. A certified copy of an OVD containing details of identity and address.
Provided that in case the OVD submitted by a foreign national does not
contain the details of address, in such case the documents issued by the
Government departments of foreign jurisdictions and letter issued by the
Foreign Embassy or Mission in India shall be accepted as proof of
address.
Provided further that, while opening accounts of legal entities as specified
in part III of this Master Direction, in case, PAN of the authorised signatory
or the power of attorney holder is not submitted, the certified copy of OVD
of the authorised signatory or the power of attorney holder shall be
obtained, even if such OVD does not contain address ,.
Explanation 1: Aadhaar number shall not be sought from individuals who are
not `residents' as defined under these Directions.
Explanation 2: A declaration to the effect of individual not being eligible for
enrolment of Aadhaar may be obtained by the RE
Explanation 3: Customers, at their option, shall submit one of the five OVDs
(c) In case the identity information relating to the Aadhaar number or Permanent
Account Number submitted by the customer does not have current address,
an OVD as defined in section 3(a) (xiv) shall be obtained from the customer
for this purpose.
"Provided that in case the OVD furnished by the customer does not contain
updated address, the following documents shall be deemed to be OVDs for
the limited purpose of proof of address:-
i. utility bill which is not more than two months old of any service provider
(electricity, telephone, post-paid mobile phone, piped gas, water bill);
ii. property or Municipal tax receipt;
iii. pension or family pension payment orders (PPOs) issued to retired
employees by Government Departments or Public Sector Undertakings,
if they contain the address;
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iv. letter of allotment of accommodation from employer issued by State
Government or Central Government Departments, statutory or regulatory
bodies, public sector undertakings, scheduled commercial banks,
financial institutions and listed companies and leave and licence
agreements with such employers allotting official accommodation;
Provided further that the customer shall submit Aadhaar or OVD updated with
current address within a period of three months of submitting the above
documents."
(d) RE, at the time of receipt of the Aadhaar number, shall carry out, with the
explicit consent of the customer, e-KYC authentication (biometric or OTP
based) or Yes/No authentication.
Provided,
i. Yes/No authentication shall not be carried out while establishing an
account based relationship.
ii. In case of existing accounts where Yes/No authentication is carried
out, REs shall ensure to carry out biometric or OTP based e-KYC
authentication within a period of six months after carrying out yes/no
authentication.
iii. Yes/No authentication in respect of beneficial owners of a legal entity
shall suffice in respect of existing accounts or while establishing an
account based relationship.
iv. Where OTP based authentication is performed in `non-face to face'
mode for opening new accounts, the limitations as specified in Section
17 shall be applied.
v. Biometric based e-KYC authentication can be done by bank
official/business correspondents/business facilitators/ Biometric
enabled ATMs.
Explanation 1: While seeking explicit consent of the customer, the consent
provisions as specified in Section 5 and 6 of the Aadhaar (Authentication)
Regulations, 2016, shall be observed.
Explanation 2: REs shall allow the authentication to be done at any of their
branches.
(e) In case the customer eligible to be enrolled for Aadhaar and obtain a
Permanent Account Number, referred to in Section 15(a) above, does not
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submit the Aadhaar number or the Permanent Account Number/ form 60 at
the time of commencement of an account based relationship with a RE, the
Customer shall submit the same within a period of six months from the date of
the commencement of the account based relationship. In case the customer
fails to submit the Aadhaar number or Permanent Account Number/form 60
within the aforesaid six months period, the said account shall cease to be
operational till the time the Aadhaar number and Permanent Account Number/
form 60 is submitted by the customer.
Explanation: In case of asset accounts such as loan accounts, for the purpose
of ceasing the operation in the account, only credits shall be allowed.
(f) REs shall duly inform the customer about this provision while opening the
account.
(g) The customer, eligible to be enrolled for Aadhaar and obtain the Permanent
Account Number, except one who is a resident in the State of Jammu and
Kashmir or Assam or Meghalaya, already having an account based
relationship with REs, shall submit the Aadhaar number and Permanent
Account Number/ form 60 by such date as may be notified by the Central
Government. In case the customer fails to submit the Aadhaar number and
Permanent Account Number/form 60 by such date, the said account shall
cease to be operational till the time the Aadhaar number and Permanent
Account Number/form 60 is submitted by the customer.
Provided REs shall serve at least two notices for the compliance before such
date.
(h) REs shall ensure that introduction is not to be sought while opening accounts.
Part I -CDD Procedure in case of Individuals
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16. REs shall apply the following procedure while establishing an account based
relationship with an individual:
(a) Obtain information as mentioned under Section 15; and
(b) such other documents pertaining to the nature of business or financial status
specified by the RE in their KYC policy.
Provided that information collected from customers for the purpose of opening of
account shall be treated as confidential and details thereof shall not be divulged for
18
the purpose of cross selling, or for any other purpose without the express
permission of the customer.
Explanation: CDD procedure, including Aadhaar authentication and obtaining PAN/
form 60 as applicable, shall be carried out for all the joint account holders.
17. 11Accounts opened using OTP based e-KYC, in non face to face mode are
subject to the following conditions:
(i) There must be a specific consent from the customer for authentication
through OTP
(ii) the aggregate balance of all the deposit accounts of the customer shall
not exceed rupees one lakh. In case, the balance exceeds the threshold, the
account shall cease to be operational, till CDD as mentioned at (v) below is
complete.
(iii) the aggregate of all credits in a financial year, in all the deposit taken
together, shall not exceed rupees two lakh.
(iv) As regards borrowal accounts, only term loans shall be sanctioned.
The aggregate amount of term loans sanctioned shall not exceed rupees
sixty thousand in a year.
12
(v) Accounts, both deposit and borrowal, opened using OTP based e-
KYC shall not be allowed for more than one year within which Biometric
based e-KYC authentication Is to be completed.
17
(vi) If the CDD procedure as mentioned above is not completed within a
year, in respect of deposit accounts, the same shall be closed immediately.
In respect of borrowal accounts no further debits shall be allowed.
(vii) REs shall ensure that only one account is opened using OTP based
KYC in non face to face mode and a declaration shall be obtained from the
customer to the effect that no other account has been opened nor will be
opened using OTP based KYC in non face to face mode. Further, while
uploading KYC information to CKYCR, REs shall clearly indicate that such
accounts are opened using OTP based e-KYC and other REs shall not open
accounts based on the KYC information of accounts opened with OTP
based e-KYC procedure in non face to face mode.
(viii) REs shall have strict monitoring procedures including systems to
generate alerts in case of any non-compliance/violation, to ensure
compliance with the above mentioned conditions.
19
18. 13Deleted
19. 14Deleted
20. 15Deleted
16
21. Deleted
17
22. Deleted
23. 18In case an individual customer who does not have Aadhaar/enrolment number
and PAN and desires to open a bank account, banks shall open a `Small
Account', subject to the following:
(a) The bank shall obtain a self-attested photograph from the customer.
(b) The designated officer of the bank certifies under his signature that the person
opening the account has affixed his signature or thumb impression in his
presence.
(c) Such accounts are opened only at Core Banking Solution (CBS) linked branches
or in a branch where it is possible to manually monitor and ensure that foreign
remittances are not credited to the account.
(d) Banks shall ensure that the stipulated monthly and annual limits on aggregate of
transactions and balance requirements in such accounts are not breached,
before a transaction is allowed to take place.
(e) The account shall remain operational initially for a period of twelve months which
can be extended for a further period of twelve months, provided the account
holder applies and furnishes evidence of having applied for any of the OVDs
during the first twelve months of the opening of the said account.
(f) The entire relaxation provisions shall be reviewed after twenty four months.
(g) The account shall be monitored and when there is suspicion of money
laundering or financing of terrorism activities or other high risk scenarios, the
identity of the customer shall be established through the production of an OVD
and Aadhaar Number or where an Aadhaar number has not been assigned to the
customer through the production of proof of application towards enrolment for
Aadhaar which is not more than six months old, along with an OVD.
Provided further that if the customer is not eligible to be enrolled for an Aadhaar
number, the identity of the customer shall be established through the production
of an OVD.
20
(h) Foreign remittance shall not be allowed to be credited into the account unless the
identity of the customer is fully established through the production of an OVD and
Aadhaar Number or the enrolment number which is not more than six months old,
where the person is eligible to enrol for Aadhaar number has not been assigned
an Aadhaar number.
Provided that if the client is not eligible to be enrolled for the Aadhaar number, the
identity of client shall be established through the production of an OVD.
24. 19Simplified procedure for opening accounts by Non-Banking Finance
Companies (NBFCs): In case a person who desires to open an account is not
able to produce identification information as mentioned under Section 15
NBFCs may at their discretion open accounts subject to the following
conditions:
(a) The NBFC shall obtain a self-attested photograph from the customer.
(b) The designated officer of the NBFC certifies under his signature that the
person opening the account has affixed his signature or thumb impression in
his presence.
(c) The account shall remain operational initially for a period of twelve months,
within which the customer has to furnish identification information as
mentioned under Section 15.
(d) The identification process as per Section 15 is to be completed for all the
existing accounts opened on the basis of introduction earlier, within a period
of six months.
(e) balances in all their accounts taken together shall not exceed rupees fifty
thousand at any point of time
(f) the total credit in all the accounts taken together shall not exceed rupees one
lakh in a year.
(g) The customer shall be made aware that no further transactions will be
permitted until the full KYC procedure is completed in case Directions (e) and
(f) above are breached by him.
(h) The customer shall be notified when the balance reaches rupees forty
thousand or the total credit in a year reaches rupees eighty thousand that
appropriate documents for conducting the KYC must be submitted otherwise
the operations in the account shall be stopped when the total balance in all
21
the accounts taken together exceeds the limits prescribed in direction (e) and
(f) above.
25. 20Deleted .
26. 21KYC verification once done by one branch/office of the RE shall be valid for
transfer of the account to any other branch/office of the same RE, provided full
KYC verification has already been done for the concerned account and the
same is not due for periodic updation.
Part II - CDD Measures for Sole Proprietary firms
27. 22For opening an account in the name of a sole proprietary firm, identification
information as mentioned under Section 15 in respect of the individual
(proprietor) shall be obtained.
28. In addition to the above, any two of the following documents as a proof of
business/ activity in the name of the proprietary firm shall also be obtained:
(a) Registration certificate
(b) Certificate/licence issued by the municipal authorities under Shop and
Establishment Act.
(c) Sales and income tax returns.
23
(d) CST/VAT/ GST certificate (provisional/final).
(e) Certificate/registration document issued by Sales Tax/Service
Tax/Professional Tax authorities.
(f) IEC (Importer Exporter Code) issued to the proprietary concern by the
office of DGFT/ Licence/certificate of practice issued in the name of the
proprietary concern by any professional body incorporated under a
statute.
(g) 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.
(h) Utility bills such as electricity, water, and landline telephone bills.
29. In cases where the REs are satisfied that it is not possible to furnish two such
documents, REs may, at their discretion, accept only one of those documents
as proof of business/activity.
22
Provided REs undertake contact point verification and collect such other
information and clarification as would be required to establish the existence of
such firm, and shall confirm and satisfy itself that the business activity has been
verified from the address of the proprietary concern.
Part III- CDD Measures for Legal Entities
30. 24For opening an account of a company, certified copies of each of the
following documents shall be obtained:
(a) Certificate of incorporation.
(b) Memorandum and Articles of Association.
(c) A resolution from the Board of Directors and power of attorney granted to
its managers, officers or employees to transact on its behalf.
(d) Identification information as mentioned under Section 15 in respect of
managers, officers or employees holding an attorney to transact on its
behalf.
25
31. For opening an account of a partnership firm, the certified copies of each of
the following documents shall be obtained:
(a) Registration certificate.
(b) Partnership deed.
(c) Identification information as mentioned under Section 15in respect of the
person holding an attorney to transact on its behalf.
32. 26For opening an account of a trust, certified copies of each of the following
documents shall be obtained:
(a) Registration certificate.
(b) Trust deed.
(c) Identification information as mentioned under Section 15in respect of the
person holding a power of attorney to transact on its behalf.
33. 27For opening an account of an unincorporated association or a body of
individuals, certified copies of each of the following documents shall be
obtained:
(a) resolution of the managing body of such association or body of individuals;
(b) power of attorney granted to transact on its behalf;
23
(c) Identification information as mentioned under Section 15 in respect of the
person holding an attorney to transact on its behalf and
(d) such information as may be required by the RE to collectively establish the
legal existence of such an association or body of individuals.
Explanation: Unregistered trusts/partnership firms shall be included under the
term `unincorporated association'.
Explanation: Term `body of individuals' includes societies.
33A For opening accounts of juridical persons not specifically covered in the earlier
part, such as Government or its Departments, societies, universities and local bodies
like village panchayats, certified copies of the following documents shall be
obtained.:
(a) Document showing name of the person authorised to act on behalf of the
entity;
28
(b) Aadhaar/ PAN/ Officially valid documents for proof of identity and
address in respect of the person holding an attorney to transact on its
behalf and
(c) Such documents as may be required by the RE to establish the legal
existence of such an entity/juridical person.
Part IV - Identification of Beneficial Owner
34. For opening an account of a Legal Person who is not a natural person, the
beneficial owner(s) shall be identified and all reasonable steps in terms of Rule
9(3) of the Rules to verify his/her identity shall be undertaken keeping in view
the following:
(a) Where the customer or the owner of the controlling interest is a company listed
on a stock exchange, or is a subsidiary of such a company, it is not necessary
to identify and verify the identity of any shareholder or beneficial owner of such
companies.
(b) In cases of trust/nominee or fiduciary accounts whether the customer is acting
on behalf of another person as trustee/nominee or any other intermediary is
determined. In such cases, satisfactory evidence of the identity of the
intermediaries and of the persons on whose behalf they are acting, as also
24
details of the nature of the trust or other arrangements in place shall be
obtained.
Part V - On-going Due Diligence
35. REs shall undertake on-going due diligence of customers to ensure that their
transactions are consistent with their knowledge about the customers,
customers' business and risk profile; and the source of funds.
36. Without prejudice to the generality of factors that call for close monitoring
following types of transactions shall necessarily be monitored:
a) Large and complex transactions including RTGS transactions, and those
with unusual patterns, inconsistent with the normal and expected activity of
the customer, which have no apparent economic rationale or legitimate
purpose.
b) Transactions which exceed the thresholds prescribed for specific categories
of accounts.
c) High account turnover inconsistent with the size of the balance maintained.
d) Deposit of third party cheques, drafts, etc. in the existing and newly opened
accounts followed by cash withdrawals for large amounts.
37. The extent of monitoring shall be aligned with the risk category of the
customer.
Explanation: High risk accounts have to be subjected to more intensified monitoring.
(a) A system of periodic review of risk categorisation of accounts, with such
periodicity being at least once in six months, and the need for applying
enhanced due diligence measures shall be put in place.
(b) The transactions in accounts of marketing firms, especially accounts of
Multi-level Marketing (MLM) Companies shall be closely monitored.
Explanation: Cases where a large number of cheque books are sought by the
company and/or multiple small deposits (generally in cash) across the country in
one bank account and/or where a large number of cheques are issued bearing
similar amounts/dates, shall be immediately reported to Reserve Bank of India and
other appropriate authorities such as FIU-IND.
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38. 29Periodic Updation
Periodic updation shall be carried out at least 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 as per the following procedure:
(a) REs shall carry out
i. PAN verification from the verification facility available with the issuing
authority and
ii. Authentication, of Aadhaar Number already available with the RE with
the explicit consent of the customer in applicable cases.
iii. In case identification information available with Aadhaar does not
contain current address an OVD containing current address may be
obtained.
iv. Certified copy of OVD containing identity and address shall be obtained
at the time of periodic updation from individuals not eligible to obtain
Aadhaar, except from individuals who are categorised as `low risk'. In
case of low risk customers when there is no change in status with
respect to their identities and addresses, a self-certification to that
effect shall be obtained.
v. In case of Legal entities, RE shall review the documents sought at the
time of opening of account and obtain fresh certified copies.
(b) REs may not insist on the physical presence of the customer for the purpose of
furnishing OVD or furnishing consent for Aadhaar authentication unless there
are sufficient reasons that physical presence of the account holder/holders is
required to establish their bona-fides. Normally, OVD/Consent forwarded by the
customer through mail/post, etc., shall be acceptable.
(c) REs shall ensure to provide acknowledgment with date of having performed
KYC updation.
(d) The time limits prescribed above would apply from the date of opening of the
account/ last verification of KYC.
39. 30Deleted
26
Part VI - Enhanced and Simplified Due Diligence Procedure
A. Enhanced Due Diligence
40. 31Accounts of non-face-to-face customers: REs shall ensure that the first
payment is to be effected through the customer's KYC-complied account with
another RE, for enhanced due diligence of non-face to face customers.
41. Accounts of Politically Exposed Persons (PEPs)
A. REs shall have the option of establishing a relationship with PEPs provided
that:
(a) sufficient information including information about the sources of funds
accounts of family members and close relatives is gathered on the PEP;
(b) the identity of the person shall have been verified before accepting the PEP
as a customer;
(c) the decision to open an account for a PEP is taken at a senior level in
accordance with the REs' Customer Acceptance Policy;
(d) all such accounts are subjected to enhanced monitoring on an on-going
basis;
(e) in the event of an existing customer or the beneficial owner of an existing
account subsequently becoming a PEP, senior management's approval is
obtained to continue the business relationship;
(f) the CDD measures as applicable to PEPs including enhanced monitoring
on an on-going basis are applicable.
B. These instructions shall also be applicable to accounts where a PEP is the
beneficial owner
42. Client accounts opened by professional intermediaries:
REs shall ensure while opening client accounts through professional
intermediaries, that:
a) Clients shall be identified when client account is opened by a professional
intermediary on behalf of a single client.
b) REs shall have option to hold 'pooled' accounts managed by professional
intermediaries on behalf of entities like mutual funds, pension funds or other
types of funds.
c) REs shall not open accounts of such professional intermediaries who are
bound by any client confidentiality that prohibits disclosure of the client details
to the RE.
27
d) All the beneficial owners shall be identified where funds held by the
intermediaries are not co-mingled at the level of RE, and there are 'sub-
accounts', each of them attributable to a beneficial owner, or where such
funds are co-mingled at the level of RE, the RE shall look for the beneficial
owners.
e) REs shall, at their discretion, rely on the 'customer due diligence' (CDD) done
by an intermediary, provided that the intermediary is a regulated and
supervised entity and has adequate systems in place to comply with the KYC
requirements of the customers.
f) The ultimate responsibility for knowing the customer lies with the RE.
B. Simplified Due Diligence
43. 32Simplified norms for Self Help Groups (SHGs)
(a) CDD of all the members of SHG as per the CDD procedure mentioned in
Section 15 of the MD shall not be required while opening the savings bank
account of the SHG
(b) CDD as per the CDD procedure mentioned in Section 15 of the MD of all the
office bearers shall suffice.
(c) No separate CDD as per the CDD procedure mentioned in Section 15 of the
MD of the members or office bearers shall be necessary at the time of credit
linking of SHGs.
44. Procedure to be followed by banks while opening accounts of foreign
students
(a) Banks shall, at their option, open a Non Resident Ordinary (NRO) bank
account of a foreign student on the basis of his/her passport (with visa &
immigration endorsement) bearing the proof of identity and address in the
home country together with a photograph and a letter offering admission from
the educational institution in India.
i. Provided that a declaration about the local address shall be obtained
within a period of 30 days of opening the account and the said local
address is verified.
ii. Provided further that pending the verification of address, the account shall
be operated with a condition of allowing foreign remittances not exceeding
28
USD 1,000 or equivalent into the account and a cap of rupees fifty
thousand on aggregate in the same, during the 30-day period.
(b) The account shall be treated as a normal NRO account, and shall be operated
in terms of Reserve Bank of India's instructions on Non-Resident Ordinary
Rupee (NRO) Account, and the provisions of FEMA. 1999.
(c) Students with Pakistani nationality shall require prior approval of the Reserve
Bank for opening the account.
45. Simplified KYC norms for Foreign Portfolio Investors (FPIs)
Accounts of FPIs which are eligible/ registered as per SEBI guidelines, for the
purpose of investment under Portfolio Investment Scheme (PIS), shall be opened
by accepting KYC documents as detailed in Annex II, subject to Income Tax
(FATCA/CRS) Rules.
Provided that banks shall obtain undertaking from FPIs or the Global Custodian
acting on behalf of the FPI that as and when required, the exempted documents as
detailed in Annex II will be submitted.
Chapter VII
Record Management
46. The following steps shall be taken regarding maintenance, preservation and
reporting of customer account information, with reference to provisions of
PML Act and Rules. REs shall,
(a) maintain all necessary records of transactions between the RE and the
customer, both domestic and international, for at least five years from the date
of transaction;
(b) preserve the records pertaining to the identification of the customers and their
addresses obtained while opening the account and during the course of
business relationship, for at least five years after the business relationship is
ended;
(c) make available the identification records and transaction data to the
competent authorities upon request;
(d) introduce a system of maintaining proper record of transactions prescribed
under Rule 3 of Prevention of Money Laundering (Maintenance of Records)
Rules, 2005 (PML Rules, 2005);
29
(e) maintain all necessary information in respect of transactions prescribed
under PML Rule 3 so as to permit reconstruction of individual transaction,
including the following:
(i) the nature of the transactions;
(ii) the amount of the transaction and the currency in which it was
denominated;
(iii) the date on which the transaction was conducted; and
(iv) the parties to the transaction.
(f) evolve a system for proper maintenance and preservation of account
information in a manner that allows data to be retrieved easily and quickly
whenever required or when requested by the competent authorities;
(g) maintain records of the identity and address of their customer, and records
in respect of transactions referred to in Rule 3 in hard or soft format.
Chapter VIII
Reporting Requirements to Financial Intelligence Unit - India
47. REs shall furnish to the Director, Financial Intelligence Unit-India (FIU-IND),
information referred to in Rule 3 of the PML (Maintenance of Records)
Rules, 2005 in terms of Rule 7 thereof.
Explanation: In terms of Third Amendment Rules notified September 22, 2015
regarding amendment to sub rule 3 and 4 of rule 7, Director, FIU-IND shall have
powers to issue guidelines to the REs for detecting transactions referred to in
various clauses of sub-rule (1) of rule 3, to direct them about the form of
furnishing information and to specify the procedure and the manner of
furnishing information.
48. The reporting formats and comprehensive reporting format guide,
prescribed/ released by FIU-IND and Report Generation Utility and Report
Validation Utility developed to assist reporting entities in the preparation of
prescribed reports shall be taken note of. The editable electronic utilities to
file electronic Cash Transaction Reports (CTR) / Suspicious Transaction
Reports (STR) which FIU-IND has placed on its website shall be made use
of by REs which are yet to install/adopt suitable technological tools for
extracting CTR/STR from their live transaction data. The Principal Officers of
those REs, whose all branches are not fully computerized, shall have
suitable arrangement to cull out the transaction details from branches which
30
are not yet computerized and to feed the data into an electronic file with the
help of the editable electronic utilities of CTR/STR as have been made
available by FIU-IND on its website http://fiuindia.gov.in.
49. While furnishing information to the Director, FIU-IND, delay of each day in
not reporting a transaction or delay of each day in rectifying a mis-
represented transaction beyond the time limit as specified in the Rule shall
be constituted as a separate violation. REs shall not put any restriction on
operations in the accounts where an STR has been filed. REs shall keep the
fact of furnishing of STR strictly confidential. It shall be ensured that there is
no tipping off to the customer at any level.
50. Robust software, throwing alerts when the transactions are inconsistent with
risk categorization and updated profile of the customers shall be put in to
use as a part of effective identification and reporting of suspicious
transactions.
Chapter IX
Requirements/obligations under International Agreements
Communications from International Agencies
51. REs shall ensure that in terms of Section 51A of the Unlawful Activities
(Prevention) (UAPA) Act, 1967, they do not have any account in the name of
individuals/entities appearing in the lists of individuals and entities, suspected
of having terrorist links, which are approved by and periodically circulated by the
United Nations Security Council (UNSC). The details of the two lists are as
under:
(a) The "ISIL (Da'esh) &Al-Qaida Sanctions List", which includes names of
individuals and entities associated with the Al-Qaida. The updated ISIL &Al-
Qaida Sanctions List is available at
https://scsanctions.un.org/fop/fop?xml=htdocs/resources/xml/en/consolidated.
xml&xslt=htdocs/resources/xsl/en/al-qaida-r.xsl
(b) The"1988 Sanctions List", consisting of individuals (Section A of the
consolidated list) and entities (Section B) associated with the Taliban which is
available at
https://scsanctions.un.org/fop/fop?xml=htdocs/resources/xml/en/consolidated.
xml&xslt=htdocs/resources/xsl/en/taliban-r.xsl.
31
52. Details of accounts resembling any of the individuals/entities in the lists
shall be reported to FIU-IND apart from advising Ministry of Home Affairs as
required under UAPA notification dated August 27, 2009.
53. In addition to the above, other UNSCRs circulated by the Reserve Bank in
respect of any other jurisdictions/ entities from time to time shall also be taken
note of.
54. Freezing of Assets under Section 51A of Unlawful Activities (Prevention)
Act, 1967
The procedure laid down in the UAPA Order dated August 27, 2009 (Annex I of
this Master Direction shall be strictly followed and meticulous compliance with the
Order issued by the Government shall be ensured.
55. Jurisdictions that do not or insufficiently apply the FATF
Recommendations
(a) FATF Statements circulated by Reserve Bank of India from time to time, and
publicly available information, for identifying countries, which do not or
insufficiently apply the FATF Recommendations, shall be considered. Risks
arising from the deficiencies in AML/CFT regime of the jurisdictions included in
the FATF Statement shall be taken into account.
(b) Special attention shall be given to business relationships and transactions
with persons (including legal persons and other financial institutions) from or
in countries that do not or insufficiently apply the FATF Recommendations
and jurisdictions included in FATF Statements.
Explanation: The process referred to in Section 55 a & b do not preclude REs
from having legitimate trade and business transactions with the countries and
jurisdictions mentioned in the FATF statement.
(c) The background and purpose of transactions with persons (including legal
persons and other financial institutions) from jurisdictions included in FATF
Statements and countries that do not or insufficiently apply the FATF
Recommendations shall be examined, and written findings together with all
documents shall be retained and shall be made available to Reserve
Bank/other relevant authorities, on request.
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Chapter X
Other Instructions
56. Secrecy Obligations and Sharing of Information:
(a) Banks shall maintain secrecy regarding the customer information which arises
out of the contractual relationship between the banker and customer.
(b) While considering the requests for data/information from Government and other
agencies, banks shall satisfy themselves that the information being sought is not
of such a nature as will violate the provisions of the laws relating to secrecy in the
banking transactions.
(c) The exceptions to the said rule shall be as under:
i. Where disclosure is under compulsion of law
Where there is a duty to the public to disclose,
ii.
the interest of bank requires disclosure and
iii.
Where the disclosure is made with the express or implied consent of
iv.
the customer.
(d) NBFCs shall maintain confidentiality of information as provided in Section 45NB
of RBI Act 1934.
57. CDD Procedure and sharing KYC information with Central KYC Records
Registry (CKYCR)
REs shall capture the KYC information for sharing with the CKYCR in the manner
mentioned in the Rules, as required by the revised KYC templates prepared for
`individuals' and `Legal Entities' as the case may be. Government of India has
authorised the Central Registry of Securitisation Asset Reconstruction and Security
Interest of India (CERSAI), to act as, and to perform the functions of the CKYCR vide
Gazette Notification No. S.O. 3183(E) dated November 26, 2015.
The `live run' of the CKYCR would start with effect from July 15, 2016 in phased
manner beginning with new `individual accounts'. Accordingly, REs shall take the
following steps:
(i) Scheduled Commercial Banks (SCBs) shall invariably upload the KYC
data pertaining to all new individual accounts opened on or after January
1, 2017 with CERSAI in terms of the provisions of the Prevention of Money
Laundering (Maintenance of Records) Rules, 2005. SCBs are, however,
33
allowed time upto February 1, 2017 for uploading date in respect of
accounts opened during January 2017.
(ii) REs other than SCBs shall upload the KYC data pertaining to all new
individual accounts opened on or after from April 1, 2017 with CERSAI in
terms of the provisions of the Prevention of Money Laundering
(Maintenance of Records) Rules, 2005.
(iii) Operational Guidelines (version 1.1) for uploading the KYC data have
been released by CERSAI. Further, `Test Environment' has also been
made available by CERSAI for the use of REs.
58. Reporting requirement under Foreign Account Tax Compliance Act
(FATCA) and Common Reporting Standards (CRS)
Under FATCA and CRS, REs shall adhere to the provisions of Income Tax Rules
114F, 114G and 114H and determine whether they are a Reporting Financial
Institution as defined in Income Tax Rule 114F and if so, shall take following steps
for complying with the reporting requirements:
(a) Register on the related e-filling portal of Income Tax Department as Reporting
Financial Institutions at the link https://incometaxindiaefiling.gov.in/ post login -
-> My Account --> Register as Reporting Financial Institution,
(b) Submit online reports by using the digital signature of the `Designated
Director' by either uploading the Form 61B or `NIL' report, for which, the
schema prepared by Central Board of Direct Taxes (CBDT) shall be referred
to.
Explanation: REs shall refer to the spot reference rates published by Foreign
Exchange Dealers' Association of India (FEDAI) on their website at
http://www.fedai.org.in/RevaluationRates.aspx for carrying out the due
diligence procedure for the purposes of identifying reportable accounts in
terms of Rule 114H.
(c) Develop Information Technology (IT) framework for carrying out due diligence
procedure and for recording and maintaining the same, as provided in Rule
114H.
34
(d) Develop a system of audit for the IT framework and compliance with Rules
114F, 114G and 114H of Income Tax Rules.
(e) Constitute a "High Level Monitoring Committee" under the Designated
Director or any other equivalent functionary to ensure compliance.
(f) Ensure compliance with updated instructions/ rules/ guidance notes/ Press
releases/ issued on the subject by Central Board of Direct Taxes (CBDT) from
time to time and available on the web site
http://www.incometaxindia.gov.in/Pages/default.aspx. REs may take note of
the following:
a) updated Guidance Note on FATCA and CRS
b) a press release on `Closure of Financial Accounts' under Rule 114H
(8).
59. Period for presenting payment instruments
Payment of cheques/drafts/pay orders/banker's cheques, if they are presented
beyond the period of three months from the date of such instruments, shall not be
made.
60. Operation of Bank Accounts & Money Mules
The instructions on opening of accounts and monitoring of transactions shall be strictly
adhered to, in order to minimise the operations of "Money Mules" which are used to
launder the proceeds of fraud schemes (e.g., phishing and identity theft) by criminals
who gain illegal access to deposit accounts by recruiting third parties which act as
"money mules." If it is established that an account opened and operated is that of a
Money Mule, it shall be deemed that the bank has not complied with these directions.
61. Collection of Account Payee Cheques
Account payee cheques for any person other than the payee constituent shall not be
collected. Banks shall, at their option, collect account payee cheques drawn for an
amount not exceeding rupees fifty thousand to the account of their customers who
are co-operative credit societies, provided the payees of such cheques are the
constituents of such co-operative credit societies.
62. (a) A Unique Customer Identification Code (UCIC) shall be allotted while
entering into new relationships with individual customers as also the existing
customers by banks and NBFCs.
35
(b) The banks/NBFCs shall, at their option, not issue UCIC to all walk-
in/occasional customers such as buyers of pre-paid instruments/purchasers of
third party products provided it is ensured that there is adequate mechanism to
identify such walk-in customers who have frequent transactions with them and
ensure that they are allotted UCIC.
63. Introduction of New Technologies Credit Cards/Debit Cards/
Smart Cards/Gift Cards/Mobile Wallet/ Net Banking/ Mobile
Banking/RTGS/ NEFT/ECS/IMPS etc.
Adequate attention shall be paid by REs to any money-laundering and financing of
terrorism threats that may arise from new or developing technologies and it shall
be ensured that appropriate KYC procedures issued from time to time are duly
applied before introducing new products/services/technologies. Agents used for
marketing of credit cards shall also be subjected to due diligence and KYC measures.
64. Correspondent Banks
Banks shall have a policy approved by their Boards, or by a committee headed by the
Chairman/CEO/MD to lay down parameters for approving correspondent banking
relationships subject to the following conditions:
(a) Sufficient information in relation to the nature of business of the bank
including information on management, major business activities, level of
AML/CFT compliance, purpose of opening the account, identity of any third
party entities that will use the correspondent banking services, and
regulatory/supervisory framework in the bank's home country shall be
gathered.
(b) Post facto approval of the Board at its next meeting shall be obtained for the
proposals approved by the Committee.
(c) The responsibilities of each bank with whom correspondent banking
relationship is established shall be clearly documented.
(d) In the case of payable-through-accounts, the correspondent bank shall be
satisfied that the respondent bank has verified the identity of the customers
having direct access to the accounts and is undertaking on-going 'due
diligence' on them.
(e) The correspondent bank shall ensure that the respondent bank is able to
provide the relevant customer identification data immediately on request.
36
(f) Correspondent relationship shall not be entered into with a shell bank.
(g) It shall be ensured that the correspondent banks do not permit their accounts
to be used by shell banks.
(h) Banks shall be cautious with correspondent banks located in jurisdictions
which have strategic deficiencies or have not made sufficient progress in
implementation of FATF Recommendations. .
(i) Banks shall ensure that respondent banks have KYC/AML policies and
procedures in place and apply enhanced 'due diligence' procedures for
transactions carried out through the correspondent accounts.
65. Wire transfer
REs shall ensure the following while effecting wire transfer:
(a) All cross-border wire transfers including transactions using credit or debit
card shall be accompanied by accurate and meaningful originator information
such as name, address and account number or a unique reference number, as
prevalent in the country concerned in the absence of account.
Exception: Interbank transfers and settlements where both the originator and
beneficiary are banks or financial institutions shall be exempt from the above
requirements.
(b) Domestic wire transfers of rupees fifty thousand and above shall be
accompanied by originator information such as name, address and account
number.
(c) Customer Identification shall be made if a customer is intentionally
structuring wire transfer below rupees fifty thousand to avoid reporting or
monitoring. In case of non-cooperation from the customer, efforts shall be
made to establish his identity and STR shall be made to FIU-IND.
(d) Complete originator information relating to qualifying wire transfers shall be
preserved at least for a period of five years by the ordering bank.
(e) A bank processing as an intermediary element of a chain of wire transfers
shall ensure that all originator information accompanying a wire transfer is
retained with the transfer.
(f) The receiving intermediary bank shall transfer full originator information
accompanying a cross-border wire transfer and preserve the same for at
37
least five years if the same cannot be sent with a related domestic wire
transfer, due to technical limitations.
(g) All the information on the originator of wire transfers shall be immediately made
available to appropriate law enforcement and/or prosecutorial authorities on
receiving such requests.
(h) Effective risk-based procedures to identify wire transfers lacking complete
originator information shall be in place at a beneficiary bank.
(i) Beneficiary bank shall report transaction lacking complete originator
information to FIU-IND as a suspicious transaction.
(j) The beneficiary bank shall seek detailed information of the fund remitter with the
ordering bank and if the ordering bank fails to furnish information on the
remitter, the beneficiary shall consider restricting or terminating its business
relationship with the ordering bank.
66. Issue and Payment of Demand Drafts, etc.,
Any remittance of funds by way of demand draft, mail/telegraphic
transfer/NEFT/IMPS or any other mode and issue of travelers' cheques for value of
rupees fifty thousand and above shall be effected by debit to the customer's account
or against cheques and not against cash payment.
67. Quoting of PAN
Permanent account number (PAN) of customers shall be obtained and verified while
undertaking transactions as per the provisions of Income Tax Rule 114B applicable
to banks, as amended from time to time. Form 60 shall be obtained from persons
who do not have PAN.
68. Selling Third party products
REs acting as agents while selling third party products as per regulations in force
from time to time shall comply with the following aspects for the purpose of these
directions:
(a) the identity and address of the walk-in customer shall be verified for
transactions above rupees fifty thousand as required under Section 13(e) of
this Directions.
(b) transaction details of sale of third party products and related records shall be
maintained as prescribed in Chapter VII Section 46.
38
(c) AML software capable of capturing, generating and analysing alerts for the
purpose of filing CTR/STR in respect of transactions relating to third party
products with customers including walk-in customers shall be available.
(d) transactions involving rupees fifty thousand and above shall be undertaken
only by:
· debit to customers' account or against cheques; and
· obtaining and verifying the PAN given by the account based as well as
walk-in customers.
(e) Instruction at `d' above shall also apply to sale of REs' own products, payment
of dues of credit cards/sale and reloading of prepaid/travel cards and any
other product for rupees fifty thousand and above.
69. At-par cheque facility availed by co-operative banks
(a) The `at par' cheque facility offered by commercial banks to co-operative banks
shall be monitored and such arrangements be reviewed to assess the risks
including credit risk and reputational risk arising therefrom.
(b) The right to verify the records maintained by the customer cooperative banks/
societies for compliance with the extant instructions on KYC and AML under
such arrangements shall be retained by banks.
(c) Cooperative Banks shall:
i. ensure that the `at par' cheque facility is utilised only:
a. for their own use,
b. for their account-holders who are KYC complaint, provided that all
transactions of rupees fifty thousand or more are strictly by debit to the
customers' accounts,
c. for walk-in customers against cash for less than rupees fifty thousand
per individual.
ii. maintain the following:
a. records pertaining to issuance of `at par' cheques covering, inter alia,
applicant's name and account number, beneficiary's details and date of
issuance of the `at par' cheque,
b. sufficient balances/drawing arrangements with the commercial bank
extending such facility for purpose of honouring such instruments.
iii. ensure that `At par' cheques issued are crossed `account payee'
irrespective of the amount involved.
39
70. Issuance of Prepaid Payment Instruments (PPIs):
PPI issuers shall ensure that the instructions issued by Department of Payment and
Settlement System of Reserve Bank of India through their Master Direction are
strictly adhered to.
71. Hiring of Employees and Employee training
(a) Adequate screening mechanism as an integral part of their personnel
recruitment/hiring process shall be put in place.
(b) On-going employee training programme shall be put in place so that the
members of staff are adequately trained in AML/CFT policy. The focus of
the training shall be different for frontline staff, compliance staff and staff
dealing with new customers. The front desk staff shall be specially trained
to handle issues arising from lack of customer education. Proper staffing of
the audit function with persons adequately trained and well-versed in
AML/CFT policies of the RE, regulation and related issues shall be ensured.
72. Adherence to Know Your Customer (KYC) guidelines by NBFCs/RNBCs
and persons authorised by NBFCs/RNBCs including brokers/agents etc.
(a) Persons authorised by NBFCs/ RNBCs for collecting the deposits and their
brokers/agents or the like, shall be fully compliant with the KYC guidelines
applicable to NBFCs/RNBCs.
(b) All information shall be made available to the Reserve Bank of India to verify
the compliance with the KYC guidelines and accept full consequences of any
violation by the persons authorised by NBFCs/RNBCs including
brokers/agents etc. who are operating on their behalf.
(c) The books of accounts of persons authorised by NBFCs/RNBCs including
brokers/agents or the like, so far as they relate to brokerage functions of the
company, shall be made available for audit and inspection whenever required.
40
Chapter XI
Repeal Provisions
73. With the issue of these directions, the instructions / guidelines contained in the
circulars mentioned in the Appendix, issued by the Reserve Bank stand
repealed.
74. All approvals / acknowledgements given under the above circulars shall be
deemed as given under these directions.
75. All the repealed circulars are deemed to have been in force prior to the coming
into effect of these directions.
41
Annex I
Government Order on Procedure for Implementation
of Section 51A of The Unlawful Activities (Prevention) Act, 1967
File No.17015/10/2002-IS-VI
Government of India
Ministry of Home Affairs
Internal Security - I Division
New Delhi, Dated 27th August, 2009
To,
1. Governor, Reserve Bank of India, Mumbai
2. Chairman, Securities & Exchange Board of India, Mumbai
3. Chairman, Insurance Regulatory and Development Authority, Hyderabad
4. Foreign Secretary, Ministry of External Affairs, New Delhi
5. Finance Secretary, Ministry of Finance, New Delhi
6. Revenue Secretary, Department of Revenue,
Ministry of Finance, New Delhi
7. Director, Intelligence Bureau, New Delhi
8. Additional Secretary, Department of Financial Services,
Ministry of Finance, New Delhi
9. Chief Secretaries of all States / Union Territories
Order
Procedure for Implementation of Section 51A of
The Unlawful Activities (Prevention) Act, 1967
The Unlawful Activities (Prevention) Act, 1967 (UAPA) was amended and notified on
31.12.2008, which, inter-alia, inserted Section 51A to the Act. Section 51A reads as
under :
"51A. For the prevention of, and for coping with terrorist activities, the Central
Government shall have power to -
(a) freeze, seize or attach funds and other financial assets or economic
resources held by, on behalf of or at the direction of the individuals or entities
Listed in the Schedule to the Order, or any other person engaged in or
suspected to be engaged in terrorism;
(b) prohibit any individual or entity from making any funds, financial assets or
economic resources or related services available for the benefit of the
individuals or entities Listed in the Schedule to the Order or any other person
engaged in or suspected to be engaged in terrorism;
(c) prevent the entry into or the transit through India of individuals Listed in the
Schedule to the Order or any other person engaged in or suspected to be
engaged in terrorism",
42
The Unlawful Activities (Prevention) Act define "Order" as under :
"Order" means the Prevention and Suppression of Terrorism (Implementation of
Security Council Resolutions) Order, 2007, as may be amended from time to
time.
In order to expeditiously and effectively implement the provisions of Section
51A, the following procedures shall be followed :-
Appointment and Communication of Details of UAPA Nodal Officers
2. As regards appointment and communication of details of UAPA nodal
officers -
(i) The UAPA nodal officer for IS-I division would be the Joint Secretary
(IS.I), Ministry of Home Affairs. His contact details are 011-23092736 (Tel),
011-23092569 (Fax) and jsis@nic.in (e-mail id).
(ii) The Ministry of External affairs, Department of Economic affairs,
Foreigners Division of MHA, FIU-IND; and RBI, SEBI, IRDA (hereinafter
referred to as Regulators) shall appoint a UAPA nodal officer and
communicate the name and contact details to the IS-I Division in MHA.
(iii) The States and UTs should appoint a UAPA nodal officer preferably of
the rank of the Principal Secretary / Secretary, Home Department and
communicate the name and contact details to the IS-I Division in MHA.
(iv) The IS-I Division in MHA would maintain the consolidated list of all
UAPA nodal officers and forward the list to all other UAPA nodal officers.
(v) The RBI, SEBI, IRDA should forward the consolidated list of UAPA
nodal officers to the Banks, stock exchanges / depositories, intermediaries
regulated by SEBI and insurance companies respectively
(vi) The consolidated list of the UAPA nodal officers should be circulated
to the nodal officer of IS-I Division of MHA in July every year and on every
change. Joint Secretary (IS-I), being the nodal officer of IS-I Division of
MHA, shall cause the amended list of UAPA nodal officers to be circulated
to the nodal officers of Ministry of External Affairs, Department of Economic
affairs, Foreigners Division of MHA, RBI, SEBI, IRDA and FIU-IND.
Communication of the List of Designated Individuals / Entities
3. As regards communication of the list of designated individuals / entities -
(i) The Ministry of External Affairs shall update the list of individuals and
entities subject to UN sanction measures on a regular basis. On any
revision, the Ministry of External Affairs would electronically forward this list
to the Nodal officers in Regulators, FIU-IND, IS-I Division and Foreigners'
Division in MHA.
43
(ii) The Regulators would forward the list mentioned in (i) above (referred
to as designated lists) to the banks, stock exchanges / depositories,
intermediaries regulated by SEBI and insurance companies respectively.
(iii) The IS-I Division of MHA would forward the designated lists to the
UAPA nodal officer of all States and UTs.
(iv) The Foreigners Division of MHA would forward the designated lists to
the immigration authorities and security agencies.
Regarding Funds, Financial Assets or Economic Resources or related
Services held in the Form of Bank Accounts, Stocks or Insurance Policies
etc.
4. As regards funds, financial assets or economic resources or related
services held in the form of bank accounts, stocks or Insurance policies etc., the
Regulators would forward the designated lists to the banks, stock exchanges /
depositories, intermediaries regulated by SEBI and insurance companies
respectively. The RBI, SEBI and IRDA would issue necessary guidelines to
banks, stock exchanges / depositories, intermediaries regulated by SEBI and
insurance companies requiring them to -
(i) Maintain updated designated lists in electronic form and run a check on
the given parameters on a regular basis to verify whether individuals or
entities listed in the schedule to the Order, herein after, referred to as
designated individuals / entities are holding any funds, financial assets or
economic resources or related services held in the form of bank accounts,
stocks or Insurance policies etc., with them.
(ii) In case, the particulars of any of their customers match with the
particulars of designated individuals / entities, the banks, stock exchanges /
depositories, intermediaries regulated by SEBI and insurance companies
shall immediately, not later than 24 hours from the time of finding out such
customer, inform full particulars of the funds, financial assets or economic
resources or related services held in the form of bank accounts, stocks or
Insurance policies etc., held by such customer on their books to the Joint
Secretary (IS.I), Ministry of Home Affairs, at Fax No.011-23092569 and
also convey over telephone on 011-23092736. The particulars apart from
being sent by post should necessarily be conveyed on e-mail id: jsis@nic.in
(iii) The banks, stock exchanges / depositories, intermediaries regulated
by SEBI and insurance companies shall also send a copy of the
communication mentioned in (ii) above to the UAPA nodal officer of the
state / UT where the account is held and Regulators and FIU-IND, as the
case may be.
(iv) In case, the match of any of the customers with the particulars of
designated individuals / entities is beyond doubt, the banks, stock
exchanges / depositories, intermediaries regulated by SEBI and insurance
companies would prevent designated persons from conducting financial
transactions, under intimation to the Joint Secretary (lS.I), Ministry of Home
44
Affairs, at Fax No.011-23092569 and also convey over telephone on 011-
23092736. The particulars apart from being sent by post should necessarily
be conveyed on e-mail id: jsis@nic.in
(v) The Banks, stock exchanges / depositories, intermediaries regulated
by SEBI and insurance companies, shall file a Suspicious Transaction
Report (STR) with FIU-IND covering all transactions in the accounts
covered by paragraph (ii) above, carried through or attempted as per the
prescribed format.
5. On receipt of the particulars referred to in paragraph 3 (ii) above, IS-I
Division of MHA would cause a verification to be conducted by the State Police
and / or the Central Agencies so as to ensure that the individuals / entities
identified by the Banks, stock exchanges / depositories, intermediaries
regulated by SEBI and Insurance Companies are the ones listed as designated
individuals / entities and the funds, financial assets or economic resources or
related services, reported by banks, stock exchanges / depositories,
intermediaries regulated by SEBI and insurance companies are held by the
designated individuals / entities. This verification would be completed within a
period not exceeding 5 working days from the date of receipt of such
particulars.
6. In case, the results of the verification indicate that the properties are owned
by or are held for the benefit of the designated individuals / entities, an order to
freeze these assets under section 51A of the UAPA would be issued within 24
hours of such verification and conveyed electronically to the concerned bank
branch, depository, branch of insurance company branch under intimation to
respective Regulators and FlU-IND. The UAPA nodal officer of IS-I Division of
MHA shall also forward a copy thereof to all the Principal Secretary / Secretary,
Home Department of the States or UTs, so that any individual or entity may be
prohibited from making any funds, financial assets or economic resources or
related services available for the benefit of the designated individuals / entities
or any other person engaged in or suspected to be engaged in terrorism. The
UAPA nodal officer of IS-I Division of MHA shall also forward a copy of the
order under section 51A, to all Directors General of Police / Commissioners of
Police of all states / UTs for initiating action under the provisions of Unlawful
Activities (Prevention) Act.
The order shall take place without prior notice to the designated individuals
/ entities.
Regarding Financial Assets or Economic Resources of the Nature of
Immovable Properties
7. IS-I Division of MHA would electronically forward the designated lists to the
UAPA nodal officer of all States and UTs with the request to have the names of
the designated individuals / entities, on the given parameters, verified from the
records of the office of the Registrar performing the work of registration of
immovable properties in their respective jurisdiction.
45
8. In case, the designated individuals / entities are holding financial assets or
economic resources of the nature of immovable property and if any match with
the designated individuals / entities is found, the UAPA nodal officer of the state
/ UT would cause communication of the complete particulars of such individual /
entity along with complete details of the financial assets or economic resources
of the nature of immovable property to Joint Secretary (IS.I), Ministry of Home
Affairs, immediately within 24 hours at Fax No.011-23092569 and also convey
over telephone on 011-23092736. The particulars apart from being sent by post
would necessarily be conveyed on e-mail id: jsis@nic.in.
9. The UAPA nodal officer of the state / UT may cause such inquiry to be
conducted by the State Police so as to ensure that the particulars sent by the
Registrar performing the work of registering immovable properties are indeed of
these designated individuals / entities. This verification would be completed
within a maximum of 5 working days and should be conveyed within 24 hours of
the verification, if it matches with the particulars of the designated individual /
entity to Joint Secretary (IS-I), Ministry of Home Affairs at the Fax, telephone
numbers and also on the e-mail id given below.
10. A copy of this reference should be sent to Joint Secretary (IS.I), Ministry of
Home Affairs, at Fax No.011-23092569 and also convey over telephone on
011- 23092736. The particulars apart from being sent by post would necessarily
be conveyed on e-mail id: jsis@nic.in. MHA may have the verification also
conducted by the Central Agencies. This verification would be completed within
a maximum of 5 working days.
11. In case, the results of the verification indicate that the particulars match
with those of designated individuals / entities, an order under section 51A of the
UAPA would be issued within 24 hours, by the nodal officer of IS-I Division of
MHA and conveyed to the concerned Registrar performing the work of
registering immovable properties and to FIU-IND under intimation to the
concerned UAPA nodal officer of the state / UT.
The order shall take place without prior notice, to the designated individuals
/ entities.
12. Further, the UAPA nodal officer of the state / UT shall cause to monitor
the transactions / accounts of the designated individual / entity so as to prohibit
any individual or entity from making any funds, financial assets or economic
resources or related services available for the benefit of the individuals or
entities Listed in the Schedule to the Order or any other person engaged in or
suspected to be engaged in terrorism. The UAPA nodal officer of the state / UT
shall upon coming to his notice, transactions and attempts by third party
immediately bring to the notice of the DGP / Commissioner of Police of the
State / UT for also initiating action under the provisions of Unlawful Activities
(Prevention) Act.
46
Implementation of Requests Received from Foreign Countries under U.N.
Security Council Resolution 1373 of 2001
13. U.N. Security Council Resolution 1373 obligates countries to freeze
without delay the funds or other assets of persons who commit, or attempt to
commit, terrorist acts or participate in or facilitate the commission of terrorist
acts; of entities owned or controlled directly or indirectly by such persons; and of
persons and entities acting on behalf of, or at the direction of such persons and
entities, including funds or other assets derived or generated from property
owned or controlled, directly or indirectly, by such persons and associated
persons and entities. Each individual country has the authority to designate the
persons and entities that should have their funds or other assets frozen.
Additionally, to ensure that effective cooperation is developed among countries,
countries should examine and give effect to, if appropriate, the actions initiated
under the freezing mechanisms of other countries.
14. To give effect to the requests of foreign countries under U.N. Security
Council Resolution 1373, the Ministry of External Affairs shall examine the
requests made by the foreign countries and forward it electronically, with their
comments, to the UAPA nodal officer for IS-I Division for freezing of funds or
other assets.
15. The UAPA nodal officer of IS-I Division of MHA, shall cause the request to
be examined, within 5 working days, so as to satisfy itself that on the basis of
applicable legal principles, the requested designation is supported by
reasonable grounds, or a reasonable basis, to suspect or believe that the
proposed designee is a terrorist, one who finances terrorism or a terrorist
organization, and upon his satisfaction, request would be electronically
forwarded to the nodal officers in Regulators, FIU-IND and to the nodal officers
of the States / UTs. The proposed designee, as mentioned above would be
treated as designated individuals / entities.
16. Upon receipt of the requests by these nodal officers from the UAPA nodal
officer of IS-I Division, the procedure as enumerated at paragraphs 4 to 12
above shall be followed.
The freezing orders shall take place without prior notice to the designated
persons involved
Procedure for Unfreezing of Funds, Financial Assets or Economic
Resources or related Services of Individuals / Entities Inadvertently
affected by the Freezing Mechanism upon Verification that the Person or
Entity is not a Designated Person
17. Any individual or entity, if it has evidence to prove that the freezing of
funds, financial assets or economic resources or related services, owned / held
by them has been inadvertently frozen, they shall move an application giving
the requisite evidence, in writing, to the concerned bank, stock exchanges /
depositories, intermediaries regulated by SEBI, insurance companies, Registrar
of Immovable Properties and the State / UT nodal officers.
47
18. The banks, stock exchanges / depositories, intermediaries regulated by
SEBI, insurance companies, Registrar of Immovable Properties and the State /
UT nodal officers shall inform and forward a copy of the application together
with full details of the asset frozen given by any individual or entity informing of
the funds, financial assets or economic resources or related services have been
frozen inadvertently, to the nodal officer of IS-I Division of MHA as per the
contact details given in paragraph 4 (ii) above, within two working days.
19. The Joint Secretary (IS-I), MHA, being the nodal officer for IS-I Division of
MHA shall cause such verification as may be required on the basis of the
evidence furnished by the individual / entity and if he is satisfied, he shall pass
an order, within 15 working days, unfreezing the funds, financial assets or
economic resources or related services, owned / held by such applicant, under
intimation to the concerned bank, stock exchanges / depositories,
intermediaries regulated by SEBI, insurance company and the nodal officers of
States / UTs. However, if it is not possible for any reason to pass an Order
unfreezing the assets within 15 working days, the nodal officer of IS-I Division
shall inform the applicant.
Communication of Orders under Section 51A of Unlawful Activities
(Prevention) Act
20. All Orders under section 51A of Unlawful Activities (Prevention) Act,
relating to funds, financial assets or economic resources or related services,
would be communicated to all the banks, depositories / stock exchanges,
intermediaries regulated by SEBI, insurance companies through respective
Regulators, and to all the Registrars performing the work of registering
immovable properties, through the state / UT nodal officer by IS-I Division of
MHA.
Regarding Prevention of Entry into or Transit through India
21. As regards prevention of entry into or transit through India of the
designated individuals, the Foreigners Division of MHA, shall forward the
designated lists to the immigration authorities and security agencies with a
request to prevent the entry into or the transit through India. The order shall
take place without prior notice to the designated individuals / entities.
22. The immigration authorities shall ensure strict compliance of the Orders
and also communicate the details of entry or transit through India of the
designated individuals as prevented by them to the Foreigners' Division of
MHA.
Procedure for Communication of Compliance of Action taken under
Section 51A
23. The nodal officers of IS-I Division and Foreigners Division of MHA shall
furnish the details of funds, financial assets or economic resources or related
services of designated individuals / entities frozen by an order, and details of
the individuals whose entry into India or transit through India was prevented,
48
respectively, to the Ministry of External Affairs for onward communication to the
United Nations.
24. All concerned are requested to ensure strict compliance of this order.
Sd/-
(D. Diptivilasa)
Joint Secretary to Government of India
49
Annex II
KYC documents for eligible FPIs under PIS
FPI Type
Document Type Category I Category II Category III
Constitutive Mandatory Mandatory Mandatory
Documents
(Memorandu
m and
Articles of
Association,
Certificate of
Incorporation
etc.)
Proof of Mandatory Mandatory Mandatory
Address (Power of (Power of other than
Attorney {PoA} Attorney Power of
mentioning the mentioning the Attorney
Entity Level address is address is
acceptable as acceptable as
address proof) address proof)
PAN 33 Mandatory Mandatory Mandatory
Financial Exempted * Exempted * Mandatory
Data
SEBI Mandatory Mandatory Mandatory
Registration
Certificate
Board Exempted * Mandatory Mandatory
Resolution
@@
List Mandatory Mandatory Mandatory
Proof of Exempted * Exempted * Entity
Identity declares* on
Senior letter head
Manageme full name,
nt nationality,
(Whole date of birth
Time or submits
Directors/ photo identity
Partners/ proof
Trustees/ Proof of Exempted * Exempted * Declaration
etc.) Address on Letter
Head *
Photographs Exempted Exempted Exempted *
50
List and Mandatory list Mandatory - list Mandatory
Signatures of Global of Global
Custodian Custodian
signatories can signatories can
be given in case be given in case
of PoA to Global of PoA to Global
Authorized Custodian Custodian
Signatories Proof of Exempted * Exempted * Mandatory
Identity
Proof of Exempted * Exempted * Declaration
Address on Letter
Head *
Photographs Exempted Exempted Exempted *
List Exempted * Mandatory (can Mandatory
declare "no
UBO over 25%")
Ultimate Proof of Exempted * Exempted * Mandatory
Beneficial Identity
Owner Exempted * Exempted *
Proof of Declaration
(UBO)
Address on Letter
Head *
Photographs Exempted Exempted Exempted *
* Not required while opening the bank account. However, FPIs concerned may
submit an undertaking that upon demand by Regulators/Law Enforcement Agencies
the relative document/s would be submitted to the bank.
@@ FPIs from certain jurisdictions where the practice of passing Board Resolution
for the purpose of opening bank accounts etc. is not in vogue, may submit `Power of
Attorney granted to Global Custodian/Local Custodian in lieu of Board Resolution'
Category Eligible Foreign Investors
I. Government and Government related foreign investors
such as Foreign Central Banks, Governmental Agencies,
Sovereign Wealth Funds, International/ Multilateral
Organizations/ Agencies.
51
II. a) Appropriately regulated broad based funds such as
Mutual Funds, Investment Trusts, Insurance
/Reinsurance Companies, Other Broad Based Funds
etc.
b) Appropriately regulated entities such as Banks, Asset
Management Companies, Investment Managers/
Advisors, Portfolio Managers etc.
c) Broad based funds whose investment manager is
appropriately regulated.
d) University Funds and Pension Funds.
e) University related Endowments already registered with
SEBI as FII/Sub Account.
III. All other eligible foreign investors investing in India under
PIS route not eligible under Category I and II such as
Endowments, Charitable Societies/Trust, Foundations,
Corporate Bodies, Trusts, Individuals, Family Offices, etc.
52
Appendix
List of Circulars or part thereof repealed with the issuance of Master Direction
Sr.No. Circular No. Date
1. DBOD.BP.BC.92/C.469-76 August 12, 1976
2. DBOD.GC.BC.62/c.408(A)/87 November 11, 1987
3. DBOD.BP.BC.114/C.469 (81)-91 April 19, 1991
4. DBOD.FMC.No.153/27.01.003/93-94 September 1, 1993
5. DBOD.GC.BC.193/17.04.001/93 November 18, 1993
6. DBOD.GC.BC.202/17.04.001/93 December 6, 1993
7. DBOD.No.GC.BC.46/17.04.001 April 22, 1994
8. DBOD.BP.BC.106/21.01.001/94 September 23,1994
9. DBOD.BP.BC.102/21.01.001/95 September 20, 1995
10. DBOD.BP.BC.42/21.01.001/96 April 6, 1996
11. DBOD.No.BP.BC.12/21.01.023/98 February 11, 1998
12. DBOD.BP.52/21.01.001/2001-02 December 5, 2001
13. DBOD.AML.BC.89/14.01.001/2001-02 April 15, 2002
14. DBOD.AML.BC.No.102/14.01.001/2001-02 May 10, 2002
15. DBOD.AML.BC.18/14.01.001/2002-03 August 16, 2002
16. DBOD.NO.AML.BC.58/14.01.001/2004-05 November 29, 2004
17. DBOD.NO.AML.BC.28 /14.01.001/2005-06 August 23, 2005
18. DBOD.NO.AML.BC.63/14.01.001/2005-06 February 15, 2006
19. DBOD.AML.BC. No.77/ 14.01.001 / 2006-07 April 13, 2007
20. DBOD.AML.BC.No. 63/ 14.01.001/2007-08 February 18, 2008
21. DBOD.AML.BC.No. 85/ 14.01.001/ 2007 -08 May 22, 2008
22. DBOD.AML.BC.No.12/14.01.001/2008-09 July 1, 2008
23. DBOD.AML.BC.No.2/14.01.001/2009-10 July 1, 2009
24. DBOD.AML.BC.No.43/14.01.001/2009-10 September 11, 2009
53
25. DBOD.AML.BC.No.44/14.01.001/2009-10 September 17, 2009
26. DBOD.AML.BC.No.68/14.01.001/2009-10 January 12, 2010
27. DBOD.AML.BC.No.80/14.01.001/2009-10 March 26, 2010
28. DBOD.AML.BC.No.95/14.01.001/2009-10 April 23, 2010
29. DBOD.AML.BC.No.108/14.01.001/2009-10 June 9, 2010
30. DBOD.AML.BC.No.109/14.01.001/2009-10 June 10, 2010
31. DBOD.AML.BC.No.111/14.01.001/2009-10 June 15, 2010
32. DBOD.AML.BC.No.113/14.01.001/2009-10 June 29, 2010
33. DBOD.AML.BC.No.38/14.01.001/2010-11 August 31, 2010
34. DBOD.AML.BC.No.50/14.01.001/2010-11 October 26, 2010
35. DBOD.AML.BC.No.65/14.01.001/2010-11 December 7, 2010
36. DBOD.AML.BC.No.70/14.01.001/2010-11 December 30, 2010
37. DBOD.AML.BC.No.77/14.01.001/2010-11 January 27, 2011
38. DBOD.AML.BC. No.36/14.01.001/2011-12 September 28, 2011.
39. DBOD.AML BC.No.47/14.01.001/2011-12 November 04, 2011
40. DBOD. AML.BC. No.65 /14.01.001/2011-12 December 19, 2011
41. DBOD AML BC No. 70 /14.01.001/2011-12 December 30, 2011
42. DBOD. AML.BC. No 93 /14.01.001/2011-12 April 17, 2012
43. DBOD. AML.BC. No 109 /14.01.001/2011-12 June 08, 2012
44. DBOD. AML.BC. No 110 /14.01.001/2011-12 June 08, 2012
45. DBOD.AML.BC. No. 39/14.01.001/2012-13 September 7, 2012
46. DBOD.AML.BC. No. 49/14.01.001/2012-13 September 7, 2012
47. DBOD.AML.BC. No. 65/14.01.001/2012-13 December 10, 2012
48. DBOD.AML.BC. No.71/14.01.001/2012-13 January 18, 2013
49. DBOD.AML.BC. No. 78 /14.01.001/2012-13 January 29, 2013
50. DBOD.AML.BC. No.87/14.01.001/2012-13 March 28, 2013
51. DBOD. AML.BC. No.101 /14.01.001/2011-12 May 31, 2013
54
52. DBOD.AML.BC. No.29 /14.01.001/2013-14 July 12, 2013
53. DBOD.AML.BC. No. 34/14.01.001/2013-14 July 23, 2013
54. DBOD.AML.BC.No.44/14.01.001/2013-14 September 2, 2013
55. DBOD.AML.BC.No.45/14.01.001/2013-14 September 2, 2013
56. DBOD. AML.BC. No. 50/14.01.001/2013-14 September 3, 2013
57. DBOD.AML.BC.No.63/14.01.001/2013-14 October 29, 2013
58. DBOD.AML.BC. No.80/14.01.001/2013-14 December 31, 2013
59. DBOD.AML.BC.No. 100/14.01.001/2013-14 March 4, 2014
60. DBOD. AML. No. 16415 /14.01.001/2013-14 March 28, 2014
61. DBOD.AML.BC.No.103/14.01.001/2013-14 April 3, 2014
62. DBOD.AML.BC. No. 119/14.01.001/2013-14 June 9, 2014
63. DBOD. AML.BC. No.124 /14.01.001/2013-14 June 26, 2014
64. DBOD.AML.BC.No.26/14.01.001/2014-15 July 17, 2014
65. DBOD.AML.BC.No. 39/14.01.001/2014-15 September 4, 2014
66. DBOD. AML. BC. No. 44/14.01.001/2014-15 October 21, 2014
67. DBR.AML.BC.No.77/14.01.001/2014-15 March 13, 2015
68. DBR. AML. BC. No.104/ 14.01.001/ 2014-15 June 11, 2015
69. DBR.AML.BC.No.36/14.01.001/2015-16 August 28, 2015
70. DBR. AML.BC. No. 46/14.01.001/2015-16 October 29, 2015
71. DBR.AML.BC.No.60/14.01.001/2015-16 November 26, 2015
72. DBOD.NO.BC.23/21.01.001/92 September 9, 1992
73. DBOD.BP.BC No. 56 /21.01.001/ 2005-06 January 23, 2006
74. DBOD.BP.BC.No. 50 /21.01.001/2011-12 November 4, 2011
75. DBOD.BP.BC.No.87 /21.01.001//2013-14 January 22, 2014
76. DBOD.No.BP.BC.110/21.02.051/98 November 18, 1998
77. UBD.BPD.(PCB)Cir.No.69/14.01.062/2013-14 June 10, 2014
78. UBD.BPD.PCB).Cir.No.9/14.01.062/2013-14 May 26, 2014
55
79. UBD.BPD.(PCB).Cir.No.54/14.01.062/2013-14 April 7,.2014
80. UBD.BPD.(PCB).Cir.No.50/14.01.062/2013-14 March 6.2014
81. UBD.BPD.(PCB).Cir.No.48/14.01.062/2013-14 February 18, 2014
82. UBD.BPD.(PCB).Cir.No.32/14.01.062/2013-14 October 22, 2013
83. UBD.BPD.(PCB).Cir.No.15/14.01.062/2013-14 September 17,.2013
84. UBD.BPD(AD).Cir.No.4/14.01.062/2013-14 September 10,.2013
85. UBD.BPD.(PCB).Cir.No.11/14.01.062/2013-14 September 05,.2013
86. UBD.BPD.(PCB).Cir.No.2/14.01.062/2013-14 July 31,.2013
87. UBD.BPD(PCB)Cir.No.54/14.01.062/2012-13 June 6, 2013
88. UBD.BPD(PCB)Cir.No.46/14.01.062/2012-13 April 03,.2013
89. UBD.BPD(PCB)Cir.No.39/14.01.062/2012-13 March 07,.2013
90. UBD.CO.PCB.Cir.No.37/14.01.062/2012-13 February 25, 2013
91. UBD.BPD(PCB)Cir.No.34/14.01.062/2012-13 January 28, 2013
92. UBD.BPD(PCB)Cir.No.28/14.01.062/2012-13 December 19, 2012
93. UBD.BPD.(PCB).Cir.No.14/14.01.062/2012-13 October 9, 2012
94. UBD.BPD.(PCB).Cir.No.8/14.01.062/2012-13 September 13, 2012
95. UBD.CO.BPD(PCB).No.34/12.05.001/2011-12 May 11, 2012
96. UBD.CO.BPD.No.24/12.05.001/2011-12 March 5,.2012
97. UBD.BPD.(PCB).Cir.No.20/ 14.01.062/ 2011-12 March 01,.2012
98. UBD.CO.BPD.No. 10/12.05.001/2011-12 November 09, 2011
99. UBD.BPD.PCB.No. 8/12.05.001/2011-12 November 9,.2011
100. UBD.CO.BPD.(PCB).Cir.No.9/ 14.01.062/2010-11 May 2, 2011
101. UBD.CO.BPD.(PCB).Cir.No.8/ 14.01.062/2010-11 May 2, 2011
102. UBD.CO.BPD.(PCB).Cir.No.7/ 14.01.062/2010-11 March 17, 2011
103. UBD.CO.BPD.(PCB)Cir.No.6/ 14.01.062/2010-11 March 17, 2011
104. UBD.BPD (PCB) No.38/ 12.05.001/2010-11 March 15, 2011
105. UBD.BPD(PCB).No.37/12.05.001/2010-11 February 18,.2011
56
106. UBD.CO.BPD.No.35/12.05.001/2010-11 January 10, 2011
107. UBD.BPD.(PCB).No.32/12.05.001/2010-11 December 28, 2010
108. UBD.BPD.(PCB).Cir.No.17/ 14.01.062/2010-11 October 25,.2010
109. UBD.BPD.(PCB).Cir.No.12/ 12.05.001/2010-11 September 15, 2010
110. UBD.BPD.(PCB)No.11/12.05.001/2010-11 August 25, 2010
111. UBD.BPD.(PCB).No.10/12.05.001/2010-11 August 23, 2010
112. UBD.BPD.(PCB).No.9/12.05.001/2010-11 August 23, 2010
113. UBD.BPD.(PCB).Cir.No.7/ 14.01.062/2010-11 August 12, 2010
114. UBD.BPD(PCB).Cir.No.71/ 12.05.001/2009-10 June 15, 2010
115. UBD.BPD.CO.53/14.01.062/ 2009-2010 April 1, 2010
116. UBD. BPD. (PCB).Cir. No. 41/12.05.001/ 2009-10 February 3, 2010
117. UBD.BPD.CO.NSB1/38/1203.000/2009-10 December 23, 2009
118. UBD.(PCB).CO.BPD.Cir.No.36/14.01.062/2009-10 December 18, 2009
119. UBD.(PCB).CO.BPD.Cir.No.35/14.01.062/2009-10 December 17, 2009
120. UBD.(PCB).CO.BPD.Cir.No.33/14.01.062/2009-10 December 17, 2009
121. UBD.CO.BPD.PCB.Cir.No.23/ 12.05.001/2009-10 November 16, 2009
122. UBD.CO.BPD.PCB.Cir.No.21/ 12.05.001/2009-10 November 16, 2009
123. UBD.BPD.CO./NSB1/11/12.03.000/ 2009-10 September 29, 2009
124. UBD.CO.BPD.PCB.Cir.No.9/ 12.05.001/ 2009-10 September 16, 2009
125. UBD.CO.BPD(PCB).No.1/ 12.05.001/2008-09 July 2, 2008
126. UBD.CO.BPD.(PCB).No.32/ 09.39.000/2007-08 February 25, 2008
127. UBD.CO.BPD.(PCB).No.45/ 12.05.001/2006-07 May 25, 2007
128. UBD.BPD.Cir.No.38./09.16.100/ 2005-06 March 21, 2006
129. UBD.BPD.PCB.Cir.11/09.161.00/ 2005-06 August 23, 2005
130. UBD.PCB.Cir.No.6/09.161.00/ 2005-06 August 03, 2005
131. UBD.PCB.Cir. 30/09.161.00/2004-05 December 15, 2004
132. UBD.BPD.PCB.Cir.02/09.161.00/ 2004-05 July 09, 2004
57
133. UBD.BPD.PCB.Cir.48/09.161.00/ 2003-04 May 29, 2004
134. UBD.No.BPD.PCB.Cir.41/ 09.161.00/2003-04 March 26, 2004
135. UBD.No.DS.PCB.Cir.17/13.01.00/2002-03 September 18, 2002
136. RPCD.RRB.RCB.AML.BC.No.112/07.51.018/2013-14 June 16, 2014
137. RPCD.RRB.RCB.AML.BC.No.111/07.51.018/2013-14 June 12, 2014
138. RPCD.RRB.RCB.AML.BC.No.97/07.51.018/2013-14 April 25, 2014
139. RPCD.RRB.RCB.AML.BC.No.92/07.51.018/2013-14 March 13, 2014
140. RPCD.RRB.RCB.AML.BC.No.75/07.51.018/2013-14 January 09, 2014
141. RPCD.CO.RRB.RCB.BC.No.48/07.51.010/2013-14 October 29, 2013
142. RPCD.RRB.RCB.AML.BC.No.37/07.51.018/2013-14 September 18, 2013
143. RPCD.RRB.RCB.AML.BC.No.31/07.51.018/2013-14 September 16, 2013
144. RPCD.RRB.RCB.AML.BC.No.32/07.51.018/2013-14 September 10, 2013
145. RPCD.RRB.RCB.BC.No.84/07.51.018/2013-14 July 25, 2013
146. RPCD.RCB.RRB.AML.BC.No.76/07.51.018/2012-13 June 4, 2013
147. RPCD.RCB.RRB.AML.BC.No.71/07.51.018/2012-13 April 1, 2013
148. RPCD.RRB.RCB.BC.No.63/07.51.018/2012-13 30.01.2013
149. RPCD.RRB.RCB.BC.No.59/07.51.018/2012-13 January 22, 2013
150. RPCD.CO.RRB.RCB.AML.No.6097/7.51.018/2012-13 December 13, 2012
151. RPCD.CO.RRB.RCB.AML.BC.No.36/03.05.33(E)/2012- October 15, 2012
13
152. RPCD.CO.RRB.RCB.AML.BC.No.29/03.05.33(E)/2012- September 18, 2012
13
153. RPCD.CO.RRB.RCB.AML.BC.No.82/03.05.33(E)/2011- June 11, 2012
12
154. RPCD.CO.RRB.RCB.AML.BC.No.81/07.40.00/2011-12 June 11, 2012
155. RPCD.CO.RRB.RCB.AML.BC.No.70/07.40.00/2011-12 April 18, 2012
156. RPCD.CO.RCB.AML.BC.No.52/07.40.00/2011-12 January 04, 2012
157. RPCD.CO.RRB.AML.BC.No.51/03.05.33(E)/2011-12 January 02, 2012
158. RPCD.CO.RCB.AML.BC.No.50/07.40.00/2011-12 December 30, 2011
58
159. RPCD.CO.RRB.AML.BC.No.46/03.05.33(E)/2011-12 December 21, 2011
160. RPCD.CO.RRB.AML.BC.NO.31/03.05.33(E)/2011-12 November 16, 2011
161. RPCD.CO.RCB.AML.BC.No.23/07.40.00/2011-12 October 17.10.2011
162. RPCD.CO.RRB.AML.BC.No.21/03.05.33(E)/2011-12 October 13.10.2011
163. RPCD.CO.RRB.AML.BC.No.15/03.05.33(E)/2011-12 August 8, 2011
164. RPCD.CO.RCB.AML.BC.No.63/07.40.00/2010-11 April 26, 2011
165. RPCD.CO.RCB.AML.BC.No.50/07.40.00/2010-11 February 2, 2011
166. RPCD.CO.RRB.AML.BC.No.46/03.05.33(E)/2010-11 January 12, 2011
167. RPCD.CO.RCB.AML.BC.No.39/07.40.00/2010-11 December 27, 2010
168. RPCD.CO.RRB.AML.BC.No.40/03.05.33(E)/2010-11 December 24, 2010
169. RPCD.CO.RCB.AML.BC.No.37/07.40.00/2010-11 December 10, 2010
170. RPCD.CO.RRB.AML.BC.No.31/03.05.33(E)/2010-11 December 6, 2010
171. RPCD.CO.RF.AML.BC.No.20/07.40.00/2010-11 September 13, 2010
172. RPCD.CO.RRB.AML.BC.No.19/03.05.33(E)/2010-11 September 9, 2010
173. RPCD.CO.RF.AML.BC.No.12/4007.40.00/2010-11 July 20, 2010
174. RPCD.CO.RRB.AML.BC.No.13/03.05.33(E)/2010-11 July 22, 2010
175. RPCD.CO.RF.AML.BC.No.11/07.40.00/2010-11 July 20, 2010
176. RPCD.CO.RF.AML.BC.No.89/07.40.00/2009-10 June 25, 2010
177. RPCD.CORRB.AML.BC.No.87/03.05.33(E)/2009-10 June 23, 2010
178. RPCD.CO.RF.AML.BC.No.88/07.40.00/2009-10 June 25, 2010
179. RPCD.CO.RRB.AML.BC.No.86/03.05.33(E)/2009-10 June 21, 2010
180. RPCD.CO.RF.AML.BC.No.84/07.40.00/2009-10 May 14, 2010
181. RPCD.CO.RF.AML.BC.No.83/07.40.00/2009-10 May 12, 2010
182. RPCD.CO.RRB.AML.No.67/03.05.33(E)/2009-10 April 9, 2010
183. RPCD.CO.RF.AML.BC.No.83/07.40.00/2009-10 March 3, 2010
184. RPCD.CO.RRB.No.39/03.05.33(E)/2009-10 November 5, 2009
59
185. RPCD.CO.RF.AML.BC.No.34/07.40.00/2009-10 October 29, 2009
186. RPCD.CO.RF.AML.BC.No.28/07.40.00/2009-10 September 30,2009
187. RPCD.CO.RRB.BC.No.27/03.05.33(E)/2009-10 September 29, 2009
188. RPCD.CO.RCB.AML.BC.No.81/07.40.00/2007-08 June 25, 2008
189. RPCD.CO.RRB.No.BC.77/03.05.33(E)/2007-08 June 18, 2008
190. RPCD.CO.RF.AML.BC.No.51/07.40.00/2007-08 February 28, 2008
191. RPCD.CO.RRB.No.BC.50/03.05.33(E)/2007-08 February 27, 2008
192. RPCD.CO.RRB.AML.BC.No.98/03.05.28-A/2006-07 May 21, 2007
193. RPCD.CO.RF.AML.BC.No.96/07.40.00/2006-07 May 18, 2007
194. RPCD.CO.RRB.AML.BC.68/03.05.33(E)/2005-06 March 9, 2006
195. RPCD.CO.RF.AML.BC.No.65/07.40.00/2005-06 March 3, 2006
196. RPCD.No.RRB.BC.33/03.05.33(E)/2005-06 August 23, 2005
197. RPCD.RF.AML.BC.No.30/07.40.00/2005-06 August 23, 2005
198. RPCD.AML.BC.No.80/07.40.00/2004-05 February 18, 2005
199. RPCD.No.RRB.BC.81/03.05.33 (E)/2004-05 February 18, 2005
200. DNBS (PD) CC.No.46/02.02(RNBC)/2004-05 December 30, 2004
201. DNBS(PD). CC 48/10.42/2004-05 February 21, 2005
202. DNBS(PD).CC No. 58/10.42/2005-06 October 11, 2005
203. DNBS.PD. CC No. 64/03.10.042/2005-06 March 7., 2006
204. DNBS (PD). CC 113/03.10.042/2007- 08 April 23, 2008
205. DNBS (PD). CC 163/03.10.042/2009- 10 November 13, 2009
206. DNBS (PD).CC. No 166/03.10.42/2009-10 December 2, 2009
207. DNBS. (PD) CC No 192/03.10.42/2010-11 August 9, 2010
208. DNBS. (PD) CC No 193/03.10.42/2010-11 August 9, 2011
209. DNBS (PD).CC. No 201/03.10.42 /2010-11 September 22.9.2010
210. DNBS (PD).CC. No 202/03.10.42/2010-11 October 4, 2010
211. DNBS(PD).CC.No209/03.10.42/2010- 11 January 28, 2011
60
212. DNBS(PD).CC.No210/03.10.42/2010-11 February 14, 2011
213. DNBS.(PD)CCNo212/03.10.42/2010-11 March 8.3. 2011
214. DNBS(PD).CC. No.216/03.10.42/2010-11 May 2, 2011
215. DNBS(PD).CC.No218/03.10.42/2010-11 May 4, 2011
216. DNBS.(PD)CC No215/03.10.42/2010-11 April 5, 2011
217. DNBS (PD).CC. No 242/03.10.42/2011-12 September 15, 2011
218. DNBS (PD).CC. No 244/03.10.42/2011-12 September 22, 2011
219. DNBS (PD).CC. No 251/03.10.42/2011-12 December 26, 2011
220. DNBS (PD).CC. No 257/03.10.42/2011-12 March 14, 2012
221. DNBS (PD).CC. No 264/03.10.42/2011-12 March 21, 2012
222. DNBS(PD).CC. No.270/03.10.42/2011-12 April 4, 2012
223. DNBS (PD).CC. No 275/03.10.42/2011-12 May 29, 2012
224. DNBS (PD).CC. No 294/03.10.42/2012-13 July 5, 2012
225. DNBS (PD).CC. No 295/03.10.42/2012-13 July 11, 2012
226. DNBS (PD).CC. No 296/03.10.42/2012-13 July 11, 2012
227. DNBS (PD).CC. No 298/03.10.42/2012-13 July 26, 2012
228. DNBS (PD).CC. No 302/03.10.42/2012-13 September 7, 2012
229. DNBS (PD).CC. No 304/03.10.42/2012-13 September 17, 2012
230. DNBS (PD).CC. No 305/03.10.42/2012-13 October 3, 2012
231. DNBS (PD).CC. No 306/03.10.42/2012-13 October 3, 2012
232. DNBS (PD).CC. No 310/03.10.42/2012-13 November 22,2012
233. DNBS (PD).CC. No 313/03.10.42/2012-13 December 10, 2012
234. DNBS (PD).CC. No 318/03.10.42/2012-13 December 28, 2012
235. DNBS (PD).CC. No 319/03.10.42/2012-13 December 28, 2012
236. DNBS (PD).CC. No 321/03.10.42/2012-13 February 27,2013
237. DNBS (PD).CC. No 323/03.10.42/2012-13 April 18, 2013
238. DNBS (PD).CC. No 324/03.10.42/2012-13 May 2, 2013
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239. DNBS (PD).CC. No 325/03.10.42/2012-13 May 3, 2013
240. DNBS(PD).CC.No.351/03.10.42/2013-14 July 4, 2013
241. DNBS (PD).CC. No 352/03.10.42/2013-14 July 23, 2013
242. DNBS(PD).CC.No 357/03.10.42/2013-14 October 3, 2013
243. DNBS(PD).CC NO 358/03.10.42/2013-14 October 3, 2013
244. DNBS(PD).CC.No.364/03.10.42/2013-14 January 1, 2014
245. DNBS(PD).CC.No.366/03.10.42/2013-14 January 10, 2014
246. DNBS (PD).CC. No 370/03.10.42/2013-14 March 19, 2014
247. DNBS(PD).CC.No.375/03.10.42/2013-14 April 22 , 2014
248. DNBS (PD).CC. No 401/03.10.42/2014-15 July 25 , 2014
249. DNBS (PD).CC. No 402/03.10.42/2014-15 August 1, 2014
250. DNBS (PD).CC. No 404/03.10.42/2014-15 August 1, 2014
251. DNBR.CC.PD.No.010/03.10.01/2014-15 January 09, 2015
252. DNBR(PD).CC.No.034/03.10.42/2014-15 April 30, 2015
253. DBOD.No.IBS.1816/23.67.001/98-99 February 4, 1999
List of Circulars Repealed Partially, with the issuance of Master Direction
Sr.No. Circular No. Date
1. DBOD.BP.BC.57/21.01.001/95 Paragraph 2(b) May 4, 1995
2. DBS.FGV.BC.56.23.04.001/98-99 June 21, 1999
Paragraph "(b) Concept of "Know Your Customer"
(para. 9.2)"
62
1
Inserted vide Amendment dated April 20, 2018.
2
Inserted vide Gazette Notification G.S.R. 538(E) regarding PML Second amendment Rules dated June 1, 2017.
3
Amended vide Gazette Notification G.S.R. 538(E) regarding PML Second amendment Rules dated June 1, 2017. Before
amendment, it read as: Officially valid document" (OVD) means the passport, the driving licence, the Permanent Account
Number (PAN) Card, the Voter's Identity Card issued by the Election Commission of India, job card issued by NREGA duly
signed by an officer of the State Government, letter issued by the Unique Identification Authority of India containing details of
name, address and Aadhaar number.
Explanation: Customers, at their option, shall submit one of the six OVDs for proof of identity and proof of address.
4
Inserted vide Gazette Notification G.S.R. 1038(E) regarding PML Third amendment Rules dated August 21, 2017.
5
Amended vide Gazette Notification G.S.R. 538(E) regarding PML Second amendment Rules dated June 1, 2017. Before
amendment, it read as: "Customer Due Diligence (CDD)" means identifying and verifying the customer and the beneficial owner
using `Officially Valid Documents' as a `proof of identity' and a `proof of address".
6
Inserted vide DBR. AML. BC. No. /14.01.001/2017-18 dated April 20, 2018.Shifted from deleted section 15(a)
7
Inserted vide DBR. AML. BC. No. /14.01.001/2017-18 dated April 20, 2018.
8
Amended vide Gazette Notification G.S.R. 544(E) regarding PML Second amendment Rules 2015 dated July 7, 2015. Before
amendment, it read as: "Necessary information of such customers' due diligence carried out by the third party is immediately
obtained by REs".
9
Inserted vide Gazette Notification G.S.R. 538(E) regarding PML Second amendment Rules dated June 1, 2017, Gazette
Notification G.S.R. 1300(E) regarding PML Fifth amendment Rules dated October 16, 2017 and Gazette Notification G.S.R.
1318(E) regarding PML Sixth amendment Rules dated October 23, 2017
10
Amended vide Gazette Notification G.S.R. 538(E) regarding PML Second amendment Rules dated June 1, 2017. Before
amendment, the section read as:" REs shall obtain the following documents from an individual while establishing an account
based relationship:
(a) one certified copy of an OVD as mentioned at Section 3(a)(vi) of Chapter I, containing details of identity and address;
(b) one recent photograph; and
(c) such other documents pertaining to the nature of business or financial status specified by the RE in their KYC policy.
Provided that information collected from customers for the purpose of opening of account shall be treated as confidential and
details thereof shall not be divulged for the purpose of cross selling, or for any other purpose without the express permission
of the customer.
Explanation: Customers, at their option, shall submit one of the six OVDs for proof of identity and proof of address.
11
Amended vide amendment dated April 20, 2018. Before amendment, it read as: "Accounts opened in terms of this proviso
i.e., using OTP based e-KYC, are subject to the following conditions"
12
Amended vide amendment dated April 20, 2018. Before amendment, it read as: "Accounts, both deposit and borrowal,
opened using OTP based e-KYC shall not be allowed for more than one year within which Customer Due Diligence (CDD)
procedure as provided in section 16 or as per the first proviso of Section 17 of the Principal Direction is to be completed. If the
CDD procedure is not completed within a year, in respect of deposit accounts, the same shall be closed immediately. In respect
of borrowal accounts no further debits shall be allowed."
13
Deleted vide amendment dated April 20, 2018. Deleted portion to read as:"REs shall print/download directly, the prospective
customer's e-Aadhaar letter from the UIDAI portal, if such a customer knows only his/her Aadhaar number or if the customer
carries only a copy of Aadhaar downloaded from a place/source elsewhere, provided, the prospective customer is physically
present in the branch of the RE".
14
Deleted vide amendment dated April 20, 2018. Deleted portion to read as: "A copy of the marriage certificate issued by the
State Government or Gazette notification indicating change in name together with a certified copy of the `officially valid
document' in the existing name of the person shall be obtained for proof of address and identity, while establishing an account
based relationship or while undertaking periodic updation exercise in cases of persons who change their names on account of
marriage or otherwise"
15
Deleted vide amendment dated April 20, 2018. Deleted portion to read as: In case the person who proposes to open an
account does not have an OVD as `proof of address', such person shall provide OVD of the relative as provided at sub-
section 77 of Section 2 of the Companies Act, 2013, read with Rule 4 of Companies (Specification of definitions details)
Rules, 2014, with whom the person is staying, as the `proof of address' Explanation: A declaration from the relative that the
said person is a relative and is staying with him/her shall be obtained
16
Deleted vide amendment dated April 20, 2018. Deleted portion to read as: "In cases where a customer categorised as `low
risk', expresses inability to complete the documentation requirements on account of any reason that the REs consider to be
genuine, and where it is essential not to interrupt the normal conduct of business, REs shall, at their option, complete the
verification of identity of the customer within a period of six months from the date of establishment of the relationship."
17
Deleted vide amendment dated April 20, 2018. Deleted portion to read as: In respect of customers who are categorised as
`low risk' and are not able to produce any of the OVDs mentioned at Section 3(a)(vi) of Chapter I and where `simplified
procedure' is applied, REs shall, accept any one document from each of the two additional sets of documents listed under the
two provisos of sub-Rule 2(1)(d). Explanation: During the periodic review, if the `low risk' category customer for whom
simplified procedure is applied, is re-categorised as `moderate or `'high' risk category, then REs shall obtain one of the six
OVDs listed at Section 3(a)(vi) of these Directions for proof of identity and proof of address immediately. In the event such a
customer fails to submit such an OVD, REs shall initiate action as envisaged in Section 39 of these Directions.
18
Amended vide amendment dated November, 201, in terms of Gazette Notification G.S.R. 538(E) regarding PML Second
amendment Rules dated June 1, 2017. Deleted portion of Section 23 (e), 23(f) 23(g) and 23(g) to read as:
(e) The account shall be monitored and when there is suspicion of money laundering or financing of terrorism activities or other
high risk scenarios, the identity of the customer shall be established through the production of "officially valid documents".
(f) Foreign remittance shall not be allowed to be credited into the account unless the identity of the customer is fully established
through the production of "officially valid documents".
63
(g) The account remains operational initially for a period of twelve months which can be extended for a further period of twelve
months, provided the account holder applies and furnishes evidence of having applied for any of the OVDs during the first
twelve months of the opening of the said account.
(h) The entire relaxation provisions shall be reviewed after twenty four months.
19
Amended vide amendment dated April 20, 2018 amended portion of Section 24(a), 24(b) and 24(c) to read as, (a)
Introduction from another account holder who has been subjected to full KYC procedure shall be obtained.
(b)The introducer's account with the NBFC shall be at least six month old and shows satisfactory transactions.
(c)Photograph of the customer who proposes to open the account and also his address shall be certified by the introducer, or
any other evidence as to the identity and address of the customer to the satisfaction of the NBFC shall be obtained.
20
Deleted vide amendment dated April 20, 2018 and shifted to Section 10. Deleted/shifted portion to read as: "If an existing
KYC compliant customer of a RE desires to open another account with the same RE, there shall be no need for a fresh CDD
exercise."
21
Amended vide Gazette Notification G.S.R. 538(E) regarding PML Second amendment Rules dated June 1, 2017. Deleted
portion of Section 26 is as follows: "and a self-declaration from the account holder about his/her current address is obtained in
such cases.
22
Amended vide Gazette Notification G.S.R. 538(E) regarding PML Second amendment Rules dated June 1, 2017. Deleted
Portion of Section 27 to read as: a certified copy of an OVD as mentioned at Section 3(a) (vi) of Chapter I, containing details of
identity and
23
Inserted vide amendment dated April 20, 2018
24
Amended vide amendment dated April 20, 2018
25
Amended vide amendment dated April 20, 2018
26
Amended vide amendment dated April 20, 2018
27
Amended vide amendment dated April 20, 2018
Deleted portion of Sections 30, 31, 32 and 33 is "Officially valid documents"
28
Inserted vide amendment dated April 20, 2018
29
Amended vide amendment dated April 20, 2018 Deleted Portion of Section 38 to read as: Periodic updation shall be carried
out at least 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 subject to the following conditions:
(a) Fresh proofs of identity and address shall not be sought at the time of periodic updation, from customers who are
categorised as `low risk', when there is no change in status with respect to their identities and addresses and a self-certification
to that effect is obtained.
(b) A certified copy of the proof of address forwarded by `low risk' customers through mail/post, etc., in case of change of
address shall be acceptable.
(c) Physical presence of low risk customer at the time of periodic updation shall not be insisted upon.
(e) Fresh photographs shall be obtained from customer for whom account was opened when they were minor, on their
becoming a major.
(f) e-KYC process using OTP based authentication, for the purpose of periodic updation is allowed, provided, while onboarding,
the customer was subjected to KYC process as specified in Section 16 or Section 17.
30
Amended vide amendment dated April 20, 2018 Deleted Portion of Section 39 to read as: Partial freezing and closure of
accounts
(a) Where REs are unable to comply with the CDD requirements mentioned at Part I to V above, they shall not open accounts,
commence business relations or perform transactions. In case of existing business relationship which is not KYC compliant,
banks shall ordinarily take step to terminate the existing business relationship after giving due notice.
(b) As an exception to the Rule, banks shall have an option to choose not to terminate business relationship straight away and
instead opt for a phased closure of operations in this account as explained below:
i. The option of `partial freezing' shall be exercised after giving due notice of three months to the customers to comply with
KYC requirements.
ii. A reminder giving a further period of three months shall also be given.
iii. Thereafter, `partial freezing' shall be imposed by allowing all credits and disallowing all debits with the freedom to close the
accounts in case of the account being KYC non-compliant after six months of issuing first notice.
iv. All debits and credits from/ to the accounts shall be disallowed, in case of the account being KYC non-compliant after six
months of imposing `partial freezing',
v. The account holders shall have the option, to revive their accounts by submitting the KYC documents.
When an account is closed whether without `partial freezing' or after `partial freezing', the reason for that shall be communicated
to account holder.
31
Amended vide amendment dated April 20, 2018 Before amendment, it read as: "Accounts of non-face-to-face customers:
REs shall include additional procedures i.e., certification of all the documents presented, calling for additional documents and the first
payment to be effected through the customer's KYC-complied account with another RE, for enhanced due diligence of non-face to
face customers."
32
Amended vide amendment dated April 20, 2018
33
Amended vide amendment dated April 20, 2018 Deleted Portion of read as: `Card'
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