KYC guidelines require financial institutions to verify customer identities and monitor transactions to prevent money laundering, terrorist financing, identity theft and other illegal activities. The RBI's KYC guidelines include having a customer acceptance policy, customer identification procedures, monitoring high-value and suspicious transactions, and implementing risk management practices. Financial institutions must know their customers to comply with KYC regulations and protect themselves from illegal activities.

1. KYC (Know Your Customer)
Guidelines
By: Kapil Rajput

2. KYC (Meaning)
• The activities of customer due diligence that
financial institutions and other regulated
companies must perform to identify their
clients and ascertain relevant information
pertinent to doing financial business with
them and the bank regulation which governs
those activities.
http://en.wikipedia.org/wiki/Know_your_customer

3. Why KYC ?
• To restrict money laundering and terrorist financing.
• To prevent identity theft, identity fraud.
• To prevent the possible misuse of banking activities
for anti-national or illegal activities.

4. KYC Guidelines by RBI
1. Customer Acceptance Policy
2. Customer Identification Procedures
3. Monitoring of Transactions
4. Risk management

5. Customer Acceptance Policy
• All banks shall develop criteria for accepting any
person as their customer to restrict any anonymous
accounts and ensure documentation mentioned in
KYC.

6. Customer Identification Procedures
• Customer to be identified not only while opening
the account, but also at the time when the bank has
a doubt about his transactions

7. Monitoring of Transactions
• KYC can be effective by regular monitoring of transactions.
• Banks should ensure that its branches continue to maintain
proper record of all cash transactions( deposits and
withdrawals) of Rs.10 lakh and above.
• The internal monitoring system should have an inbuilt
procedure for reporting of such transactions and those of
suspicious nature to controlling/ head office on a fortnightly
basis.

8. Risk Management
• This is about managing internal work to reduce the
risk of any unwanted activity.
• Table