KYC Information And Process

1. KYC
Know Your Customer
Know Your Customer – KYC enables banks to know/understand their
customers and their financial dealings to be able to servethem better and
prudently manage the risks of money laundering and financing of terrorism.
 KYC stands for ‘Know your Customers’
 Itis a process by which bank obtains about the identity and address of
the customers and helps to ensurethat banks services arenot misused.
 Banks are also required to periodically update their customer’ KYC
details
 Itenables banks to know / understand their customers and their
financial dealings so as to be able to servethem better.
 Know Your Customer (KYC) Policy is an important step developed
globally to prevent:
 Identify theft
 Financial fraud
 Money Laundering
 Terroristfinancing
Define a Customer
 Individual
 Company/Business Entity
 ProfessionalIntermediaries such as Stock Broker
 Chartered Accountants, Solicitors
 Any person or entity connected with a financial transaction
Why KYC?
 To establish the identity of the client. This means identifying the
customer and verifying his/her by using reliable, independent source
documents, data or information.
 To ensurethat sufficientinformation is obtained on the nature of
employment/ business that the customer does/expects to undertake
 And the purposeof the account.

2.  To prevent banks frombeing used, intentionally or unintentionally,, by
criminal elements for money laundering activities.
When KYC Required?
 Opening an account in a bank
 Applying for a Credit Card or loan
 Opening a subsequentaccount
 Opening a locker facility
 While investing in a mutual fund
 Financial institutes may ask for a mandatory KYC process in other
instance too
 When there are not enough documents with the Bank in existing
account
 When there are changes in signatories, Beneficial Owners etc.
 When the bank feels it necessary to obtain additional information from
existing customers based on conduct of the account
What does KYC controls?
 Name Matching against list known parties
 Collection and analysis of basic identity information
 Creation of an expectation of a customer’s transactionalbehaviour
 Determination of the customer’s risk in terms of propensity to commit
money laundering terroristfinance or identity theft
 Monitoring of a customer’s transaction againsttheir expected behaviour
and recorded profile as well as that of the customer’s peers.
List of KYC Documents
Individual
 Passport
 Voter’s Card
 Driving License
 Adhaar Card
 NREGA Card
 Pan Card

3. Company / Business Entities
 Certificate of incorporation
 Article of Association (AoA)
 Memorandumof Association (MoA)
 Service tax / VAT Certificate
 Rent Agreement Copy
 KYC of Directors and Authorised Signatory
Terminologies toKnow
 Money Laundering :-
Is the process of creating the appearance those large amounts of money
obtained fromserious crimes, such as drug trafficking of terrorist
activity, originated froma legitimate source
 TerrorismFinancing :-
 Refers to activities that providefinancing or financial supportto
individual terrorists or terroristgroups.
 A governmentthat maintains a list of terroristorganization
normally will also pass laws to prevent money laundering being
used to finance thoseorganizations