Q-1 What is KYC?

Ans- KYC stands for Know Your Customer. KYC is done in a Bank to stop Money Laundering.
There are 4 guidelines of KYC:-

1) Customer Acceptance Policy

2) Customer Identification Procedures
3) Monitoring of Transactions
4) Risk Management

Q2 – What is Money Laundering?

Ans – Money Laundering is an activity to make Black Money look white.

Q3 – What are sources of Black/Crime Money?

Ans – The various sources of Black/Crime Money are:-

• Drugs Trafficking

• Kidnapping

• Extortion money

• Tax Evasion and hiding income

• Corruption

• Other Crimes like Betting, human trafficking

Q4 – What are Guidelines of KYC?

Ans - There are 4 guidelines of KYC:-

1) Customer Acceptance Policy

2) Customer Identification Procedures
3) Monitoring of Transactions
4) Risk Management
 Customer Acceptance Policy – This guideline says that do not open Benami or criminal accounts.
We should also not open accounts without all proofs.

Customer Identification Procedures – This guideline says that check all proofs before account
opening.

Monitoring of Transaction – This guideline says that after account opening, monitor the
transactions to check if they are matching customer’s profile or not.

Risk Management – This guideline is for the Bank to provide KYC training to all staff.

Q5 – What are the Steps of Money Laundering?

Ans – There are 3 Steps of Money Laundering.

1) Placement
2) Layering
3) Integration

Placement – In this step, black money is deposited in bank via RTGS/NEFT, Cheque, Draft and Cash

Layering – In this step, money is moved to various accounts to hide the source of money.

Integration – In this step, we buy land, house or gold with the black money.

Q6 – What is AML (Anti Money Laundering)?

Ans – AML is the steps taken by the bank to stop Money Laundering.

The steps are:-

1) Do proper KYC during account opening

2) Report CTR to FIU-IND

3) Report STR to FIU-IND

4) Save 10 year of customer transactions data in the system

Q7 - What is STR (Suspicious Transaction Report)?

Ans – This report has all those transactions which are not matching Customer’s profile. Such transactions
are termed as Suspicious Transactions.
The STR report should be sent to FIU within 7-days of finding suspicious transaction.

Q8 – What is CTR (Cash Transaction Report)?

Ans – This report has details of all those customers who have deposited or withdrawn cash of Rs 10 Lac
in a month.

The cash transaction report (CTR) for each month should be submitted to FIU-IND by 15th of the next
month.

Q9 – What is FIU (Financial Intelligence Unit)

Ans – This unit receives CTR and STR reports from Banks. It then decides if Money Laundering is done by
customer or not.

Q10 – What is a Shell Company?

Ans – A shell company is a company in which no real business is conducted. Such a company is operated
as a tool to do money laundering.

Q 11 – What all Identity Proofs are acceptable for opening Bank account?

Ans- The various ID proofs that are acceptable for account opening are:-

• Passport

• Driving License

• Voter ID Card

• Aadhar Card

• PAN Card

• Employee ID card issued by Govt

• Senior Citizen card issued by State/Central Govt.

• Any card belonging to defense personnel

Q 12 – What all address proofs are acceptable for opening bank account?

Ans – The various address proofs that are acceptable for accounts opening in banks are:-

• Passport

• Driving License

• Landline Telephone Bill/Electricity bill/Water Bill [Not older than 3]

• Bank statement of an existing account [Not older than 3 months]

• Post paid piped gas connection bill showing consumption and complete address.

• Life Insurance Premium Receipt.

• Aadhar Card.

Q 13 – Give Examples of Low-Risk, Medium-Risk and High-Risk Customers?

Ans –Low Risk Customers Examples

• Salaried Account Customers

• Minor Accounts,

• Senior Citizen,

• Women Account

• Account of Government Departments

• Account of companies which have major government stake like LIC, NTPC, ONGC

• Account of Regulatory bodies like IRDA, SEBI

• Account of Large Corporate like TATA Group, BAJAJ Group, Mahindra Group

Medium Risk Customers Examples

• Non Resident Customers

• High Net worth Individuals

High-Risk Customers Examples

• Accounts of Trusts,

• Accounts of Charities

• Accounts of NGOs and Organizations receiving donations

• Partnership Firms Accounts

• Account of Politically Exposed Persons(PEP)

Q14 – Give examples of Suspicious Transactions?

Ans - A Suspicious Transaction is a transaction which does not actually have any economic or logical
purpose.

For Example:-

• Large Cash Deposits in Account of an Individual, in which, normally only minimum balance is
maintained.

• Sudden Increase of balance in an account, which became active recently from dormant category.

• Funds received in an account from abroad, although the account holder does not have any
foreign collaboration.

• Large sum of money deposited in accounts via various modes like RTGS/NEFT/Cheque and the
funds being washed-out in a day or two, giving indication of Layering.

Q 15 – What are Functions of FIU?

Ans –The various functions of FIU are:-

1) Collect CTR and STR reports from Banks

2) Analyze suspicious transactions that are reported by the Banks

3) Sharing information with FIU of other countries, if required

4) Maintain database of suspicious transactions

Q16 – What is Terrorist Financing?

Ans - Terrorist financing means providing financial support to terrorists or terrorist organizations to
enable them to carry out terrorist acts.

Terrorist financing involves requesting/collecting funds with the intention to use them for support
terrorist acts.

Q17 – How Combating Financing of Terrorism (CFT) is done?

Ans – CFT means stopping Financing of Terrorism.

For doing CFT the Security Council of the United Nation circulates list of Terrorists and Terrorist
Organizations to all Central Banks in the world, who further circulates those lists to various Banks in their
respective countries.

The examples of Terrorist List are:-

• “Al-Qaida Sanctions List” - This list shall include the names of those individuals, groups,
associated with Al-Qaida.

• “1988 Sanctions List” - This list consists of names of Individuals and entities associated
with the Taliban.

For Combating Financing of Terrorism, A Bank should ensure that:-

1) While opening a customer’s account, it should be ensured that the name of the proposed
customer does not appear in the circulated lists.

2) A Bank should also scan all its existing accounts to ensure that no existing customer is linked to
any terrorist group mentioned in the list.

In case any customer is found to be linked to a terrorist or a terrorist group, then Bank should
immediately report to FIU-IND.

Other Important Questions

1) Why should we hire you?
2) What are your strengths and weakness?
3) Where do you see yourself after 5 years?
4) What do you know about the company?
5) Why do you want to come in KYC/AML Profile?