KYC/AML/CFT

UPDATED 12.10.23
REF 467/2023

RAVI KUMAR
NOTES
KYC POLICY GUIDELINES GIVEN UNDER : SECTION 35 A OF BR ACT

Who is authorized to act as and perform the functions of CKYCR :

CERSAI

CERSAI FULL FORM :

(CER-SAR-SII)
CER : CERNTRAL REGISTRTY OF
SAR : SECURATISATION ASSET RECONSTURTION AND
SII : SECURITY INTEREST OF INDIA

FATCA : Foreign Account Tax Compliance Act of the United States

of America
Shell Bank :Bank that has no physical presence in the country
IGA : Inter Governmental Agreement
Objective of KYC/AML/CFT : To prevent Bank from being
used intentionally or unintentionally , by criminal elements
for money laundering or terrorist financing activities

BENEFICAIL OWNERHSIP

COMPANY : MORE THAN 10%-share in Capital/Profit/Shares

TRUST : Beneficiaries with 10% or More Interest
PARTNERSHIP/ASSOCIATION/SOCIETY : 15% Capital/Profit
Unincorporated Association or Body of Individuals : 15 %
SHG/JLG : Office Bearers of SHGs/JLGs
POLITICALLY EXPOSED PERSONS (PEPS): “Politically Exposed Persons” (PEPs)
are individuals who are or have been entrusted with prominent public
functions by a foreign country, including the Heads of States/Governments,
Senior Politicians, Senior Government or Judicial or Military Officers, Senior
Executives of State-owned Corporations and important Political Party Officials

DESIGNATED DIRECTOR” : To ensure overall compliance with the obligations

imposed under chapter IV of the PML Act and the Rules and includes the
Managing Director or a whole-time Director duly authorized by the Board of
Directors.
ED overseeing Central Processing Wing is Designated Director

PRINCIPAL OFFICER : Officer responsible for furnishing information under

PMLA Rules.
Responsible for timely submission of CTR, STR and reporting of counterfeit
notes and all transactions involving receipts by Non-Profit Organisations of
value to FIU-IND.
Know Your Client (KYC) Identifier means the unique
number or code assigned to a customer by the Central
KYC Records Registry

Digital KYC : Capturing live photo of the customer

and OVD OR the proof of possession of
Aadhaar, where offline verification cannot be carried out,

along with the latitude and longitude of the location

where such live photo is being taken by an authorized
officer of the bank
 Video based Customer Identification Process (V-CIP)

Alternate method of customer identification

with facial recognition and customer due diligence by an

authorized official of the Bank

by undertaking seamless, secure, live, informed-consent based audio-

visual interaction with the customer to obtain identification information
required for CDD purpose

and to ascertain the veracity of the information furnished by the

customer through independent verification and maintaining audit trail of
the process.

Such processes complying with prescribed standards and procedures shall

be treated on par with face-to-face Customer Identification Process
 OVD - (OFFICIALLY VALID DOCUMENT)
 Passport
 Driving License
 Proof of possession of Aadhaar number
 Voter Identity Card issued by Election Commission of India
 Job card 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
 Any other document as notified by the Central Government in
consultation with the

 PRESERVATION PERIOD : 5 years from the date of transaction between

the bank and the client, all necessary records of transactions
OVD does not have updated address following
document Shall be deemed to the OVDs for the
limited purpose of proof of address
 Utility bill not more than 2 months
(Electrical/Telephone/Water/Mobile/Gas)
 Municipal Tax receipt,
 PPO
 Accommodation letter issued by Employees of
Central Govt, SC Banks, PSU, Fin institutions, Listed
companies

 The Client shall submit updated OVD with current

address within a period of 3 months of submitting
CERTIFIED COPY :
In case of Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs) the
original certified copy, certified by any one of the following, may be obtained:

 Authorized officials of overseas branches of Scheduled

Commercial Banks registered in India
 Branches of overseas banks with whom Indian banks
have relationships,
Notary Public abroad,
 Court Magistrate,
 Judge,
 Indian Embassy/Consulate General in the country where
the non-resident customer reside
 ACCOUNT OPENING DOCUMENTS :
COMPANY ACCOUNT :
Certificate of incorporation
Memorandum and Articles of Association
PAN of Company
Resolution from the Board of Directors and POA granted to its managers, officers or employees to
transact on its behalf
Corporate Identification Number (CIN)
One copy of an OVD, One recent photo & PAN or Form No.60 of related beneficial owner, the
managers, officers or employees, as the case may be, holding an attorney to transact on the
company‟s behalf.
The names of the relevant persons holding Senior Management position and
The registered office and the principal place of its business, if it is different

Accounts of partnership firms

Registration Certificate
Partnership Deed
PAN of the partnership firm
One copy of an OVD, one recent photograph and PAN or Form No.60 of related beneficial owner,
managers, officers or employees, as the case may be, holding and an attorney to transact on its
behalf
The names of all the partners and
 Address of the registered office, and the principal place of its business, if it is different
 ACCOUNT OPENING DOCUMENTS :
Accounts of Trusts :
Registration Certificate
Trust Deed
PAN or Form No.60 of the trust.
One copy of an OVD, one recent photograph and PAN or Form No.60 of related beneficial owner,
managers, officers or employees, as the case may be, holding and an attorney to transact on its behalf
The names of the beneficiaries, trustees, settlor and authors of the Trust.
The address of the registered office of the Trust; and
List of trustees and documents, as specified in Point 1, for those discharging the role as trustee and
authorised to transact on behalf of the Trust

Accounts of Proprietorship Concerns

Proof of business – 2 documents (if Branch satisifed one )
Registration Certificate or
Licence issued by the Municipal authorities under Shop & Establishment Act.
Sales and income tax returns.
CST/VAT/GST certificate (Provisional/Final)
Registration document issued by Sales Tax / Service Tax / Professional Tax authorities
IT return in the name of the sole Proprietor where the firm‟s income is reflected, duly
authenticated/acknowledged by the IT Authorities
Utility bills such as electricity, water and landline telephone bills
IEC (Importer Exporter Code) issued by DGFT
ACCOUNTS OF FOREIGN STUDENTS STUDYING IN INDIA
 Open a Non Resident Ordinary (NRO) bank account of a foreign
student on the basis of his/her passport (with visa & immigration
endorsement) with a photograph and a letter offering admission
from the educational institution in India.

 Branches should obtain a declaration about the local address within

a period of 30 days of opening the account and verify the said local
address.

 During the 30 days period, the account should be operated with a

condition of allowing foreign remittances not exceeding USD 1,000
and a cap of monthly withdrawal to Rs. 50,000/-, pending
verification of address.

 Students with Pakistani nationality will need prior approval of the

RBI for opening the account.
Issue of Demand Drafts/ Traveller‟s cheques: Issue of for
value of Rs. 50,000/- and above shall be effected by
debit to the customer‟s account or against cheques and
not against cash payment

Unique Customer Identification Code (UCIC) will help the

Bank to identify customers, track the facilities availed,
monitor financial transactions in a holistic manner and
enable the Bank to have a better approach to risk
profiling of customers

KYC data of individual accounts is to be uploaded to Central

KYC Registry (CKYCR) within T+5 days from the date of
establishing account based relationship
HOW MANY PILLARS IN KYC : 4 AND THEY ARE
AIMM
1 Customer Acceptance Policy

2 Customer Identification Policy

3 Monitoring of Transactions

4 Risk Management
CUSTOMER DEFINED AT : KYC POLICY

CUSTOMER DEFINITION : A PERSON WHO IS HAVING FINANCIAL

RELATIONSHIP or activity WITH THE BANK

RISK CATEGORIZATION OF CUSTOMERS: Based on the policy/ guidance notes

of RBI/IBA, risk rating has been assigned taking into account the following
parameters available in CBS system : 7 parameters
1 Customer Type
2 Customer Profession
3 Type of Business.
4 Product Code.
5 Account Status
6 Account Vintage
7 Average balance in deposits in
SB/Current/Term Deposit accounts
 TYPE OF CUSTOMERS:
LOW RISK :
Salaried employees (Govt servant/ Ex service man/Banker/Professor)
Senior Citizens
Staff/ Ex-staff/FAMILY of staff
Government Departments
Government owned companies ,
Govt./ Semi Govt. Employees
Public Sector
Regional Rural Banks
Cooperative Bank
Local Authority ,Other Banks
Individual
Pensioner,
Public Ltd.,
Illiterate
SHG
MAGISTRATE
JOURNALIST
NURSE
 MEDIUM RISK : (BUSINESS AND TYPES OF BUSINESS CUSTOMERS)
BASED ON CUSTOMER TYPE :
Blind
Purdanashin
Proprietorship
Partnership
Private Limited Company
Unregistered body
Registered Body
Corporate Body

Director/ED
Business executive/ Businessman
Doctor ,Engineer & Lawyer
Financaial broker
Accountants

MANUFACTURING/ RETAIL TRADE & WHOLEASLE TRADE / DISTRIBUTION

RELIGIOUS INSTITUTION
HEALTH AND SOCIAL WORK
Restaurants
 HIGH RISK
Trusts
Charities
Society
Co-op society
NGOs,
Politically Exposed Persons (PEPs),
Accounts of non-face-to-face customers,
HNI,
EXPORTERS & IMPORTERS
HUF
NBFC
Dealers in Jewelry, gold/silver/bullions, diamonds and other precious metals/stones,
Blocked Accounts and
Unclaimed deposits
Association/Clubs
FORIEGNERS
WALK IN CUSTOMER
MONEY MULES : OPERATION OF BANK ACCOUNTS
Contractors & industrialist
REAL ESTATE SERVICES
Construction
EMBASSIES / CONSULATE
DEALING IN PRECIOUS METAL OR STON

PEP ACCOUNTS : Branch Head SCALE 4 & above can open

 RISK RATING FOR PRODUCT CODE

101 CANARA SB GENERAL : LOW

102 SB PENSION : LOW
111 CANARA SB STAFF : LOW
RECURRING DEPOSIT GENERAL/STAFF : LOW
CURRENT ACCOUNT- GENERAL-RURAL : LOW
FD/KD GENERAL : LOW

103 CANARA SB NRE : HIGH

117 SAVINGS BANK GOLD SCHEME : HIGH
CANARA SB RFC USD : HIGH
CURRENT ACCOUNT- NRE /NRO : HIGH
CA RERA ACCOUNT : HIGH
FD CGA : HIGH
RISK RATING FOR ACCOUNT STATUS :
DESCRIPTION RISK CATEGORY
REGULAR / ACTIVE LOW
INOPERATIVE / DORMANT MEDIUM
UNCLAIMED / BLOCKED HIGH

RISK RATING FOR VINTAGE :

DESCRIPTION RISK
CATEGORY
LESS THAN 6 MONTHS OLD HIGH
6 MONTHS TO LESS THAN 12 MONTHS MEDIUM
12 MONTHS AND ABOVE LOW
RISK RATING FOR VINTAGE :

When an existing Customer opens a new account, the Vintage Parameter

need not be taken into account for risk categorization of such accounts and
the account may be classified basing on the risk category allotted to the
customer on the other 6 parameters.
Once new account completes 6 months then the account should be
categorized as medium risk subject to complying with other risk parameters.
And, the account thereafter should go to low risk after 12 months subject to
complying with other risk parameters

Under vintage parameter, newly opened CASA accounts which have not
completed 6 months shall be categorised as High Risk, except accounts
pertaining to staff, ex-staff, pensioners, small accounts, Financial Inclusion
and Basic Savings Bank Account
RISK CATEGORISATION FOR NRI CUSTOMER: :
The process of Risk categorization of NRIs shall be based on the risk profile of
the country where the customer is domiciled‟.
 Final risk categorization shall be done taking into consideration the rating in
all the 7 parameters.
 Export Credit Guarantee Corporation of India Ltd (ECGC) is updating the
country risk classification on regular basis
ECGC CLASSIFICATION RISK CATEGORY FINAL RISK ALLOTMENT
A1 Insignificant
LOW
A2 Low Risk
B1 Moderately Low Risk
B2 Moderate Risk MEDIUM
: C1 Moderately High Risk
HIGH
C2 High Risk
D Very High Risk
FIXATION OF THRESHOLD LIMIT :
Branch shall fix appropriate threshold limit of a Customer while opening new
account based on the following Parameters

SB General (101) :
Rural –Rs.50000, Semi Urban –Rs.1 lakh, Urban-Rs.2 lakh, Metro-Rs. 3 lakh.

SB BSBD (108) : Rural, Semi Urban, Urban, Metro – Rs.50,000/-.

SB Canchamp (109) : Rural, Semi Urban, Urban, Metro –Rs.50,000/-

SB Staff (111) : Rural, Semi Urban, Urban, Metro – Rs.1 lakh.

Current /OD/OCC Accounts : Rural Rs.2 lakh, Semi Urban – Rs.3 lakh,
Urban- Rs.4 lakh, Metro-Rs. 5 lakh :
1 Out of the following who is a LOW RISK customer

A Blind
B Purdanashin
C Illiterate.
D NRI

2. Out of following who is not a HIGH RISK customer

a. HNI
b. NRI
c. PEP
d.Purdanashin.
RISK RATING BASED ON AVERAGE BALANCE IN SB, CURRENT and TERM DEPOSIT
ACCOUNTS :

HIGH : (RS 100 LAC AND ABOVE DEPOSIT (SB/CA/TD)

Enjoying FB limits/Term loans exceeding Rs. 100 lakh.

MEDIUM (Rs 25 LACS TO RS 100 LACS)

LOW (LESS THAN 25 LAC)

RISK CATEGORISATION OF HNI :

1) Average balance of Rs.100 lakh and above in all deposit accounts (SB+CA+TD).
2) Enjoying Fund based limits/term loans exceeding Rs.100 lakh
Review Customer risk categorization :
Half Yearly -30th Jun and 31st December every year. (251/22)

Re-KYC (REVIEW OF RISK RATING)

LOW RISK – 10 YEARS (Branches need not seek fresh proofs of identity and
address at the time of periodic updation, in case of no change in status with
respect to their identities and addresses. A self-certification by the customer to
that effect should suffice in such cases.)
MEDIUM RISK - 8 YEARS
HIGH RISK -2 YEARS
CKYC TO BE DONE = T+5 DAYS

Preservation of Records : At least 5 years from the date of transaction between the
bank and the client, all necessary records of transactions, both domestic or
international.

Documents like passports, identity cards, driving licenses, PAN card, utility bills etc.)
obtained while opening the account and during the course of business relationship, are
COMBATING FINANCING OF TERRORISM (CFT): United Nations periodically
circulates the lists of individuals and entities, suspected of having terrorist links,
and as approved by its Security Council (UNSC):
Branches are required to screen customer names with UN List of terrorist
individuals/entities before creation of new customer ID/opening of accounts
FATF : Financial Action Task Force : making poilices to combat AML and finacing to
Terrorisum. (Established in 1989)
FIU-IND : Financial Intelligence Unit-India, New Delhi

Reports to be furnished to FIU-IND

Cash Transaction Report (CTR) - Above 10 lacs – Reporting to FIU – 15th of the
succeeding month

Suspicious Transaction Report (STR) shall be furnished within 7 days of arriving at

a conclusion that any transaction, whether cash or non-cash, or a series of
transactions

Non-Profit Organisation (NPO) : 15th of the succeeding month (more than Rs 10 lacs)

Counterfeit Currency Report (CCR): 15th of the succeeding month

Cross-border Wire Transfer Report : 15th of the succeeding month (more than Rs 5 lakh)
PMLA 2002- SEC 3 DEALS WITH ANTI MONEY
LAUNDERING

3 STAGES OF AML ARE PLI

PLACEMENT
LAYERING
INTEGRATION

UCIC : UNIFIED CUSTOMER IDENTIFICATION CODE

PARTNERHIP – MIN 2 MAX 10 (FOR BANKING) –
MAX 20 (OTHER CHANNEL)
(BUT AS PER COMPANIES ACT 2013-100)

PRIVATE LIMITED COMPANY- MIN 2-MAX 200

(DIRECTORS MIN 2-MAX 15)

PUBLIC LIMITED COMPANY- MIN 7-MAX UNLIM

(DIRECTORS MIN 3-MAX
15)
COMPANY/TRUSTEE if any trustee/director dies -
chq will be passed

PRINCIPAL AND AGENT CASE:

 principal died agent issued- Don’t pass the chq
 Agent issued agent died- chq will be passed

MINOR CAN BE ADMITTED INTO THE

PARTERNERHIP FOR THE BENEFIT OF FIRM, BUT
WITH IN 6 MONTHS AFTER ATTAINING MAJORITY
DECLARE
DOCUMENT HANDLING, DIGITISATION OF RECORDS & RETENTION POLICY (640/23)
DEFINITIONS
Born-digital records : Records that have been natively created in digital format
(rather than digitized from paper records). Examples : email, text-based documents
(for example Word documents, Google documents), presentations (for example
PowerPoint), spreadsheets (for example Excel), PDFs etc

Digitization: The act of scanning a physical document into digital form

Electronic Record (e-Record): Record or data generated image or sound stored,

received or sent in an electronic form or micro film or computer-generated micro
fiche and shall include floppies, Digital Archive Tape (DATs), Tapes, Hard Disks, CD etc

Legacy Data: The data, which are not migrated to the new system, or the data which
are purged/archived from the current database and not available for online usage

Metadata: Metadata is data [information] that provides information about other

data. In other words, it is data that is used to describe another item's content.

There is no specific time frame prescribed for preserving documents under RTI Act,
For the sake of convenience and also the risk attached to each item, the security
items with reference to their type/place of storage are grouped as under :

Group A : Items to be necessarily held in FBR Strong Room/FBR Safe.

Group B : Items to be held preferably either in FBR/Strong Room/FBR Safe or in Fire

Resistant Record Cabinet (which basically has a dual locking Arrangement).

Group C : Items to be held (either preferably in FBR Strong Room/FBR Safe/Fire

Resistant Record Cabinet or in cupboard with dual locking arrangement).

All records older than 3 years that are not required for frequent reference may be
trar.nsferred to the old records under authentication of an Officer/Manager.

Procedure for destruction of old records by Branches/Offices : Every year during

November, a list of old records to be destroyed is prepared and submitted to P&E
CO/ HO as the case may be, on or before 7th of December every year and obtain
permission for destruction. The entire process should be completed before the end
of April
 PRESERVATION OF RECORDS : 221/2022
SECTION 45Y OF BR ACT
Records set out under Prevention of Money Records to be preserved for at least 5 years
Laundering (Amendment) Act, 2009 from the date of transaction between the
bank and the client.
Records set out under PML Rules, 2005 Records should be maintained for at least 5
years from the date of cessation of
transactions between the bank and the
client.
Specified records and registers where the 5 years immediately preceding the current
transactions are internal in nature calendar year
Records of Transactions pertaining to Money 5 years
Changing Activities
Enhanced due diligence shall be maintained 5 years
for a period of ……years in case of any dubious
transaction

Unclaimed deposit To be maintained till the claim is lodged

and 20 years after it is settled
Records which relate to disputes or 20 years after the disputes are over
litigations in the Court of Law
In respect of Written off loan accounts,
preservation of the loan papers, files,
registers etc
Preservation of physical cheques as
required under CTS
Preservation of physical cheques/ images
of Government Cheques paid by drawee
branches
Advances (10 years)
Miscellaneous Services (10 years)
Preserved for a period of 10 years from the date
of closure of loan a/c or settlement of DICGC/
other claim, if any, whichever is later.
The presenting branches should preserve the
physical cheques in their custody securely for a
period of 10 years. The images of all the
government cheques paid should be preserved by
the drawee banks likewise for a period of 10
years.
10 years
Credit Limit Books, (10 years)
Fire Insurance Policy Register, Discretionary
Power Register
Godown Books
CIBIL/ CIRs data
ATM Cash Balancing Worksheet Register
Remittance register.
Traveller’s Cheque Register
Shroff Cash Book, Shroff cash payments
Tappal Book
Leave registers
SA/BAA/SL 10 YEARS FROM TALLYING
Govt. transactions
To be maintained Branch Licence / Branch shifting, Policy Matters,
permanently Inventory Register, Investigation Reports,
Files relating to Staff lapses where disciplinary action is
recommended and
EMT PAPERS
DEATH CLAIM PAPERS
Dividend Warrants Register
Provident Fund related all
Investment Registers
Security Register
Staff File Index book
Register for POA, Succession & Death Certificates
SDL Agreements.
ATM/Debit Card issue – Registers/Applications
Jewel Appraiser’s File
Hardware/Software Register.
RBI Inspection Reports/Notes.
Bonus Paid Register /File.
Complaint Register / File
COUNER CURRENCY 3 YEARS from the date of receipt from the Police
REPORTS Authorities/Courts. And
3 years after conclusion of court case
 Terminal Questions
• Cross-border Wire Transfer Report (CWTR) is required to be
filed by _______ for all cross border wire transfers of the value
of more than ______ or its equivalent in foreign currency
where either the origin or destination of fund is in India.
• a.15th of scuueeding quarter, Rs 10 lakhs
• b.15th of succeeding quarter, Rs 10 lakhs
• c.30th of succeeding quarter, Rs 10 lakhs
• d.15th of succeeding month, Rs 10 lakhs
• e.15th of succeeding month, Rs 5 lakhs

Answer is e.15th of succeeding month, Rs 5 lakhs

 Terminal Questions
• What is the threshold limit of a customer fixed while
for opening a current account in Urban Branch?
• a.Rs 1 lakh
• b.Rs 2 lakh
• c.Rs 3 lakh
• d.Rs 4 lakh
• e.Rs 5 lakh

Answer is d.Rs 4 lakh

 Terminal Questions
• What is the threshold limit of a customer fixed while
for opening a OD/OCC account in Semi Urban Branch?
• a.Rs 1 lakh
• b.Rs 2 lakh
• c.Rs 3 lakh
• d.Rs 4 lakh
• e.Rs 5 lakh

Answer is c 3 lacs
 Terminal Questions
• Records/files related to Unclaimed deposit to be
maintained and preserved till the claim is lodged and
_______ after it is settled.
• a) 10 years
• b) 20 years
• c) 15 years
• d) 12 years
• e) 30 years
•

Answer is b) 20 years
 Terminal Questions
• If the average balance in SB, Current and Term Deposit account of
a customer is ____________, it is categorized as high risk as per
balance parameter of risk categorization for customer.

• a.Rs 5 lakhs & above

• b.Rs 10 lakhs & above
• c.Rs 25 lakhs & above
• d.Rs 50 lakhs & above
• e.Rs 100 lakhs & above
•
•

Answer is e.Rs 100 lakhs & above

 Terminal Questions
• Which one is not an Officially Valid Document?
• a.Passport.
• b. Driving License.
• c.Proof of possession of Aadhaar number
• d.Ration card
• e.Letter issued by the National Population Register
containing details of name and address
•

Answer is d.Ration card

 Terminal Questions
• In case, Officially Valid Documents (OVDs) furnished by the customer
does not contain updated address but submit certain documents
deemed to be OVD for the limited purpose of address proof, the
Customer should submit updated Officially Valid Document with
current address within a period of _______ of submitting the above
document.
• a.1 month
• b.2 months
• c.3 months
• d.6 months
• e.15 days
•

Answer is c.3 months

 Terminal Questions
• ________ means the capturing live photo of the Customer and
Officially Valid Document or the proof of possession of Aadhaar,
where offline verification cannot be carried out, along with the
latitude and longitude of the location where such live photo is
being taken by an authorized officer of the bank.
• a.Online KYC
• b.Video kyc
• c.Digital KYC
• d.Video based Customer Identification Process (V-CIP)
• e.e-KYC
•

Answer is c.Digital KYC

 Terminal Questions
• ________ is a term used to describe innocent victims
who are duped by fraudsters into laundering stolen/
illegal money via their bank account(s).
• a.Kite Flying
• b.Money Mule
• c.Window dressing
• d.Street Financing
• d.Social engineering
•

Answer is b.Money Mule

 Terminal Questions
• A ___________ means a person designated 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.

• a.Designated Director
• b.Principal Officer
• c.Authorised Person
• d.Chief Officer
• e.Juridical Person
•
Answer is a.Designated Director
 Terminal Questions
• The threshold for "Controlling ownership interest" for
the purpose of determination of Beneficial Owner (BO)
has been revised to ……..% for both Companies and
Trusts respectively?
• a.15 %
• b.25 %
• c. 10 %
• d.30 %
• e.50 %

Answer is c 10 %