Know your customer
1) Customer Acceptance
2) Customer Identification
3) Monitoring of Transactions
4) Risk Management
Definition of a Customer:
(i) A person or entity
(a) Maintaining an account with the Bank, or
(b) Has a business relationship with the Bank (including borrowers/guarantors of loans, Demat account holders, locker holders etc.)
(ii) One on whose behalf the account is maintained (i.e. the beneficial owner)
(iii) Beneficiaries of transactions conducted by professional intermediaries (such as Stock Brokers, Chartered Accountants, Solicitors, etc. if permitted under the law) and
- iv) Any person / entity connected with a financial transaction.
Branches should open accounts of only those persons whose identity can be verified. Thorough scrutiny of antecedents and present status should be ensured to find out :
(i) if the accounts are in fictitious / benami name/s;
(ii) whether the persons are having any connections with terrorist organizations.
(iii) whether the persons are with criminal background or were ever convicted
for offences relating to money laundering, terrorist activities, drug trafficking
- Due Diligence must be exercised at the time of opening accounts.
- Obtain necessary information to establish the identity, legal existence of each new customer based preferably on disclosures made by customers themselves.
- Ascertain the purpose of opening the accounts and seek details of occupation and source and level of income to prevent misuse of the banking system for perpetration of frauds and money laundering.
- For identification of a customer, in addition to obtaining photographs, any of the photo identity documents mentioned below may be obtained.
– Voter ID Card
– PAN Card
– Govt. Defense ID Card
– ID Cards of reputed employers
– Driving License
– Utility Bills
- Further, to verify the authenticity of the current address any of the following (latest / recent) documents should be perused and copy retained.
– Credit Card Statement
– Income/Wealth tax assessment order
– Electricity bill
– Telephone Bill
– Bank account statement;
– Letter from reputed employer;
– Letter from any recognized public authority;
– Ration Card
- Branches should verify that the relevant details are incorporated in the documents being accepted for identification. If necessary, more than one of the above documents and additional documents, if need be, may be called for to establish the identity and correct address of the customer.
- The officer scrutinizing the photo identity document/address document must satisfy himself about the prima facie authenticity by verifying the originals and authenticated photo copy of the same, which would be kept as branch record along with the account opening form. He should also ascertain that the photograph on Account Opening Form and Photo identify document pertain to the same individual.
- In case of joint accounts, applicants who are not closely related to each other would require to establish their identity and address independently.
- In case of Corporate and other legal entity customers the identity of all the signatories to be established as above, apart from obtaining details of its Registered Office and Business address. Relevant documents like Registration Certificate, Certificate of incorporation, Memorandum and Articles of Association and appropriate authorization for opening of account also to be obtained.
- A letter of thanks should also be sent to the Account holder by post / courier to the recorded address, to ascertain the correctness of the address. If the letter is returned undelivered, the matter should be looked into.