ALLAHABAD BANK...Allahabad Bank which are located abroad, to the extent they are not contradictory to the local laws in the host country, provided that:-i. where local applicable laws

ALLAHABAD BANK

Policy/Guidelines on Know Your Customer(KYC) norms/ Anti Money Laundering (AML)standards/ Combating Financing of Terrorism(CFT)/ Obligations of Bank under PMLA, 2002

2018-19

In lines with the Know Your Customer (KYC) Direction, 2016 (Updated as on 12th

July, 2018)issued by Reserve Bank of India and Amendments thereon made in PMLAct, 2002(Updated up to 02.03.2019)

AML & KYC Cell,Head Office

2 N.S. ROAD, KOLKATA-700 001

Policy cum Guidelines on KYC, AML & CFT-Obligations of Bank under PMLA Page 2

INDEX

Paragraph Particulars Page No.

Chapter-I:: Preliminary1.1 Short Title & Commencement 81.2 Applicability 81.3 (a) Definitions

i. Act & Rules 8ii. Beneficial Owner 9-10iii. Central KYC Registry (CKYCR) 10iv. Designated Director 10v. Non-profit Organizations 11vi. Officially Valid Document (OVD) 11vii. Aadhaar Number 11-12viii. Authentication 12ix. e-KYC authentication facility 12x. Yes/No authentication facility 12xi. Person 13xii. Principal Officer 13xiii. Suspicious Transaction 14xiv. Small Account 14-15xv. Transaction 15xvi Biometric Information 15xvii Central Identities Data Repository (CIDR) 15xviii Demographic Information 16xix Enrolment Number 16(b) Terminologiesi. Common Reporting Standards (CRS) 16ii. Customer 16iii. Walk-in Customer 16iv. Customer Due Diligence (CDD) 16v. Customer identification 16vi. FATCA 16-17vii. IGA 17viii. KYC Template 17ix. Non-face-to-face customers 17x. On-going Due Diligence 17xi. Periodic Updation 17xii. Politically Exposed Persons (PEPs) 17xiii. Regulated Entities (REs) 17-18xiv. Shell Bank 18xv. Shell Company 18

xvi. Wire transfer 18


xvii. Domestic and cross-border wire transfer 18

Chapter-II:: General2.1 Some Important Guidelines

a) Customer identification procedure & KYC updation 19

b) Verification of Genuineness of Permanent Account Number (PAN) 19

c) KYC for sale of Third party products 19d) Risk Categorization of Accounts 20e) Monitoring & Reporting of Transactions 20f) Issuing of Demand Draft/Banker’s Cheque/Inter Office Instrument for Rs.50,000and above 20g) Structuring of transactions with value just below threshold limits 21h) Customer’s transactions through BGL Accounts 21i) Transactions through NRE/NRO Accounts, Liberised Remittance Scheme and Importof gold under consignment basis 21j) Acceptance of Cash Deposits in accounts 21k) Management Overview and Compliance Culture 22l) Internal Audit and Concurrent Audits 22m) KYC Policy 22n) Compliance of KYC policy 22-23

Chapter-III:: Customer Acceptance Policy3 Customer Acceptance Policy(CAP) 23-24

Chapter-IV:: Risk Management4.1 Risk Management directives, Bank's Policy of Customer Risk Management 25-274.2 Maintenance of Customers’ Risk Profile 27-284.3 Management of Customer Risk Profile 28

(i) Level - I (Low risk) customers 28-30(ii) Level - II (Medium risk) customers 30(iii) Level - III (High risk) customers 30-31

Chapter-V:: Customer Identification Procedure (CIP)5.1 Procedure to be adopted in Customer Identification 31-32

Chapter-VI:: Customer Due Diligence (CDD) Procedure6.1 Procedure for obtaining Identification Information 33-35

Part I - CDD Procedure in case of Individuals6.1.1 Due Diligence for Individual Customer 35-366.1.2 KYC Verification through e-KYC 36-376.1.3 Due Diligence for opening of ‘Small Account” 376.1.4 Due Diligence for Shifting of bank accounts to another centre - Proof of address 38

Part II - CDD Measures for Sole Proprietary firms

6.2 Due Diligence for opening account of Sole Proprietary Firms 38-39Part III- CDD Measures for Legal Entities

6.3.1 Due Diligence for opening account of a Company 396.3.2 Due Diligence for opening account of a Partnership Firm 39-406.3.3 Due Diligence for opening account of a Trust 40


6.3.4Due Diligence for opening account of an unincorporated association/Body ofIndividuals 40

6.3.5Due Diligence for opening account of Government or its Departments, societies,universities and local bodies like village panchayats 40-41

Part IV - Identification of Beneficial Owner 41Part V - On-going Due Diligence

6.5.1 Periodic Updation 42-43Part VI - Enhanced and Simplified Due Diligence Procedure

6.6.1 Enhanced Due Diligence 43I. Accounts of non-face-to-face customers 43-44II. Accounts of Politically Exposed Persons (PEPs) 44III. Accounts of High Net-worth Individual (HNI) Customers 44-45

6.6.2 Simplified Due DiligenceI. Simplified norms for Self Help Groups (SHGs) 45II. Procedure to be followed by banks while opening accounts of foreign students 45-46III. Simplified KYC norms for Foreign Portfolio Investors (FPIs) 46-47

Chapter-VII:: Record Management & Reporting Obligation7.1 Record Management 48

7.2 Reporting Requirements to Financial Intelligence Unit - India 49

7.3 Bank’s Policy towards Reporting Obligation under AML Compliance 507.3.1 Nomination of Designated Director 50-517.3.2 Appointment of Principal Officer 517.3.3 Statutory Reports to FIU-IND 51-52

• Cash Transaction Reporting (CTR) 53-54• Counterfeit Currency Reporting (CCR) 54-55• Non-Profit Organization Transaction Report (NTR) 55• Cross-border Wire Transfer Report (CWTR) 56-57• Suspicious Transaction Report (STR) 57-61

7.3.4 Trade Based Money Laundering (TBML) 61-627.4 Screening of Cash Withdrawals and Deposits for the Purpose of CTR 62-637.5 Requirements/obligations under International Agreements Communications

from International Agencies/Combating Financing of Terrorism (CFT)63-64

7.6 Jurisdictions that do not or insufficiently apply the FATFRecommendations

64-65

7.7 Adherence to Foreign Contribution Regulation Act (FCRA), 1976 657.8 Anti-Money Laundering Focus 667.9 Implementation of UNSCR 2140(2014) and 2216(2015) pertaining to Yemen 66-67

Chapter-VIII:: Other Instructions8.1

Secrecy Obligations and Sharing of Information 67-688.2

Due Diligence for detecting Suspicious Transaction Report related to Shell Companies 68-69

8.3CDD Procedure and sharing KYC information with Central KYC Records Registry(CKYCR) 69-70


8.4Reporting requirement under Foreign Account Tax Compliance Act (FATCA)and Common Reporting Standards (CRS) 70-71

8.5 Period for presenting payment instruments 718.6 White-listing of Accounts for AML System 718.7 Operation of Bank Accounts & Money Mules 718.8 Collection of Account Payee Cheques 71-728.9 Unique Customer Identification Code (UCIC) 72

8.10Introduction of New Technologies – Credit Cards/ Debit Cards/ Smart Cards/ GiftCards/ Mobile Wallet/ Net Banking/ Mobil e Banking/ RTGS/ NEFT/ ECS/ IMPS etc. 72

8.11 Correspondent Banks 72-738.12 Wire transfer 73-748.13 Issue and Payment of Demand Drafts, etc. 748.14 Quoting of PAN 74-758.15 Selling Third party products 768.16 At-par cheque facility availed by co-operative banks 76-778.17 Issuance of Prepaid Payment Instruments (PPIs) 778.18 Hiring of Employees and Employee training 77

8.19

Adherence to Know Your Customer (KYC) guidelines by BFCs/RNBCs and personsauthorized by NBFCs/RNBCs including brokers/agents etc 77-78

Chapter-IX:: General Guidelines9.1 Roles & responsibilities of bank’s officers & staff 78-79

9.2 Duties/ responsibilities of officers/staff 79-80

9.3 Evaluation of KYC Guidelines by Internal Audit and Inspection System 809.4 Training to officers/ staff 80-819.5 Confidentiality of customer information 819.6 Avoiding hardship to customers 819.7 Sensitising the customers 819.8 KYC for the Existing Accounts 81-829.9 Applicability to Branches and Subsidiaries outside India 829.10 Technology requirements 829.11 Penalty for Non-Adherence to KYC norms 82


List of Appendix

Particulars

Appendix-I Indicative list of High/Medium Risk Customers

Appendix-II KYC documents for eligible FPIs under PIS


Revised Policy/Guidelines on Know Your Customer (KYC) norms/ Anti Money Laundering(AML) standards/ Combating Financing of Terrorism (CFT)/ Obligations of banks

under PMLA, 2002

(In lines with the Know Your Customer (KYC) Direction, 2016

Issued by Reserve Bank of India and amendments thereon made in PML Act, 2002)

In terms of the provisions of Prevention of Money-Laundering Act, 2002 and the Prevention of

Money-Laundering (Maintenance of Records) Rules, 2005, Regulated Entities (REs), [which include

inter-alia all Scheduled Commercial Banks (SCBs), as detailed in Point No. 3(b)xiii] are required to

follow certain customer identification procedure while undertaking a transaction either by

establishing an account based relationship or otherwise and monitor their transactions. Bank shall

take steps to implement provisions of Prevention of Money-Laundering Act, 2002 and the Prevention of

Money-Laundering (Maintenance of Records) Rules, 2005, as amended from time to time, including

operational instructions issued in pursuance of such amendment(s). The revised Master Direction is in

accordance with the changes carried out in the PML Rules vide Gazette Notification GSR 538 (E) dated

June 1, 2017 and thereafter and is subject to the final judgment of the Hon’ble Supreme Court in the

case of Justice K.S. Puttaswamy (Retd.) & Anr. V. Union of India, W.P. (Civil) 494/2012 etc. (Aadhaar

cases).

Accordingly, in exercise of the powers conferred by Sections 35 A of the Banking Regulation Act, 1949

and the Banking Regulation Act (AACS), 1949, read with Section 56 of the Act ibid and Rule 9(14) of

Prevention of Money-Laundering (Maintenance of Records) Rules, 2005 the Reserve Bank of India

being satisfied that it is necessary and expedient in the public interest to do so, hereby, issues the

Directions. In line with the KYC Directions and amendments made thereon in PML act, 2002, Bank felt

necessity of framing revised KYC & AML Policy of the Bank.


CHAPTER – IPRELIMINARY

1.1 Short Title and commencement.

(a) This Policy shall be called the KYC/AML & CFT Policy cum Guidelines, 2019.

(b) The objective of this Policy is to prevent the Bank from being used, intentionally or

unintentionally, by criminal elements for money laundering or terrorist financing activities.

(c) KYC procedures will also enable the Bank to know/understand its customers and their

financial dealings better which in turn help them manage their risks prudently.

1.2 Applicability(a) This policy shall be applied to all the Branches and Offices of Allahabad Bank

(b) This Policy shall also apply to those branches and majority owned subsidiaries of the

Allahabad Bank which are located abroad, to the extent they are not contradictory to the local

laws in the host country, provided that :-

i. where local applicable laws and regulations prohibit implementation of these guidelines,

the same shall be brought to the notice of the Reserve Bank of India.

ii. in case there is a variance in KYC/AML standards prescribed by the Reserve Bank

of India and the host country regulators, branches/overseas subsidiaries

of the Bank are required to adopt the more stringent regulation of the two.

1.3 Definitions:In this Policy, unless the context otherwise requires, the terms herein shall bear the meanings

assigned to them below :-(a) Terms bearing meaning assigned in terms of Prevention of Money-Laundering Act, 2002 and the

Prevention of Money-Laundering (Maintenance of Records) Rules, 2005 :

SL.No.

Terminology Definition

i. Act and Rules “Act” and “Rules” means the Prevention of Money-

Laundering Act, 2002 and the Prevention of Money-

Laundering (Maintenance of Records) Rules, 2005,

respectively and amendments thereto.


ii. Beneficial Owner (BO): a. Where the customer is a company, the beneficial

owner is the natural person(s), who, whether acting

alone or together, or through one or more juridical

person, has/have a controlling ownership interest or

who exercise control through other means.

Explanation- For the purpose of this sub-clause-

1.“Controlling ownership interest” means ownership

of/entitlement to more than 25 per cent of the

shares or capital or profits of the company.

2.“Control” shall include the right to appoint majority

of the directors or to control the management or

policy decisions including by virtue of their

shareholding or management rights or shareholders

agreements or voting agreements.

b. Where the customer is a partnership firm, the

beneficial owner is the natural person(s), who, whether

acting alone or together, or through one or more juridical

person, has/have ownership of/entitlement to more than

15 per cent of capital or profits of the partnership.

c. Where the customer is an unincorporatedassociation or body of individuals, the beneficial

owner is the natural person(s), who, whether acting

alone or together, or through one or more juridical

person, has/have ownership of/entitlement to more

than 15 per cent of the property or capital or profits of

the unincorporated association or body of individuals.

Explanation: Term ‘body of individuals’ includes

societies. Where no natural person is identified

under (a), (b) or (c) above, the beneficial

owner is the relevant natural person who holds the

position of senior managing official.

d. Where the customer is a trust, the identification of

beneficial owner(s) shall include identification of the


author of the trust, the trustee, the beneficiaries with

15% or more interest in the trust and any other

natural person exercising ultimate effective control

over the trust through a chain of control or ownership.

iii. Central KYC RecordsRegistry (CKYCR)

“Central KYC Records Registry” (CKYCR) means an

entity defined under Rule 2(1)(aa) of the Rules, to

receive, store, safeguard and retrieve the KYC records in

digital form of a customer.

iv. Designated Director “Designated Director" means a person designated

by the Bank to ensure overall compliance with the

obligations imposed under chapter IV of the PML Act and

the Rules and shall include :-

a. the Managing Director or a whole-time Director, duly

authorized by the Board of Directors, if the RE is a

company,

b. the Managing Partner, if the RE is a partnership firm,

c. the Proprietor, if the RE is a proprietorship concern,

d. the Managing Trustee, if the RE is a trust,

e. a person or individual, as the case may be, who controls

and manages the affairs of the RE, if the RE is an

unincorporated association or a body of individuals, and

f. a person who holds the position of senior management

or equivalent designated as a 'Designated Director’ in

respect of Cooperative Banks and Regional Rural Banks.

Bank is required to nominate a Director on their Boards as

“Designated Director”, as per the provisions of the

Prevention of Money Laundering (Maintenance of

Records) Rules, 2005 (Rules), to ensure overall

compliance with the obligations under the Act and

Rules. The name, designation and address of the

Designated Director is to be communicated to the

Director, Financial Intelligence Unit - India (FIU-IND).

Explanation:- For the purpose of this clause, the terms

"Managing Director" and "Whole-time Director" shall have the


meaning assigned to them in the Companies Act, 2013.

v. Non-profit organizations(NPO)

“Non-profit organizations” (NPO) means any entity

or organization that is registered as a trust or a society

under the Societies Registration Act, 1860 or any similar

State legislation or a company registered under Section

8 of the Companies Act, 2013.

vi. Officially valid document(OVD)

Govt. of India has made amendment to the Prevention of

Money-laundering (Maintenance of Records) Rules, 2005

vide its Gazette Notification No. 92 dated 13th February, 2019,

and has advised that “Officially Valid Document” (OVD)would mean-

(a) The passport,

(b) The Driving License,

(c) Proof of possession of Aadhaar number

(d) The Voter’s Identity Card issued by Election

Commission of India,

(e) Job Card issued by NREGA duly signed by an officer

of the State Government,

(f) The letter issued by the National Population Register

containing details of name, address.

Explanation:

1. Where any clients submits his/her proof of possession of

Aadhaar number as an officially valid document, he/she may

submit it in such form as are issued by the Unique

Identification Authority of India(UIDAI).

2. For the purpose of this clause, a document shall be

deemed to be an OVD even if there is a change in the name

subsequent to its issuance provided it is supported by a

marriage certificate issued by the State Government or

Gazette notification, indicating such a change of name.

vii. Aadhaar number “Aadhaar number” means an identification number

issued to an individual under sub-section (3) of section

3, and includes any alternative virtual identity generated


under sub-section (4) of that section.

Explanation 1: In terms of the Aadhaar Act, everyresident shall be eligible to obtain an Aadhaar number.

Explanation 2: Aadhaar will be the document for identityand address.

Explanation 3: Where the client submits his proof ofpossession of Aadhaar number as an Officially validdocument, he/she may submit it in such form as areissued by the UIDAI.

viii. Authentication “Authentication” as defined under sub-section (c) of

section 2 of the Aadhaar Act, means the process by which

the Aadhaar number along with demographic information or

biometric information of an individual is submitted to the

Central Identities Data Repository (CIDR) for its verification

and such Repository verifies the correctness, or the lack

thereof, on the basis of information available with it.

ix. e-KYC authentication facility “e-KYC authentication facility” means an authentication

facility as defined in Aadhaar (Authentication) Regulations,

2016, i.e., a type of authentication facility in which the

biometric information and/or OTP and Aadhaar number

securely submitted with the consent of the Aadhaar number

holder through a requesting entity, is matched against the

data available in the Central Identities Data Repository

(CIDR), and the Authority returns a digitally signed response

containing e-KYC data along with other technical details

related to the authentication transaction.

x. Yes/No authenticationfacility

“Yes/No authentication facility” means an authentication

facility as defined in Aadhaar (Authentication) Regulations,

2016, i.e., a type of authentication facility in which the identity

information and Aadhaar number securely submitted with the

consent of the Aadhaar number holder through a requesting

entity, is then matched against the data available in the CIDR,

and the Authority responds with a digitally signed response

containing “Yes” or “No”, along with other technical details

related to the authentication transaction, but no identity

information.


xi. Person “Person” has the same meaning assigned in the Act and

includes:

a) An individual,

b) A Hindu undivided family,

c) A Company,

d) A firm,

e) An association of persons or a body of

individuals, whether incorporated or not,

f) Every artificial juridical person, not falling within any one

of the above persons (a to e), andg) Any agency, office or branch owned or controlled by any

of the above persons (a to f).

xii. Principal Officer “Principal Officer” means an officer nominated

by the RE, responsible for furnishing information as per

rule 8 of the Rules.

Bank should appoint a senior management officer to be

designated as Principal Officer. Bank should ensure that

the Principal Officer is able to act independently andreport directly to the senior management or to theBoard of Directors. Principal Officer shall be located at

the head/corporate office of the bank and shall beresponsible for monitoring and reporting of alltransactions and sharing of information as requiredunder the law. He will maintain close liaison with

enforcement agencies, banks and any other institution

which are involved in the fight against money

laundering and combating financing of terrorism

Further, the role and responsibilities of the PrincipalOfficer should include overseeing and ensuringoverall compliance with regulatory guidelines onKYC/AML/CFT issued from time to time andobligations under the Prevention of MoneyLaundering Act, 2002, rules and regulations made

there under, as amended form time to time. The Principal

Officer will also be responsible for timely submission

of CTR, STR, CWTR and reporting of counterfeit


currency notes and all transactions involving receipts by

non-profit organisations of value more than Rupees Ten

Lakh or its equivalent in foreign currency to FlU-IND. With

a view to enabling the Principal Officer to discharge his

responsibilities effectively, the Principal Officer and other

appropriate staff should have timely access to

customer identification data and other CDD information,

transaction records and other relevant information.

xiii. Suspicious transaction “Suspicious transaction” means a “transaction” as

defined below, including an attempted transaction,

whether or not made in cash, which, to a person

acting in good faith, :

a) gives rise to a reasonable ground of suspicion

that it may involve proceeds of an offence

specified in the Schedule to the Act,

regardless of the value involved; or

b) appears to be made in circumstances of unusual

or unjustified complexity; or

c) appears to not have economic rationale or bona-fide

purpose; or

d) gives rise to a reasonable ground of suspicion

that it may involve financing of the activities relating

to terrorism.

Explanation: Transaction involving financing of the

activities relating to terrorism includes transaction

involving funds suspected to be linked or related to, or to

be used for terrorism, terrorist acts or by a terrorist, terrorist

organization or those who finance or are attempting to

finance terrorism.

xiv. Small Account A ‘Small Account’ means a savings account in which:

a) the aggregate of all credits in a financial

year does not exceed rupees one lakh;

b) the aggregate of all withdrawals and transfers in

a month does not exceed rupees ten thousand;


and

c) the balance at any point of time does not

exceed rupees fifty thousand.

Provided, that this limit on balance shall notbe considered while making deposits throughGovernment grants, welfare benefits andpayment against procurements.

xv. Transaction “Transaction” means a purchase, sale, loan,

pledge, gift, transfer, delivery or the arrangement thereof

and includes:

a) opening of an account;

b) deposit, withdrawal, exchange or transfer of funds

in whatever currency, whether in cash or by

cheque, payment order or other instruments or by

electronic or other non-physical means;

c) the use of a safety deposit box or any other form of

safe deposit;

d) entering into any fiduciary relationship;

e) any payment made or received, in whole or in part, for

any contractual or other legal obligation; or

f) establishing or creating a legal person or legal

arrangement.

xvi Biometric Information As defined in the Section 2(g) of the Aadhaar Act,

“Biometric Information” means photograph, finger print, iris

scan or such biological attributes of an individual as may be

specified by Aadhaar (authentication) regulations.

xvii Central Identities DataRepository (CIDR)

As defined in Section 2(h) of the Aadhaar Act, “Central

Identities Data Repository (CIDR)” means a centralized

database in one or more locations containing all Aadhaar

numbers issued to Aadhaar number holders along with the

corresponding demographic information and biometric

information of such individuals and other information related

thereto


3

xviii. Demographic information As defined in Section 2(k) of the Aadhaar Act, “Demographic

information” includes information relating to the name, date of

birth, address and other relevant information of an individual,

as may be specified by regulations for the purpose of

issuing an Aadhaar number, but shall not include race,

religion, caste, tribe, ethnicity, language, records of

entitlement, income or medical history.

xix. Enrolment number Enrolment number” means “Enrolment ID” as defined in

Section 2(1)(j) of the Aadhaar (Enrolment and Update)

Regulation 2016 which means a 28 digit Enrolment

Identification Number allocated to residents at the time

of enrolment of Aadhaar.

(b) Terms bearing meaning assigned in the Directions, unless the context otherwise

requires, shall bear the meanings assigned to them below:

SL.NO.

Terminology Definition

i. Common ReportingStandards (CRS)

“Common Reporting Standards” (CRS) means reporting

standards set for implementation of multilateral

agreement signed to automatically exchange information

based on Article 6 of the Convention on Mutual

Administrative Assistance in Tax Matters.

ii. Customer “Customer” means a person who is engaged in a

financial transaction or activity with the Bank and includes

a person on whose behalf the person who is engaged in

the transaction or activity, is acting.

iii. Walk-in Customer “Walk-in Customer” means a person who does not

have an account based relationship with the Bank, but

undertakes transactions with the Bank.

iv. Customer Due Diligence(CDD)

“Customer Due Diligence” (CDD) means identifying

and verifying the customer and the beneficial owner.

v. Customer identification “Customer identification” means undertaking the

process of CDD.

vi. FATCA “FATCA” means Foreign Account Tax Compliance Act

of the United States of America (USA) which, inter

alia, requires foreign financial institutions to report


about financial accounts held by U.S. Taxpayers or foreign

entities in which U.S. Taxpayers hold a substantial

ownership interest.

vii. IGA “IGA” means Inter Governmental Agreement between

the Governments of India and the USA to improve

international tax compliance and to implement FATCA of

the USA.

viii. KYC Templates “KYC Templates” means templates prepared to

facilitate collating and reporting the KYC data to the

CKYCR, for individuals and legal entities.

ix. Non-face-to-facecustomers

“Non-face-to-face customers” mean customers who

open accounts without visiting the branch/offices of the Bank

or meeting the officials of Bank.

x. On-going Due Diligence “On-going Due Diligence” means regular monitoring

of transactions in accounts to ensure that they are

consistent with the customers’ profile and source of funds.

xi. Periodic Updation “Periodic Updation” means steps taken to ensure that

documents, data or information collected under the CDD

process is kept up-to-date and relevant by undertaking

reviews of existing records at periodicity prescribed

by the Reserve Bank.

xii. Politically ExposedPersons” (PEPs)

“Politically Exposed Persons” (PEPs) are individuals

who are or have been entrusted with prominent public

functions in a foreign country, e.g., Heads of

States/Governments, senior politicians, senior

government/judicial/military officers, senior executives

of state-owned corporations, important political party

officials, etc.

xiii. Regulated Entities” (REs) “Regulated Entities” (REs) means :

a. All Scheduled Commercial Banks (SCBs)/

Regional Rural Banks (RRBs)/ Local Area Banks

(LABs)/ All Primary (Urban) Co-operative Banks

(UCBs)/State and Central Co-operative Banks (StCBs

/ CCBs) and any other entity which has been

licenced under Section 22 of Banking Regulation Act,


1949, which as a group shall be referred as ‘banks’

b. All India Financial Institutions (AIFIs)

c. All Non-Banking Finance Companies (NBFC)s,

Miscellaneous Non- Banking Companies (MNBCs)

and Residuary Non-Banking Companies (RNBCs).

d. All Payment System Providers (PSPs)/

System Participants (SPs) and Prepaid Payment

Instrument Issuers (PPI Issuers)

e. All authorised persons (APs) including those who

are agents of Money Transfer Service Scheme

(MTSS), regulated by the Regulator.

xiv. Shell bank “Shell bank” means a bank which is incorporated in a

country where it has no physical presence and is

unaffiliated to any regulated financial group.

xv. Shell Company A Shell Company is an entity that has no active business and

usually exists only in name as a vehicle for another company’s

business operations (Black’s Law Dictionary). In essence,

shells are corporations that exist mainly on paper, have no

physical presence, employ no one and produce nothing.

xvi. Wire transfer “Wire transfer” means a transaction carried out, directly

or through a chain of transfers, on behalf of an originator

person (both natural and legal) through a bank by

electronic means with a view to making an amount of

money available to a beneficiary person at a bank.

xvii. Domestic and cross-borderwire transfer

“Domestic and cross-border wire transfer”: When the

originator bank and the beneficiary bank is the same

person or different person located in the same country,

such a transaction is a domestic wire transfer, and if the

‘originator bank’ or ‘beneficiary bank’ is located in

different countries such a transaction is cross-border

wire transfer.

(c) All other expressions unless defined herein shall have the same meaning as have beenassigned to them under the Banking Regulation Act or the Reserve Bank of India Act, or thePrevention of Money Laundering Act and Prevention of Money Laundering (Maintenance ofRecords) Rules, any statutory modification or re- enactment thereto or as used in commercialparlance, as the case may be.


CHAPTER – IIGeneral

2.1 Some important guidelines:

Branches are advised to note the following important guidelines for meticulous compliance, in view ofthe importance attached for adherence to the KYC & AML policy :-

a) Customer identification procedure & KYC updation

(i) The identity of the proposed customer and the beneficial owner should beestablished to the satisfaction of the bank before permitting the opening ofaccounts.

(ii) The identity of the existing customer also needs to be re-verified while activatingdormant/in-operative accounts.

(iii) The identification requirements in respect of walk-in-customers should be met andrecords to be preserved, wherever applicable.

b) Verification of Genuineness of Permanent Account Number (PAN)

Branches should verify genuineness of the Pan provided through NSDL site.Branches must not enter any Junk/ Invalid PAN as this situation is not only fraughtwith risk with facilitating the customer with less deduction of tax but also makes the branchManagers personally responsible.

c) KYC for sale of Third party products

When banks sell third party products as agents, the responsibility for ensuring compliancewith KYC/AML/CFT regulations lies with the third party. However, to mitigate reputationalrisk to banks and to enable a holistic view of a customer’s transactions, branches must followthe appended guidelines:

(i) Even while selling of third party products as agents, banks should verify the identityand address of the walk-in-customer.

(ii) Banks should also maintain transaction details with regard to sale of third partyproducts and related records.

(iii) Sale of third party products by banks as agents to customers, including walk-in-

customers, for Rs.50,000 and above must be made (a) by debit to customers’


accounts or against cheques, and (b) obtention & verification of the PAN given by the

account based as well as walk-in-customers. This instruction would also apply to sale

of bank’s own products, payment of dues of credit cards/sale and reloading of

prepaid/travel cards and any other product for Rs. 50,000 and above.

d) Risk Categorization of Accounts

Risk categorization in respect of the accounts should be assigned ab initio at the time of

opening of the accounts. Periodical reviews of all accounts regarding its risk

categorization have to be carried out at the prescribed intervals. We have since introduced

system-based risk categorization of the customers, through integration of AML software with

B@ncs24, based on set domain parameters viz. occupation, line of business, entity type,

country, resident status etc.

e) Monitoring & Reporting of Transactions

(i) The coverage and intensity of monitoring of transactions should be in

commensurate with the risk categorization of the customers and should meet all

the obligations of the bank under PMLA 2002. Moreover, monitoring of

transactions of walk-in customers should also be subjected to the same rigor as that

applicable to the bank’s own customers for monitoring purposes.

(ii) It is observed that some branches were using internal accounts as aparking account for own customers’ / walk-in customers’ cash transactions whichinvolved purchase of DDs, sale of gold coin etc. for amounts aboveRs.50,000. This is strictly prohibited under extant policy guidelines. In suchcases, the transactions effected were not being captured for the purposes ofmonitoring and reporting under CTR/STR. It is, therefore, advised to put astop to this practice forthwith, and in case any violation is found later on,personal accountability will be fixed on the erring officials.

f) Issuing of Demand Draft/Banker’s Cheque/Inter Office Instrument for Rs.50,000and above: Branches must not accept cash for issuing of Demand Drafts(DD) / Banker’s

Cheque (BC) / Inter-Office-Instrument (IOI) of Rs.50,000 and above to customers / walk-in

customers. The name of the purchaser should be incorporated on the face of the demand

draft, pay order, banker’s cheque, etc. These instructions took effect for such instruments

issued on or after September 15, 2018.


g) Structuring of transactions with value just below threshold limits:

Structured transactions involving multiple cash deposits, DD/IOI/Banker’s Cheque

purchases and sale of gold coins, with the individual transactions of values just below the

threshold limit of Rs.50,000 i.e. in the range of Rs.40,000 to Rs.49,999 (i.e. less than

threshold limit of Rs.50,000) to the same purchaser (favouring same beneficiary) on a

single day (aggregate of such drafts issued exceeds Rs.50,000), indicating accommodating

them by splitting of amounts, is against the spirit of PMLA guidelines and must be avoided.

h) Customer’s transactions through BGL Accounts:

Branches/offices must desist from initiating transactions on behalf of thecustomers through BGL accounts viz. sundry, suspense, internal accounts etc. inviolation of extant guidelines. All the field functionaries should note that in caseany such instance comes to notice, the concerned officials would be heldpersonally responsible and would be subjected to Disciplinary Action.

i) Transactions through NRE/NRO Accounts, Liberised Remittance Scheme and Importof gold under consignment basis:

Branches must ensure strict adherence to the extant FEMA, 1999 regulations on

permissible transactions and upper limits for transactions in NRE & NRO accounts

considering the aspect of repatriation of funds through such accounts. It may also be

ensured that the transactions within the extant ceilings prescribed under Liberalised

Remittance Scheme are put through only in case of resident individuals meeting all other

conditions specified in the extant guidelines/instructions. It is reiterated that the facility

should not be extended to non-individuals. Banks should not take part with advance

payments on import of gold under consignment basis.

j) Acceptance of Cash Deposits in accounts:

Branches are advised that there is no restriction regarding acceptance of cash deposits in

the accounts of the customers provided PAN/Form 60/61 is obtained in case of deposits

above Rs.50,000, and CTR reports are filed with FIU-IND for cash transactions

above Rs.10,00,000 in aggregate during a month. However, attempts to structure

transactions below the threshold limits of Rs.50,000 and/ or Rs.10,00,000 should attract the

attention of the branches for further necessary action including reporting of such

transactions under STRs to FIU-IND through their respective ZOs & HO.


k) Management Overview and Compliance Culture:

Lackadaisical approach in ensuring KYC compliance will be detrimental to the interests of

the banks in the long run, not only in the domestic front, but in the international market as

well. A bank that knowingly / unknowingly participates in transactions intended to be used by

customers to avoid regulatory or financial reporting requirements, evade tax liabilities or

facilitate illegal conduct will be exposing itself to reputational risk.

l) Internal Audit and Concurrent Audits:

Bank’s internal audit and compliance functions have an important role in evaluating and

ensuring adherence to the KYC policies and procedures. Branches should take a proactive

role to make optimum use of the management tools like internal audit and concurrent

audit machinery by ensuring reporting of such cases of non-adherence to the KYC norms &

AML measures.

m) KYC Policy:

Every Bank should have a Know Your Customer (KYC) policy duly approved by theBoard of Directors the Bank or any committee of the Board to which power has beendelegated.

KYC policy incorporates the following four key parameters:-

a) Customer Acceptance Policy (CAP);

b) Customer Identification Procedures (CIP);

c) Monitoring of Transactions; and

d) Risk Management.

n) Compliance of KYC policy:a) The Bank shall ensure compliance with KYC Policy through:

i) Specifying as to who constitute ‘Senior Management’ for the purpose of KYC

compliance.

ii) Allocation of responsibility for effective implementation of policies and

procedures.

iii) Independent evaluation of the compliance functions of the Bank’s policies and

procedures, including legal and regulatory requirements.

iv) Concurrent/internal audit system to verify the compliance with KYC/AML policies

and procedures.

v) Submission of quarterly audit notes and compliance to the Audit Committee.


b) Decision-making functions of determining compliance with KYC norms shall not beoutsourced.

CHAPTER – IIICustomer Acceptance Policy (CAP)

3. In order to establish relationship with the intending customer, comprehensive information regardingthe new customer should be obtained at the initial stage. The prospective customer should beinterviewed by the Branch Manager/ Officer to understand customer’s intended relationship withthe Bank.

Branch heads/officials, in the process of establishing relationship with the customer and/orpermitting opening of the account, should protect the bank from the risks of doing business with anyindividual or entity whose identity cannot be determined or who refuses to provideinformation, or who have provided information that contains significant inconsistencies whichcannot be resolved after due investigation.

The following guidelines should be taken into account while accepting a customer:

(a) No account is opened in anonymous or fictitious/benami name.

Opening of or keeping any anonymous account or accounts in fictitious name or account onbehalf of other persons whose identity has not been disclosed or cannot be verified should not beallowed.

(b) No account is opened where the Bank is unable to apply appropriate CDD measures, eitherdue to non-cooperation of the customer or non-reliability of the documents/information furnishedby the customer.

The branch may also consider closing an existing account under similar circumstances. Itis, however, necessary to have suitable built in safeguards to avoid harassment of thecustomer. For example, decision by the branch to close an account in such cases shouldbe taken at Zonal Office level after giving due notice to the customer explaining thereasons for such a decision

(c) No transaction or account based relationship is undertaken without following the CDD procedure.

(d) The mandatory information to be sought for KYC purpose while opening an account andduring the periodic updation, is specified.

(e) ‘Optional’/additional information, is obtained with the explicit consent of the customer afterthe account is opened.

(f) CDD Procedure is followed for all the joint account holders, while opening a joint account.


(g) Circumstances, in which a customer is permitted to act on behalf of another person/entity, shouldbe clearly spelt out in conformity with the established law and practice of banking as there couldbe occasions when an account is operated by a mandate holder or where an account is openedby an intermediary in fiduciary capacity.

(h) Suitable system is put in place to ensure that the identity of the customer does notmatch with any person or entity, whose name appears in the sanctions lists circulated byReserve Bank of India.

(i) Branches should apply the CDD procedure at the UCIC level. Thus, if an existing KYCcompliant customer of a RE desires to open another account with the same RE, there shall beno need for a fresh CDD exercise

It is important to bear in mind that the adoption of Customer Acceptance Policy and itsimplementation shall not result in denial of banking/financial facility to members of the general public,especially those, who are financially or socially disadvantaged.

CHAPTER – IVRisk Management

The KYC guidelines go beyond merely establishing the identity of the person and satisfying about

his/her credentials by obtaining an introductory reference from a known person. The due

diligence expected under KYC involves a risk based approach going in to the purpose and reasons

for opening the account, anticipated turnover in the account, source of wealth (net worth) of the

person opening the account and sources of funds flowing into the account.

Branches should maintain “Customer Risk Profile” both for new as well as existing customers based

on the declaration/ information furnished by the customer during the course of interview so as to

understand customer’s intended relationship with the Bank.

The profile would give an idea as to what type of transactions / activities are expected in the

account. This information is valuable for monitoring the activities in the account. Based upon the

information given by the customer and recorded in the Customer Profile regarding his/ her

occupation/ activity/ source of funds/Annual expected Turnover/ Annual Income etc., a “thresholdlimit” in each particular account is to be determined. Bank will capture the declared annual turnover of

the customer for SB account, purpose for maintaining the account, last year’s sales turnover for a

current account of existing firm, projected sales turnover for current account of new firm in the CBS

system and deviced a formula correlating these factors to determine the Threshold Limit for each and

every account.


Very high turnover in the account inconsistent with the size of the balance maintained requires

intensified monitoring. If transactions of very high amount in variance with the profile are noticed, the

account holder should be contacted for further details to the satisfaction of the Branch

Manager. On the basis of assessment, the account should be reviewed and the profile should be re-

classified according to the risk perceived and the nature and extent of monitoring required in future is

to be determined accordingly.

Branches/Offices should exercise ongoing due diligence with respect to the business relationship with

every client and closely examine the transactions in order to ensure that they are consistent

with their knowledge about the clients, their business and risk profile and where necessary, the

source of funds.

4.1 For Risk Management, the Bank shall devise a risk based approach which includes the following:-

(a) Customers shall be categorised as Low, Medium and High risk category, based on the

assessment and risk perception of the Bank.

A profile for each new customer should be prepared based on risk categorization

taking the under noted points into consideration:

Identity of the customer

Social/financial status

Nature of business activity and location

Information about the clients’ location of business

Volume of turnover

Mode of payment, sources of fund

The nature and extent of due diligence will depend on the risk perceived by the branch.

However, while preparing customer profile care should be taken to seek only such

information from the customer, which is relevant to the risk category and is not

intrusive. The customer profile is a confidential document and details contained therein

should not be divulged for cross selling or any other purposes.

(b) Risk categorization shall be undertaken based on parameters such as customer’s identity,

social/financial status, nature of business activity, information about the clients’

business and their location etc. While considering customer’s identity, the ability to confirm

identity documents through online or other services offered by issuing authorities may also be

factored in.


Explanation: FATF Public Statement, the reports and guidance notes on KYC/AML issued by

the Indian Banks Association (IBA), guidance note circulated to all cooperative banks by

the RBI etc., may also be used in risk assessment.

(c) IBA has suggested some indicative parameters which can be used to determine the profile &

risk category of a customer. The suggestion of IBA was as under-

(i) Customer Constitution: Individual, proprietorship, partnership, private limited, etc.

(ii) Business Segment: Retail, Corporate, etc.

(iii) Country of Residence/Nationality: Whether India or overseas location/Indian or foreign

national.

(iv) Product Subscription: Salary Account, NRI products, etc.

(v) Economic Profile: HNI, Public Limited Company etc.

(vi) Account Status: Active, Inoperative, Dormant, etc.

(vii) Account Vintage: Less than Six months old, etc.

(viii) Presence in Regulatory Negative /PEP/Defaulter/Fraudster lists

(ix) Suspicious Transaction Report (STR) filed for the customer

(x) AML alerts

Further, IBA added that other parameters like source of funds, occupation, purpose of account

opening, nature of business, mode of operation, credit rating, etc. can also be used in addition

to the above parameters. IBA advised the Banks to adopt all or majority of these parameters

based on availability of the data.

These indicative parameters are taken into consideration while devising the Risk Categorization

process by the Bank and has already adopted a system based Risk Categorization module in the AML

system for identifying different customer risk categories based on the 8 parameters and integrated the

same in the CBS system by introducing “F9-Hot-Key” where the Risk score along with Risk

categorization has been made available to the field functionaries. “F9” Hot-key, would exhibit the

following details of the customers:-

a) HNI Status with either ‘N’ (i.e. No) or ‘Y’ (i.e. Yes)b) Risk Profile with ‘Low’, ‘Medium’ or ‘High’c) Risk Scored) E-mail addresse) Mobile No.f) Date of Birthg) Genderh) Aadhaar No.


i) PANj) PAN Status (Valid or not)k) Form 60 Number

The use of F9 hot key has been made mandatory before proceeding for any type of banking operation of

the customers in order to adherence due diligence.

A Low-risk customer may be treated as Medium/ High risk if the transactions in the account in

subsequent period does not conform to his declared income/ source of fund and raise suspicion.

Accordingly, the profile of each customer account should be reclassified/ updated as and when

situation arises.

4.2 Maintenance of Customers’ Risk Profile(a) Branches/Offices should prepare a profile for each new customer based on risk

categorisation. The customer profile should contain information relating to customer’s

identity, social/financial status, nature of business activity, information about the clients’

business and their location etc. The nature and extent of due diligence will depend on the risk

perceived by the Bank.

(b) Branches/Offices should categorize their customers into low, medium and high risk

category based on their assessment and risk perception of the customers, identifying

transactions that fall outside the regular pattern of activity and not merely based on

any group or class they belong to. Broad guidelines on risk perception is given in Appendix-I.The branches/offices are advised to go with the guidelines given in AML & KYC Policy for risk

categorization and ensure that the same are meticulously complied with to effectively help in

combating money laundering activities. The nature and extent of due diligence, may be based

on the following principles:

(i) Individuals (other than High Net Worth) and entities, whose identity and source of

income, can be easily identified, and customers in whose accounts the

transactions conform to the known profile, may be categorized as low risk.

Illustrative examples include salaried employees and pensioners, people

belonging to lower economic strata, government departments and government owned

companies, regulators and statutory bodies, etc. Further, Non-Profit Organisations

(NPOs)/ Non-Government Organisations (NGOs) promoted by the United Nations or its

agencies, and such international/multilateral organizations of repute, may also be

classified as low risk customers.


(ii) Customers who are likely to pose a higher than average risk should be categorized as

medium or high risk depending on the background, nature and location of activity,

country of origin, sources of funds, customer profile, etc. Customers requiring very

high level of monitoring, e.g., those involved in cash intensive business, Politically

Exposed Persons (PEPs) of foreign origin, may, if considered necessary, be categorised

as high risk.

The above guidelines for risk categorisation are indicative and branches/offices may use

their own judgment in arriving at the categorisation for each account based on their own

assessment and risk perception of the customers and not merely based on any group or

class they belong to. Further clarifications on risk based assessment are given hereunder.

4.3 Management of Customer Risk ProfileAs discussed in Point 4.2 branches/offices should maintain “Customer Risk Profile” both for new

as well as existing customers. While full details about the customers can be available in the

respective account opening form, additional information commensurate with the

assessment of the money laundering risks should also be obtained through

interview/discussion with the customer. Branch Manager/Officers should be vigilant

when customers conduct banking transactions and determine realistically the transactions

that are unusual and potentially fraudulent. Necessary steps to be taken as and when there is a

suspicion in any transaction. Branch should send a report to higher authority for the transactions

that are of suspicious nature.

Branch should apply Enhanced Due Diligence (EDD) measures based on the risk assessment,

thereby requiring intensive ‘due diligence’ for higher risk customers, especially those for

whom the sources of funds are not clear.

All customer accounts (both existing and new) should be categorized into three levels as per risk

perceived, viz.

i. Level - I (low risk),ii. Level - II (medium risk),iii. Level - III (high risk).

(i) Level - I (Low risk) customers:For the purpose of risk categorization, individuals (other than high net worth) and entities

whose identities and sources of wealth can be easily identified and transactions in whose

accounts by and large conforms to the known profile, may be categorized as low risk

accounts.


Illustrative examples of Level - I (low risk) customers may include;

Salaried employees whose salary structures are well defined

Businessmen/Traders whose activities are well defined and transactions in the accounts

commensurate with the business transactions.

People belonging to lower economic strata of society and whose accounts show

small balances and low turnover.

Government departments & Government owned companies, regulators and statutory

bodies etc.

In such cases, only the basic requirements of verifying the identity and location (address) of

the customers and introducers are to be met.

Reserve Bank of India observed that of late, there has been an increase in instances of

fictitious offers, where fraudsters are using RBI’s corporate logo/name in their e-mail

messages and also sometimes include the photograph of the Governor to convince the

victims of the authenticity of the purported messages conveying lottery/prize winnings. The

fraudsters persuade victims into making initial payment into a specified bank account

towards charges for claiming the prize money. The victims invariably complain to RBI

after they have lost money in such transactions. It was also observed by RBI from the

responses received from banks in this regard that these transactions generally take

place in newly opened accounts of individuals/salary accounts, which are classifiedas low risk.

In view of RBI directives, Bank has issued various advisories on website, warning public

against falling prey to fictitious offers/ lottery winnings/ remittance of cheap funds in foreign

currency from abroad by so-called foreign entities/individuals or to Indian residents acting as

representatives of such entities/individuals.

Field functionaries are advised to adopt the following measures as part of the

monitoring exercise:

a) Generally the fraudsters open and route transactions throughsalary/savings accounts categorized as low risk, by way of small deposits toevade detections. Branch should monitor operations in these low risk accounts

for identifying “atypical transaction”. The abnormal patterns in the range of transactions,

salary accounts, newly opened accounts etc should be identified. The transactions that

are deviating from the threshold limit/outside the normal transaction region should be

probed into and resolved quickly.


b) Branches should closely monitor such accounts in the initial 3-6 months of their opening

with threshold limit carefully calibrated to track transactions not in line with

customer profile and ensure quick turnaround time in resolution of alerts.

c) Branch officials should clarify queries from customers regarding such lottery

winnings where they have been advised to deposit money in specified accounts.

Branches should also display a notice within the premises that such facility is available.

(ii) Level - II (Medium risk) customers:Customers those are likely to pose a higher than average risk should be classified as Level -

II (Medium risk). Customers particularly whose sources of fund are not clear and

transaction exceeds the disclosed source of fund.

(iii) Level - III (High risk) customers:Customers that are likely to pose a higher than average risk should be categorized as Level

- III (High risk) depending upon customer’s back ground, nature and location of

activity, country of origin, source of funds and his client’s profile.

Illustrative examples of Level - III (High risk) customers may include:

In view of the risks involved in cash intensive business, accounts of bullion

dealers (including sub-dealers) & jewelers should be categorized as High Risk.

Those who are engaged in certain professions where money laundering possibilities are

high e.g. Antique dealers (individuals and entities), Money Services Bureau (entities –

non employees of these entities) and dealers in arms etc.

Non-resident customers.

High Net-worth Individuals (HNI).

Trust, Charities, N.G.Os and organizations receiving donations. However, NPOs/NGOs

promoted by United Nations or its agencies may be classified as low risk customer

Companies having close family share holding or beneficial ownership.

Firms with ‘sleeping partners’.

Funds coming from the list of countries/ centers which are known for money laundering.

Non face to face customers, and

Those with dubious reputation as per public information available etc.

Politically exposed persons (PEPs) of foreign origin, customers who are close relatives of

PEPs and accounts of which a PEP is the ultimate beneficial owner;


The above examples are illustrative and not exhaustive. Field functionaries should select

“Customer Type”, “Nationality”, “Domicile/Country of Residence”, “ResidentialStatus/Country of Incorporation”, “Occupation Code”, “Industry Classification Code”,

“BSR Activity Code”, “CIS Org Code” & “Segment Code” properly while creating or

amending any CIF in the CBS in order to facilitate the system based default classification of

the High Risk Customers.

(Detailed procedure has been enumerated in HO IC No. 15167 dated 31st July, 2017.Indicative list of High/Medium risk customers and high/medium risk products &services enclosed in Appendix -III )

The Branch officials of the concerned branch, where suspicious activity/transaction is

noticed, should verify the transactions depending upon the nature and circumstances, satisfy

themselves whether the activity/ transactions in the account is to be reported as a suspicious

nature or to be treated as a bonafide one. Accordingly, the account should be categorized as Level

- I/ Level - II/ Level - III as deemed fit and be monitored suitably.

Preparation of customer’s profile should be a continuous exercise. Customer’s profile should be

reviewed periodically. The bank has already put in place a system-based riskcategorization of the accounts with periodical review, i.e. once in six months (onFebruary & August end).

CHAPTER - VCustomer Identification Procedure (CIP)

5.1 Procedure to be adopted in Customer Identification:

Customer identification means undertaking client due diligence measures while commencing an

account-based relationship including identifying and verifying the customer and the

beneficial owner.

a) Branches shall undertake identification of customers in the following cases:-(i) Commencement of an account-based relationship with the customer.

(ii) Carrying out any international money transfer operations for a person who is not an

account holder of the bank.

(iii) When there is a doubt about the authenticity or adequacy of the customer

identification data it has obtained.

(iv) Selling third party products as agents, selling their own products, payment of dues


of credit cards/sale and reloading of prepaid/travel cards and any other product for

more than Rs. 50,000/-.

(v) Carrying out transactions for a non-account based customer, that is a walk-in

customer, where the amount involved is equal to or exceeds Rs. Rs. 50,000/-,

whether conducted as a single transaction or several transactions that appear to be

connected.

(vi) When a RE has reason to believe that a customer (account- based or walk-in) is

intentionally structuring a transaction into a series of transactions below the threshold of

Rs. 50,000/-.

b) For the purpose of verifying the identity of customers at the time of

commencement of an account-based relationship, Branches, shall at their option, rely on

customer due diligence done by a third party, subject to the following conditions :-

(i) Records or the information of the customers due diligence carried out by the third party

is obtained within two days from the third party or from the Central KYC Records Registry.

(ii) Adequate steps are taken by the Branches to satisfy themselves that copies of

identification data and other relevant documentation relating to the customer due diligence

requirements shall be made available from the third party upon request without delay.

(iii) The third party is regulated, supervised or monitored for, and has measures in place for,

compliance with customer due diligence and record-keeping requirements in line with

the requirements and obligations under the PML Act.

(iv) The third party shall not be based in a country or jurisdiction assessed as high risk.

(v) The ultimate responsibility for customer due diligence and undertaking enhanced

due diligence measures, as applicable, will be with the Branches.

While undertaking customer identification, Branches shall ensure that:-a) Decision-making functions of determining compliance with KYC norms shall not be outsourced.

b) Introduction shall not be sought while opening accounts.

c) The customers shall not be required to furnish an additional OVD, if the OVD submitted by the

customer for KYC contains both proof of identity and proof of address.


CHAPTER - VICustomer Due Diligence (CDD) Procedure

Procedure for obtaining Identification Information

6.1 For undertaking CDD, branches shall obtain the following information from an individual while

establishing an account based relationship or while dealing with the individual who is a beneficial

owner, authorized signatory or the power of attorney holder related to any legal entity:

a) 1. The Aadhaar number where the client is desirous of receiving any benefit or subsidy under any

scheme notified under section 7 of the Aadhaar (Targeted Delivery of Financial and other

subsidies, Benefits and services) act, 2016 (18 of 2016), or a copy of any other Officially Valid

Documents (OVD) in other cases containing details of identity and address of the client;

2. PAN or Form No. 60 as defined in Income-tax Rules, 1962, as amended from time to time; and

3. One recent photograph.

b) In order to establish the identity, an individual who is an Aadhaar number holder but not desirous of

receiving any benefit or subsidy under any scheme notified under section 7 of the Aadhaar

(Targeted Delivery of Financial and other subsidies, Benefits and services) act, 2016 (18 of 2016)

may voluntarily submits his/her proof of possession of Aadhaar number as an OVD in such form as

are issued by UIDAI. In this case it should be ensured that the client redact or blackout the

Aadhaar number through appropriate means in the document.

(c) In case of OVD furnished by the client does not contain updated address, the following documents

shall be deemed to be OVDs for the limited purpose of proof of address:-

1. Utility bill which is not more than two months old of any service provider

(electricity, telephone, post-paid mobile phone, piped gas, water bill);

2. Property or Municipal tax receipt;

3. Pension or family pension payment orders (PPOs) issued to retired employees by

Government Departments or Public Sector Undertakings, if they contain the address;

4. letter of allotment of accommodation from employer issued by State Government or

Central Government Departments, statutory or regulatory bodies, public sector

undertakings, scheduled commercial banks, financial institutions and listed companies

and leave and licence agreements with such employers allotting official accommodation;

The customer has to submit OVD updated with current address within a period of threemonths of submitting the above documents.


(d) An individual who is not a resident and not an Aadhaar number holder, may submit the following

1. PAN or Form No. 60 as defined in Income-tax Rules, 1962, as amended from time to

time.

2. One recent photograph and

3. A certified copy of an OVD containing details of identity and address.

In case the OVD submitted by a foreign national does not contain the details of address, in such

case the documents issued by the Government departments of foreign jurisdictions and letter

issued by the Foreign Embassy or Mission in India shall be accepted as proof of address.

Further, while opening accounts of legal entities, in case, PAN of the authorised signatory or the

power of attorney holder is not submitted, the certified copy of OVD of the authorised signatory or

the power of attorney holder shall be obtained, even if such OVD does not contain address.

Explanation : Customers, at their option, shall submit one of the six OVDs

(e) Branches, at receipt of the proof of possession of Aadhaar number from the client,may carry out,

authentication or offline verification of the same with the informed consent of the client.

Provided,

i. Biometric or OTP based e-KYC authentication facility provided by UIDAI shall be carried out

upon receipt of the client’s declaration that he/she is desirous of receiving any benefit or

subsidy under any scheme notified under section 7 of the Aadhaar ( Targeted Delivery of

Financial and Other Subsidies Benefits and Services)act, 2016 in the account.

In cases where successful authentication of Aadhaar number using e-KYC facility has been

carried out by the branch, other OVDs and photograph need not be submitted by the client.

ii. Yes/No authentication shall not be carried out while establishing an account based

relationship.

iii. Yes/No authentication in respect of beneficial owners of a legal entity shall suffice in

respect of existing accounts or while establishing an account based relationship.

iii. Where OTP based authentication is performed in ‘non-face to face’ mode for opening

new accounts, the limitations as specified in part I of this chapter shall be applied.

iv. Biometric based e-KYC authentication can be done by bank official/business

correspondents/business facilitators/ Biometric enabled ATMs.


v. If for identification of a client or beneficial owner, authentication or offline verification of Aadhaar

number has been performed by the branches, neither the biometric information nor the

Aadhaar number shall be stored.

vi. The use of modes of identification shall be a voluntary choice of every client or beneficial owner

who is sought to be identified and no client or beneficial owner shall be denied services for not

having an Aadhaar number.”

(e) Branches shall duly inform the customer about this provision while opening the account.

(h) Branches shall ensure that introduction is not to be sought while opening accounts

Part I - CDD Procedure in case of Individuals

6.1.1 Branches shall obtain the following documents from an individual while establishing an account

based relationship with an individual:-

Obtain information as mentioned under Chapter VI, Point No. 6.1.

Other relevant documents pertaining to the nature of business or financial status of the

client. (These information are required for entering correct data in CBS).

Information collected from customers for the purpose of opening of account shall be

treated as confidential and details thereof shall not be divulged for the purpose of

cross selling, or for any other purpose without the express permission of the

customer.

Explanation: CDD procedure as mentioned above shall be carried out for all the joint

account holders.

Customers already having an account based relationship with the Bank, shall submit

his/her PAN/Form 60, on such date as may be notified by the Central Government,

failing which the account shall temporarily cease to be operational till the time the

PAN/Form 60, as the case may be, is submitted by the customers.

Explanation: 1. Before temporarily ceasing operations for an account, branches shall

give the customers an accessible notice and a reasonable

opportunity to be heard.

2. “Temporary ceasing of operation” in relation to an account means the

temporary suspension of all transactions or activities in relation to

the account by the branch till such time the customer complies with

the provision of the clause.


If any customer having an existing account based relationship with the Bank gives in

writing that he/she does not want to submit PAN/Form 60, as the case may be, branch

shall close the account and all obligations due in relation to the account shall be

appropriately settled after establishing the identity of the customer in the manner as

may be determined by the Regulators from time to time.

Appropriate and viable means of identification process shall required to be provided by

the branches for those clients who are unable to undergo biometric authentication at

the time of onboarding (i.e. OTP based e-KYC) owing to injury, illness or infirmity on

account of old age or otherwise, and such like cases.

Appropriate relaxation would required to be provided for continued operation of

accounts for customers who are unable to provide PAN/Form 60 owing to the same

reasons mentioned in the earlier point. Banking services like “Doorstep Banking” may

be adopted by the branches for collecting of the same.

6.1.2 The e-KYC service (Biometric or OTP based) provided by Unique Identification Authority of

India (UIDAI) shall be accepted as a valid process for KYC verification under the PML Rules for

on-boarding of customers. This authentication facility shall be carried out by the

Branches/Business Correspondents (BCs)/Business Facilitators (BFs) upon receipt of the client’s

declaration that he/she is desirous of receiving any benefit or subsidy under any scheme notified

under section 7 of the Aadhaar (Targeted Delivery of Financial and other subsidies, Benefits and

services) act, 2016 (18 of 2016).

Accounts opened in terms of this proviso i.e., using OTP based e-KYC in non face to face

mode, are subject to the following conditions :-

1. There must be a specific consent from the customer for authentication through OTP

2. The aggregate balance of all the deposit accounts of the customer shall not exceed rupees

one lakh. In case the balance exceeds the threshold, the account shall be ceased to be

operational, till CDD as mentioned at point no. 5 below is complete.

3. The aggregate of all credits in a financial year, in all the deposit taken together,

shall not exceed rupees two lakh.

4. As regards borrowal accounts, only term loans shall be sanctioned. The aggregate

amount of term loans sanctioned shall not exceed rupees sixty thousand in a

year.

5. Accounts, both deposit and borrowal, opened using OTP based e-KYC shall not be

allowed for more than one year within which Biometric based e-KYC authentication is to be


completed.

6. If the CDD procedure as mentioned above is not completed within a year, in respect of

deposit accounts, the same shall be closed immediately. In respect of borrowal

accounts no further debits shall be allowed.

7. Branches shall ensure that only one account is opened using OTP based KYC in non

face to face mode and a declaration shall be obtained from the customer to the effect that no

other account has been opened nor will be opened using OTP based KYC in non face to

face mode. Further, while uploading KYC information to CKYCR, branches shall clearly

indicate that such accounts are opened using OTP based e-KYC and other banks shall not

open accounts based on the KYC information of accounts opened with OTP based e-

KYC procedure in non face to face mode.

8. Bank shall have strict monitoring procedures including systems to generate alerts

in case of any non-compliance/violation, to ensure compliance with the

above mentioned conditions.

6.1.3 In case an individual customer who does not have OVD and PAN and desires to open a bank

account, branches shall open a ‘Small Account’, subject to the following:

a) Bank shall obtain a self-attested photograph from the customer.

b) The designated officer of the bank certifies under his signature that the person

opening the account has affixed his signature or thumb impression in his presence.

c) Such accounts are opened only at Core Banking Solution (CBS) linked branches or in

a branch where it is possible to manually monitor and ensure that foreign remittances are not

credited to the account.

d) Banks shall ensure that the stipulated monthly and annual limits on aggregate of

transactions and balance requirements in such accounts are not breached, before a

transaction is allowed to take place.

e) The account shall be monitored and when there is suspicion of money laundering or

financing of terrorism activities or other high risk scenarios, the identity of the customer

shall be established through the production of any OVD and PAN/Form 60 as the case

may be.

f) Foreign remittance shall not be allowed to be credited into the account unless the

identity of the customer is fully established through the production of “officially valid

documents and PAN/Form 60, as the case may be.”


g) The account remains operational initially for a period of twelve months which can be

extended for a further period of twelve months, provided the account holder applies and

furnishes evidence of having applied for any of the OVDs during the first twelve months of the

opening of the said account.

h) The entire relaxation provisions shall be reviewed after twenty four months.

6.1.4 Shifting of bank accounts to another centre - Proof of address : Banks are not required to

obtain fresh documents of customers when customers approach them for transferring their

account from one branch of the bank to another branch of the same bank. Banks are

advised that KYC verification once done by one branch of the bank should be valid fortransfer of the account within the bank if full KYC verification has been done for theconcerned account and is not due for periodic updation.

Part II - CDD Measures for Sole Proprietary firms6.2 For opening an account in the name of a sole proprietary firm, identification information as

mentioned under Chapter VI, Point No. 6.1 in respect of the individual (proprietor) shall be obtained.

In addition to the above, any two of the following documents as a proof of business/ activity

in the name of the proprietary firm shall also be obtained :-

(a) Registration certificate

(b) Certificate/license issued by the municipal authorities under Shop and Establishment Act.

(c) Sales and income tax returns.

(d) CST/VAT/GST certificate (provisional/final)

(e) Certificate/registration document issued by Sales Tax/Service Tax/Professional Tax

authorities.

(f) IEC (Importer Exporter Code) issued to the proprietary concern by the office of

DGFT/License/certificate of practice issued in the name of the proprietary concern by any

professional body incorporated under a statute.

(g) Complete Income Tax Return (not just the acknowledgement) in the name of the sole

proprietor where the firm's income is reflected, duly authenticated/ acknowledged by

the Income Tax authorities.


(h) Utility bills such as electricity, water, and landline telephone bills.

In cases where the Branches are satisfied that it is not possible to furnish two such

documents, Branches may, at their discretion, accept only one of those documents as proof of

business/activity. Provided Branches undertake contact point verification and collect such

other information and clarification as would be required to establish the existence of such

firm, and shall confirm and satisfy itself that the business activity has been verified from the

address of the proprietary concern.

Part III- CDD Measures for Legal Entities

6.3.1 For opening an account of a company, one certified copy of each of the following documents

shall be obtained :-

Certificate of incorporation.

Memorandum and Articles of Association.

Permanent Account Number of the company.

A resolution from the Board of Directors and power of attorney granted to its managers,

officers or employees to transact on its behalf.

One copy of OVD containing details of identity and address, one recent photograph and

PAN/Form 60 of the managers, officers or employees, as the case may be, holding an

attorney to transact on the company’s behalf.

RBI letter no. DBR.AML.NO.8595/14.05.001/2016-17 dated 24.01.2017 addressed to IBA and

subsequent IBA Circular no. RB/CIR/CS/2025 dated 03.02.2017 advised under following lines to

comply with the KYC requirements for opening of account of a company with the banks:-

“Bank branches should not seek the Common Seal in their account opening form,since it is not a mandatory requirement. Even in those cases, where the Memorandumof Association and Articles of Association of the company require affixing a CommonSeal, the company shall be allowed to provide the same voluntarily and the accountopening form of the banks shall not have any such requirement for providing thecompany seal.”

6.3.2 For opening an account of a partnership firm, one certified copy of each of the

following documents shall be obtained:


Registration certificate.

Partnership deed.

Permanent Account Number of the firm.


PAN/Form 60 of the person holding an attorney to transact on the firm’s behalf.

6.3.3 For opening an account of a trust, one certified copies of each of the following

documents shall be obtained:

Registration certificate.

Trust deed.

Permanent Account Number or Form 60 of the trust.


PAN/Form 60 of the person holding an attorney to transact on its behalf.

6.3.4 For opening an account of an unincorporated association or a body ofindividuals, certified copies of each of the following documents shall be obtained:

Resolution of the managing body of such association or body of individuals;

Permanent Account Number or Form 60 of the unincorporated association or a body ofindividuals

Power of attorney granted to transact on its behalf;



Such information as may be required by the bank to collectively establish the legalexistence of such an association or body of individuals.

Explanation: Unregistered trusts/partnership firms shall be included under the term‘unincorporated association’.

Explanation: Term ‘body of individuals’ includes ‘societies’

6.3.5 For opening accounts of juridical persons not specifically covered in the earlier

part, such as Government or its Departments, societies, universities andlocal bodies like village panchayats, a certified copy of the following documents shall be

obtained:


Document showing name of the person authorised to act on behalf of the entity;



Such documents as may be required by the Bank to establish the legal existence of

such an entity/juridical person

Part IV - Identification of Beneficial Owner

For opening an account of a Legal Person who is not a natural person, the beneficial owner(s)

shall be identified and all reasonable steps in terms of Rule 9(3) of the Rules to verify his/her identity

shall be undertaken keeping in view the following:

a) Where the customer or the owner of the controlling interest is a company listed on a stock

exchange, or is a subsidiary of such a company, it is not necessary to identify and verify the

identity of any shareholder or beneficial owner of such companies.

b) In cases of trust/nominee or fiduciary accounts whether the customer is acting on behalf

of another person as trustee/nominee or any other intermediary is determined. In

such cases, satisfactory evidence of the identity of the intermediaries and of the persons

on whose behalf they are acting, as also details of the nature of the trust or other

arrangements in place shall be obtained.

Part V - On-going Due Diligence

Branches shall undertake on-going due diligence of customers to ensure that their

transactions are consistent with their knowledge about the customers, customers’ business and

risk profile; and the source of funds.

Without prejudice to the generality of factors that call for close monitoring following types of

transactions shall necessarily be monitored:

a) Large and complex transactions including RTGS transactions, and those with unusual

patterns, inconsistent with the normal and expected activity of the customer, which

have no apparent economic rationale or legitimate purpose.

b) Transactions which exceed the thresholds prescribed for specific categories of accounts.

c) High account turnover inconsistent with the size of the balance maintained.

d) Deposit of third party cheques, drafts, etc. in the existing and newly opened accounts


followed by cash withdrawals for large amounts.

The extent of monitoring shall be aligned with the risk category of the customer.

Explanation: High risk accounts have to be subjected to more intensified

monitoring.

a) A system of periodic review of risk categorisation of accounts, with such periodicity

being at least once in six months, and the need for applying enhanced due diligence

measures shall be put in place.

b) The transactions in accounts of marketing firms, especially accounts of Multi- level Marketing

(MLM) Companies shall be closely monitored.

Explanation: Cases where a large number of cheque books are sought by the company

and/or multiple small deposits (generally in cash) across the country in one bank

account and/or where a large number of cheques are issued bearing similar

amounts/dates, shall be immediately reported to Reserve Bank of India and other appropriate

authorities such as FIU-IND.

6.5.1 Periodic Updation : Periodic updation shall be carried out at least once in every two

years for high risk customers, once in every eight years for medium risk customers and once in

every ten years for low risk customers as per the following procedure :

a) PAN verification from the verification facility available with the issuing authority and

b) Authentication, of Aadhaar Number already available with the bank with the informed

consent of the customer in applicable cases.

c) In case identification information available with Aadhaar does not contain current address

an OVD containing current address may be obtained.

d) Certified copy of OVD/ Aadhaar number in physical or electronic form containing identity

and address shall be obtained at the time of periodic updation from an individual except

from individuals who are categorised as ‘low risk’. In case of low risk customers when there

is no change in status with respect to their identities and addresses, a self-certification

to that effect shall be obtained.

e) In case of Legal entities, branches shall review the documents sought at the time of

opening of account and obtain fresh certified copies.

f) Branches may not insist on the physical presence of the customer for the purpose of

furnishing OVD or furnishing consent for Aadhaar authentication unless there are

sufficient reasons that physical presence of the account holder/holders is required to


establish their bona-fides. Normally, OVD/Consent forwarded by the customer through

mail/post, etc., shall be acceptable.

g) Branches shall ensure to provide acknowledgment with date of having performed

KYC updation.

h) The time limits prescribed above would apply from the date of opening of the account/ last

verification of KYC.

Part VI - Enhanced and Simplified Due Diligence Procedure

6.6.1 Enhanced Due Diligence : The branches/offices are required to apply Enhanced DueDiligence (EDD) measures in case of higher risk perception on a customer. An indicative

list of EDD measures to be taken for High Risk customers is as under:

(i) Fresh KYC obtained along with additional documents.(ii) Personal visit made to the address provided by the customer(iii) Discrete enquiry made to the address provided by the customer(iv) Verification of the nature of business and financial status as provided by the

customer(v) Additional documents to verify the source of funds as legitimate.(vi) Stringent ongoing monitoring done to ensure transactions are consistent

according to the business activity of the customer.(vii) Any other measure to establish identity, address, source of fund and line of

activity of the customer which may be deemed to be appropriate or advised by theregulators from time to time.

Accordingly, Bank has developed a system based, menu driven solution to capture EDD measure/s

taken by the Branch and KYC renew date against all the High Risk customers.

(Detailed procedure has been enumerated in HO IC No. 15238 dated 11st September, 2017.)

Observance of Enhanced Due Diligence to be carried out in all the High Risk customers including

the undernoted cases-

I. Accounts of non-face-to-face customers : With the introduction of phone and electronic

banking, increasingly accounts are being opened by banks for customers without the need

for the customer to visit the bank branch. In the case of non-face-to-face customers,

apart from applying the usual customer identification procedures, there must be specific


and adequate procedures to mitigate the higher risk involved. Certification of all the

documents presented should be insisted upon and, if necessary, additional documents may be

called for. In such cases, branches may also require the first payment to be effected through the

customer's KYC compliant account with another bank.

II. Accounts of Politically Exposed Persons (PEPs): Politically exposed persons are

individuals who are or have been entrusted with prominent public functions in a foreign

country, e.g., Heads of States or of Governments, senior politicians, senior

government/judicial/military officers, senior executives of state-owned corporations,

important political party officials, etc.

a) Bank shall have the option of establishing a relationship with PEPs provided that :-

i. Sufficient information including information about the sources of funds accounts

of family members and close relatives is gathered on the PEP;

ii. The identity of the person shall have been verified before accepting the PEP as a

customer;

iii. The decision to open an account for a PEP is taken at a senior level [ not less than the

Zonal Head ] in accordance with the Bank’s Customer Acceptance Policy;

iv. All such accounts are subjected to enhanced monitoring on an on-going basis;

v. In the event of an existing customer or the beneficial owner of an existing account

subsequently becoming a PEP, branches should obtain Zonal Head’s approval to

continue the business relationship and subject the account to the CDD measures as

applicable to the customers of PEP category including enhanced monitoring on an

ongoing basis. These instructions are also applicable to accounts where PEP is the

ultimate beneficial owner.

vi. the CDD measures as applicable to PEPs including enhanced monitoring on an on-

going basis are applicable.

b) These instructions shall also be applicable to accounts where a PEP is the beneficial

owner

III. Accounts of High Net-worth Individual (HNI) Customers: While mobilizing sizable business, it

has been felt that there is a need to increase the penetration level to reach high valued accounts

so that we can cross sell our products efficiently, promote e-products and make their

connections useful for mobilizing additional business.

Further, there is an imperative need to monitor transactions in these accounts. In this

background, it was felt necessary to define High Net-worth Individuals (HNIs) so that whenever


the account is opened, the system will flag the operations staff to notice the type of customer and

accordingly render prompt and effective customer service and also monitor the transactions in

these accounts.

Thus, the customers satisfying all or any one of the undernoted characteristics will be defined as

HNI-

Individuals having average monthly balance of more than Rs.10 lac in SB and Rs.25 lacs in

CA account.

Individuals enjoying borrowing facilities of more than Rs.5 crores.

Individuals having Term Deposits (aggregate in single or joint names) of more than Rs.50

lacs.

Turnover in any individual account in excess of Rs.1 crore per annum.

Individuals having annual income more than Rs.20 lacs.

The HNI customers are poised to High Risk and require close monitoring.

6.6.2 Simplified Due Diligence:

I. Simplified norms for Self Help Groups (SHGs):

a) KYC verification of all the members of SHG shall not be required while opening the

savings bank account of the SHG

b) KYC verification of all the office bearers shall suffice.

c) No separate KYC verification of the members or office bearers shall be necessary at

the time of credit linking of SHGs.

II. Procedure to be followed by banks while opening accounts of foreign students:

A foreign student studying in India would be considered a “Person Resident in India” as defined

in Section 2 (v) of FEMA Act, 1999 and is eligible to open bank account without prior

permission of RBI. Branches/ Offices can open accounts of foreign students studying in India

after observing the normal KYC procedure. Closure of such accounts and repatriation of

proceeds are also allowed as per FEMA notification No. 13/2000 dated 3rd May,2000 and

amendments thereon from time to time. Detail of documents based on which Bank can

open an account, in the name of a foreign students studying in India, are as below :-


Passport - as the document for proof of identity

Valid Visa - a visa with photograph in it can also serve as an identity proof

Proof of admission - usually a letter from the university or college

Address proof - a letter from the college or hostel, certificate from embassy of the country

of origin or any appropriate legal authority, certified local address in India/rent

agreement / certification of registration issued by Foreigner Registration Regional Office

(FRRO)

It is observed that foreign student arriving in India are facing difficulties in complying with KYC

norms while opening a bank account due to non-availability of any proof of local address. In

view of the above, RBI has given guidelines on the following lines for opening accounts of

foreign students who are not able to provide an immediate address proof while approaching for

opening bank account :-

(a) Banks shall, at their option, open a Non Resident Ordinary (NRO) bank account of a

foreign student on the basis of his/her passport (with visa & immigration endorsement)

bearing the proof of identity and address in the home country together with a photograph

and a letter offering admission from the educational institution in India.

i) Provided that a declaration about the local address shall be obtained within a

period of 30 days of opening the account and the said local address is verified.

ii) Provided further that pending the verification of address, the account shall be operated

with a condition of allowing foreign remittances not exceeding USD 1,000 or equivalent

into the account and a cap of rupees fifty thousand on aggregate in the same, during the

30-day period.

(b) The account shall be treated as a normal NRO account, and shall be operated in terms of

Reserve Bank of India’s instructions on Non-Resident Ordinary Rupee (NRO) Account,

and the provisions of FEMA. 1999.

(c) Students with Pakistani and Bangladesh nationality shall require prior approval of

the Reserve Bank for opening the account.

III. Simplified KYC norms for Foreign Portfolio Investors (FPIs): Accounts of FPIs which are eligible/

registered as per SEBI guidelines, for the purpose of investment under Portfolio Investment

Scheme (PIS), shall be opened by accepting KYC documents as detailed in Appendix-


V, subject to Income Tax (FATCA/CRS) Rules.

FPIs have been categorized by SEBI based on their perceived risk profile as detailed. In terms of Rule

9 (14)(i) of the Rules, simplified norms have been prescribed for those FPIs have been duly registered

in accordance with SEBI guidelines and have undergone the required KYC due diligence/verification

prescribed by SEBI through a Custodian/Intermediary regulated by SEBI. Such eligible/registered FPIs

may approach the branch for opening a bank account for the purpose of investment under Portfolio

Investment Scheme (PIS) for which KYC documents prescribed by the Reserve Bank would be

required. For this purpose, branches may rely on the KYC verification done by the third party (i.e. the

Custodian/SEBI Regulated Intermediary) subject to the conditions laid down in Rule 9 (2) [(a) to (e)] of

the Rules.

In this regard, Custodians/Intermediaries regulated by SEBI will share the relevant KYC documents

with the banks concerned based on written authorization from the FPIs. Accordingly, a set of hard

copies of the relevant KYC documents furnished by the FPIs to the Custodians/Regulated

Intermediaries will be transferred to the concerned bank through their authorised representative. While

transferring such documents, the custodian/Regulated Intermediary shall certify that the documents

have been duly verified with the original or Notarised documents have been obtained, where

applicable. In this regard, a proper record of transfer of documents, both at the level of the

Custodian/Regulated Intermediary as well as at the bank, under signatures of the officials of the

transferor and transferee entities, may be kept. While opening bank accounts for FPIs in terms of the

above procedure, branches may bear in mind that they are ultimately responsible for the customer due

diligence done by the third party (i.e. the Custodian/Regulated Intermediary) and may need to take

enhanced due diligence measures, as applicable, if required. Further, branches are required to obtain

undertaking from FPIs or a Global Custodian acting on behalf of the FPI to the effect that as and when

required, the exempted documents as detailed in Annex II will be submitted.

It is further advised that to facilitate secondary market transactions, the branch may share the KYC

documents received from the FPI or certified copies received from a Custodian/Regulated

Intermediary with other banks/regulated market intermediaries based on written authorization from the

FPI.

The provisions of this circular are applicable for both new and existing FPI clients. These provisions

are applicable only for PIS by FPIs. In case the FPIs intend to use the bank account opened under the

above procedure for any other approved activities (i.e. other than PIS), they would have to undergo

KYC drill in terms of extant guidelines.


CHAPTER – VIIRecord Management & Reporting Obligation

7.1Record Management: The following steps shall be taken regarding maintenance,

preservation and reporting of customer account information, with reference to provisions of

PML Act and Rules Branches shall,

a) maintain all necessary records of transactions between the RE and the customer, both

domestic and international, for at least five years from the date of transaction; [ Our Bank hasconstituted a policy to maintain the records of transactions for at least TEN years fromthe date of transaction between the Bank and the client ]

b) preserve the records pertaining to the identification of the customers and their addresses

obtained while opening the account and during the course of business relationship, for at

least five years after the business relationship is ended; [ Our Bank has constituted apolicy to maintain the records of transactions for at least TEN years from the date oftransaction between the Bank and the client ]

c) make available the identification records and transaction data to the competent

authorities upon request;

d) introduce a system of maintaining proper record of transactions prescribed under Rule 3

of Prevention of Money Laundering (Maintenance of Records) Rules, 2005 (PML Rules,

2005)

e) maintain all necessary information in respect of transactions prescribed under PML

Rule 3 so as to permit reconstruction of individual transaction, including the following :-

i. the nature of transactions;

ii. the amount of transaction and the currency in which it was denominated;

iii. the date on which the transaction was conducted; and

iv. the parties to the transaction.

[Our Bank has constituted a policy to maintain the records of transactions for at leastTEN years from the date of transaction between the Bank and the client ]

f) evolve a system for proper maintenance and preservation of account information in a

manner that allows data to be retrieved easily and quickly whenever required or when

requested by the competent authorities;

g) maintain records of the identity and address of their customer, and records in respect of

transactions referred to in Rule 3 in hard or soft format.


7.2Reporting Requirements to Financial Intelligence Unit – India: In terms of the

Rule 3 of the PML (Maintenance of Records) Rules, 2005, banks are required to furnish

information relating to cash transactions, cash transactions integrally connected to each

other, and all transactions involving receipts by non-profit organizations [NPO means any entity

or organization that is registered as a trust or society under the Societies Registration Act, 1860

or any similar State legislation or a company registered (erstwhile Section 25 of Companies

Act, 1956) under Section 8 of the Companies Act, 2013], cash transactions where forged or

counterfeit currency notes or bank notes have been used as genuine, cross border wire

transfer etc. to the Director, Financial Intelligence Unit-India (FIU-IND) at the following

address :Director, FIU-IND

Financial Intelligence Unit-India6th Floor, Hotel Samrat

ChanakyapuriNew Delhi-110 021

Website - http://fiuindia.qov.in/

Explanation: In terms of Third Amendment Rules notified September 22 , 2015 regarding

Amendment to sub rule 3 and 4 of rule 7, Director, FIU-IND shall have powers to

issues guidelines to the banks for detecting transactions referred to in various

clauses of sub-rule (1) of rule 3, to direct them of furnishing information and to

specify the procedure and the manner of furnishing information.

It should be carefully noted that the reporting to FIU-IND will be made by thePrincipal Officer only from Head Office. In no case the branches/ zonal offices shouldsubmit the Suspicious Transaction Report (STR) to FIU-IND directly. Branchesshould submit the STR to their respective zonal offices, who in turn will compile theposition and submit the consolidated report covering all the branches under the zonealong with the reports (STR) of each branch to Head Office in confidence.

The reporting formats and comprehensive reporting format guide, prescribed/ released by

FIU-IND and Report Generation Utility and Report Validation Utility developed to assist

reporting entities in the preparation of prescribed reports shall be taken note of. The

editable electronic utilities to file electronic Cash Transaction Reports (CTR) / Suspicious

Transaction Reports (STR) which FIU-IND has placed on its website shall be made use

of by REs which are yet to install/adopt suitable technological tools for extracting

CTR/STR from their live transaction data. The Principal Officers of those REs, whose

all branches are not fully computerized, shall have suitable arrangement to cull out the

transaction details from branches which are not yet computerized and to feed the data

into an electronic file with the help of the editable electronic utilities of CTR/STR as have

been made available by FIU-IND on its website http://fiuindia.gov.in.


While furnishing information to the Director, FIU-IND, delay of each day in not reporting a

transaction or delay of each day in rectifying a mis-represented transaction beyond the

time limit as specified in the Rule shall be constituted as a separate violation. Bank shall

not put any restriction on operations in the accounts where an STR has been filed. Bank

shall keep the fact of furnishing of STR strictly confidential. It shall be ensured that there is no

tipping off to the customer at any level.

Robust software, throwing alerts when the transactions are inconsistent with risk

categorization and updated profile of the customers shall be put in to use as a part of

effective identification and reporting of suspicious transactions.

7.3Bank’s Policy towards Reporting Obligation under AML Compliance:In terms of the Rules notified under Prevention of Money Laundering Act, 2002 (PMLA) certain

obligations were cast on banking companies with regard to reporting of certain transactions.

The RBI has issued circular No DBOD.NO.AML.BC.63 /14.01.001/2005-06 dated February 15,

2006 and DBOD.AML.BC. No. 85/ 14.01.001 / 2007-08 dated May 22, 2008, detailing the obligation

of banks in terms of the Rules notified under PMLA. According to it, every banking company,

financial institution and intermediary shall –

7.3.1 Nomination of Designated Director: Designated Director" means a person designatedby the reporting entity (bank, financial institution etc.) to ensure overall compliancewith the obligations imposed under chapter IV of the Act and the Rules and includes :-

i) the Managing Director or a whole-time Director duly authorized by the Board of

Directors if the reporting entity is a company,

ii) the managing partner if the reporting entity is a partnership firm,

iii) the proprietor if the reporting entity is a proprietorship concern,

iv) the managing trustee if the reporting entity is a trust,

v) a person or individual, as the case may be, who controls and manages the affairs of

the reporting entity if the reporting entity is an unincorporated association or a

body of individuals, and

vi) such other person or class of persons as may be notified by the Government

if the reporting entity does not fall in any of the categories above.

Explanation - For the purpose of this clause, the terms "Managing Director" and "Whole-

time Director" shall have the meaning assigned to them in the Companies Act, 1956 (1 of

1956).

In addition, it shall be the duty of every reporting entity, its Designated Director, officers

and employees to observe the procedure and manner of furnishing and reporting

information on transactions referred to in Rule 3 of the Prevention of Money-

laundering (Maintenance of Records) Rules, 2005, through submission of CTR, NTR,


CWTR, CCR & STR to FIU-IND.

Accordingly, Board of Directors of our Bank has decided to nominate one of theExecutive Director, looking after the functional portfolio as “Designated Director”of our Bank and the same would be communicated to Director, FIU-IND.

7.3.2 Appointment of Principal Officer: As directed in PMLA, Bank should appoint a senior

management officer to be designated as Principal Officer. Bank should ensure that thePrincipal Officer is able to act independently and report directly to the seniormanagement or to the Board of Directors.

Principal Officer shall be located at the head/corporate office of the bank and shallbe responsible for monitoring and reporting of all transactions and sharing ofinformation as required under the law. He will maintain close liaison with enforcement

agencies, banks and any other institution which are involved in the fight against

money laundering and combating financing of terrorism Further, the role andresponsibilities of the Principal Officer should include overseeing and ensuringoverall compliance with regulatory guidelines on KYC/AML/CFT issued fromtime to time and obligations under the Prevention of Money Laundering Act,2002, rules and regulations made there under, as amended form time to time. The

Principal Officer will also be responsible for timely submission of CTR, STR and

reporting of counterfeit notes and all transactions involving receipts by non-profit

organisations of value more than Rupees Ten Lakh or its equivalent in foreign currency

to FlU-IND. With a view to enabling the Principal Officer to discharge his responsibilities

effectively, the Principal Officer and other appropriate staff should have timely access

to customer identification data and other CDD information, transaction records and

other relevant information.

Accordingly, the Bank has decided to appoint the Functional Head of Planning &Development of Head Office to be appointed as Principal Officer who would be fromthe minimum rank of General Manager.

7.3.3 Statutory Reporting to FIU-IND: To comply with the reporting obligations further, Bank

shall-

Maintain a record of all transactions, the nature and value of which may be prescribed

Such transactions may comprise of a single transaction or a series of transactionsintegrally connected to each other, and where such series of transactions take place

within a month

Furnish information of transactions referred to in clause (a), i.e., Transactions of

suspicious nature to the Director, FIU-IND

Verify and maintain the records of the identity of all its clients


Accordingly, Banks are required to make the following reports to the FIU-IND:

Cash Transaction Reporting (CTR)

Counterfeit Currency Reporting (CCR)

Non-Profit Organization Transaction Report (NTR)

Suspicious Transaction Reporting (STR)

With the amendments to Prevention of Money Laundering (PML) Rules, notified by the

Government of India vide Notification no. 12 of 2013 dated 27th August, 2013 and in terms of

amended Rule 3, every reporting entity is now required to maintain the records of all

transactions including the records of all cross border wire transfers of more than Rs.5 lakhor its equivalent in foreign currency, where either the origin or destination of the fund is in

India, in addition to the reports mentioned above. The report is named as-

Cross border Wire Transfer Report (CWTR)

Hence Bank is required to ensure timely submission of the following statutory reports within the

stipulated time frame to comply with the Bank’s obligation under PMLA:

Sl.No.

Name of the Report Short Name Frequency of submission

1. Cash Transaction Reporting CTR 15th of the succeeding month

2. Counterfeit Currency Reporting CCR 15th of the succeeding month

3.Non-Profit OrganizationTransaction Report NTR 15th of the succeeding month

4. Suspicious Transaction Reporting STRWithin 7 days of arriving at aconclusion that any transaction,is of suspicious nature.

5. Cross border Wire Transfer Report CWTR 15th of the succeeding month

To comply with the Reporting Obligations, our Bank has established AML & KYC Cell at Head

Office level to monitor and evaluate the transactions taking place in the CBS system centrally.

Accordingly, Bank has introduced AML software named TCS BαNCS software (Vendor: M/S

TCS) in the year 2008 for monitoring of transactions and generation of alerts. The STR alerts

generation has since been centralized at Head Office AML & KYC Cell, by delinking the Zonal

Office users with effect from 01.01.2013 with the introduction of new version of TCS BαNCSsoftware. Besides generating STR alerts, AML software also takes care the system based

generation of CTR, NTR and CWTR at central level. The process involved in generation and

submission of the statutory reports has been structured as under:-


Name of The Report Cash Transaction Reporting (CTR)

Definition As per the PMLA rules, Bank is required to submit the details of:

All cash transactions of the value of more than rupees ten lakh or its

equivalent in foreign currency.

All series of cash transactions integrally connected to each other,

which have been valued below rupees ten lakh or its equivalent in

foreign currency, where such series of transactions have taken place

within a month and the aggregate value of such transactions

exceeds rupees ten lakh.

The format for reporting of the above-mentioned cash transactions,

known as Cash Transaction Report (CTR) has been provided by the

RBI vide its circular dated February 15, 2006. This report is required

to be filed on a monthly basis by 15th of the succeeding month.

RBI vide circular dated May 22, 2008 has clarified that Cash

transaction reporting by branches to their controlling offices should

be submitted on monthly basis and not on fortnightly basis.

While the circular provides both manual as well as electronic formats

for submission of CTR, banks have been advised to initiate urgent

steps to ensure electronic filing of CTR.

Data Structure The FIU-IND has provided an excel based utility at its website

www.fiuindia.gov.in for generation of CTR in electronic form. After

following the steps instructed by FIU-IND therein, the said utility

automatically generates a set of 6 files for onward reporting to FIU-

IND.

Banks are required to incorporate the BSR code in the Branch file of

the CTR and this is also necessary as part of the format to be

incorporated in the CBAACC, CBAINP and CBALPE for cross-

referencing. In case BSR is not available in case of new branches,

banks may use a unique code other than BSR for the branch so that

it is possible to identify records across the CTR files.

Source ofTracking/capturing ofdata

Bank has put a system in place in which CTR files are generated by

our AML software within the 10th of the succeeding month, submit it

to the Head Office AML & KYC Cell who in turn will upload it in the


FINNET portal within 15th of the succeeding month.

Reporting The report files generated by our AML system are submitted to Head

Office AML & KYC Cell for onward submission to FIU-IND through

FINNET portal.

Stipulated Time-framefor reporting

15th of the succeeding Month

Name of The Report Counterfeit Currency Reporting (CCR)

Definition The PMLA Rule 3(1)(C) read with rule 8 requires the reporting of

all cash transactions where forged or counterfeit Indian currency

notes have been used as genuine. The RBI vide circular dated

May 22, 2008 provided the format in which the CCR needs to be

reported to the FIU-IND. The said report is required to be filed not

later than seven working days from the date of occurrence of such

transactions.

Data Structure Bank is required to enter data centrally on counterfeit currency into

a separate utility provided by FIU-IND for same. This utility is

available on FIU-IND website. After following steps instructed by

FIU-IND therein, this utility automatically generates a set of 3 files

for onward reporting to FIU-IND.


For enabling CCR reporting bank have put in place a mechanism

such that information on counterfeit currency flows to Head Office

AML & KYC Cell from currency chest, branches, zones, FGMs and

Head Office Security Department who looks after the Currency

chests operation for onward submission to FIU-IND in FINNET

portal through the principal officer.

In order to submit the Counterfeit Currency Report (CCR) bythe bank within specified time period to FIU-IND, theBranches/Currency Chests should submit the statement ofsuch transaction immediately through fax (033 2231 4629) /email ([email protected]) directly to Head Office, AML& KYC cell on the date of occurrence itself.


Reporting The report files generated by our Head Office AML & KYC Cell

submitted/uploaded to FIU-IND through FINNET portal.



Name of The Report Non-Profit Organization Transaction Report (NTR)

Definition The report of all transactions, whether cash or transfer, involvingreceipts by non-profit organizations of value more than Rs.10lakhs or its equivalent in foreign currency should be submittedevery month to the Director, FIU-IND by 15th of the succeedingmonth in the prescribed format.Explanation : Government of India Notification datedNovember 12, 2009- Rule 2 sub-rule (1) clause (ca) definesNon-Profit Organization (NPO). NPO means any entity ororganisation that is registered as a trust or a societyunder the Societies Registration Act, 1860 or any similar Statelegislation or a company registered under section 25 of theCompanies Act, 1956.

Data Structure The FIU-IND has provided an excel based utility at its websitewww.fiuindia.gov.in for generation of NTR in electronic form. Afterfollowing the steps instructed by FIU-IND therein, the said utilityautomatically generates a set of 6 files for onward reporting toFIU-IND.


Bank has put a system in place in which NTR files are generatedby our AML software within the 10th of the succeeding month;submit it to the Head Office AML & KYC Cell who in turn willupload it in the FINNET portal within 15th of the succeedingmonth.

Reporting The report files generated by our AML system are submitted toHead Office AML & KYC Cell for onward submission to FIU-INDthrough FINNET portal.




Name of The Report Cross-border Wire Transfer Report (CWTR)

Definition With the amendments to Prevention of Money Laundering(PML) Rules, notified by the Government of India videNotification no. 12 of 2013 dated 27th August, 2013 and interms of amended Rule 3, every reporting entity is nowrequired to maintain the records of all transactions includingthe records of all cross border wire transfers of more than Rs.5lakh or its equivalent in foreign currency, where either the originor destination of the fund is in India, in addition to the reportssubmitted currently. In view of the above notification,Reserve Bank of India vide its communication dated March28, 2014 has advised all the banks to submit report onCross-border Wire Transfers to the FIU-India through FINnetGateway by 15th of the succeeding month. FIU-IND hasclarified the nature of transactions to be included in theCBWT report, brief of which are appended:-

• All transactions whether these are for Trade, Non tradeor merchant are to be reported if it involves cross bordertransfers and exceeds the threshold of rupees five lakh or itsequivalent in foreign currency.

• Fund settlement transactions between banks via SWIFTmessage are also to be included under cross border wiretransfers report.

• Bank has to follow the first-in/last-out principle for theobligations regarding the reporting. The first bank whichreceives the inward remittance, whether for its own customer oracting as intermediary for the customer of other bank, has to filethe report. Similarly the last bank which sends out theremittance whether for its own customer or acting asintermediary for the customer of other bank has to file the report.

• If the values of each transaction for use of Credit cards /Debit cards / Pre-paid cards/ Travel cards in foreign country /foreign currency are more than Rupees five lakh or itsequivalent in foreign currency where either the origin ordestination is in India, then it will form part of the report.

• In case bank receives a single inward remittance of more thanRs.5 lakh where the credit needs to be applied to multiplebeneficiaries, the same needs to be reported and the details ofall the recipients should be mentioned in the receiver part of thereport.

• Foreign currency purchased and sold through a branch is notto be included in the report


Data Structure The FIU-IND has provided an excel based utility at its website

www.fiuindia.gov.in for generation of CWTR in electronic form.

After following the steps instructed by FIU-IND therein, the said

utility automatically generates a set of 6 files for onward

reporting to FIU-IND.


Bank has put in place a system for generation of system based

CWTR report in our CBSO Mumbai.

Reporting The report files generated by our CBSO are submitted to Head

Office AML & KYC Cell for onward submission to FIU-IND

through FINNET portal.

Stipulated Time-frame forreporting


Name of The Report Suspicious Transaction Report (STR)

Definition The PMLA Rule 3(1)(D) read with rule 8 requires the

reporting of all suspicious transactions whether or not made

in cash.

RBI circular No. RBI/2005-06/301

DBOD.NO.AML.BC.63/14.01.001/2005-06, dated February

15, 2006 requires that the Suspicious Transaction Report

(STR) should be furnished within 7 days of arriving at a

conclusion that any transaction, is of suspicious nature. The

Principal Officer should record his reasons for treating any

transaction or a series of transactions as suspicious. It should

be ensured that there is no undue delay in arriving at such a

conclusion once a suspicious transaction report is received

from a branch or any other office. The said circular also

provides the format of the STR.

Data Structure FIU-IND has provided a utility at its website for generation of

STRs in electronic formats. On following the steps as


instructed by FIU-IND therein, the said utility automatically

generates a set of files for onward reporting to FIU-IND.


Online Transaction Monitoring:Bank is using different scenarios to identify “Suspicious

Transaction” for reporting to Financial Intelligence Unit,

Government of India (FIU-IND). FIU-IND suggested

commonly used 58 alert indicators for detection of suspicious

transactions. These alert indicators are likely to be related to

the following sources:-

Watch list (WL) – The customer details matched with watch

lists (eg. UN list, Interpol list etc)

Transaction monitoring (TM) – Transaction monitoring alert

(e.g. unusually large transactions, increase in transaction

volumes etc.)

Typology (TY) – Common typologies of money laundering,

financing of terrorism or other crimes (e.g. Structuring of cash

deposits etc.)

Risk Management System (RM) – Risk management

system based alert (e.g. high risk customer, country, location,

source of funds, transaction type etc.)

Based on these 58 indicators, the AML software generates

STR alerts on daily basis for the transactions that trigger

these scenarios. The alerts are pushed to the user ids of

officers in AML & KYC Cell, Head Office as per the allotment

of zones amongst them for further screening. They, in turn go

through the alerts, screen them and arrive at a conclusion

whether to file the STR or to close the alert.

Offline Transaction Monitoring:RBI circular No DBOD.AML.BC. No. 85/14.01.001/2007-08

dated May 22, 2008 has advised banks that in case a

transaction is abandoned/ aborted by customers on being

asked to give some details or provide documents, it should

report all attempted transactions in STRs even if not

completed by customers irrespective of the amount of


transaction. The identification of such suspicious transactions

is more likely to be related with following sources.

Customer verification (CV): Detected during customer

acceptance, identification or verification (eg. Use of forged id,

wrong address etc.)

Law Enforcement Agency Query (LQ): Query or letterreceived from law enforcement agency (LEA) or intelligenceagency (e.g. Blocking order received, transaction detailssought etc.)

Media Reports (MR): Adverse media reports about

customer. (e.g. newspaper reports)

Employee Initiated (EI): Employee raised alert (e.g.

behavioral indicators such as customer had no information

about transaction, attempted transaction etc.)

Public Complaint (PC): Complaint received from public (e.g.

abuse of account for committing fraud etc.)

Business Associates (BA): Information received from other

institutions, subsidiaries or business associates (e.g. cross-

border referral, alert raised by agent etc.)

In order to fulfill obligations under PMLA, 2002, Bank has to

report these suspicious transactions to FIU-IND. Branches /

Controlling Offices would report such identified/attempted

transactions to Head Office, AML & KYC Cell, by providing

detail of the incident through e-mail to

[email protected] to review the case for reporting

under STR. In addition to that, reporting by Law Enforcement

Agencies (LEAs), adverse reporting in the news paper etc.

may also be considered for filing STR to FIU-IND.

Verification All the KYC documents of the suspicious accounts are calledfor from the concerned Branch for verification of KYCcompliance before reporting to FIU-IND

Reporting Online Alerts in AML system: All the alerts generated

based on the scenarios defined in the AML system would be

screened centrally at Head Office AML & KYC Cell and if


found suspicious would be reported as STR in desirable

cases to FIU-IND after obtaining confirmation from Principal

Officer.

Offline Alerts/Information: Offline alerts or information from

the field should be reported to Head Office AML/KYC Cell

through respective Zonal Offices/FGMOs. The information so

obtained would be taken up by the Head Office AML & KYC

Cell and would be submitted as STR in desirable cases to

FIU-IND after obtaining confirmation from Principal Officer.

There are cases where information are received from the

Regulators or the Law Enforcing Agencies. All these

reportings would be similarly taken up by the Head Office

AML & KYC Cell and would be reported as STRs in desirable

cases after obtaining confirmation from the Principal Officer.


Suspicious Transaction Report (STR) should be furnished

within 7 days of arriving at a conclusion that any transaction,

is of suspicious nature.

Some importantguidelines on submissionof STR

While determining suspicious transactions, branches/offices

should be guided by the definition of suspicious transaction as

contained in PMLA Rules as amended from time to time.

It is likely that in some cases transactions are

abandoned/aborted by customers on being asked to give some

details or to provide documents. It is clarified that

branches/offices should report all such attempted transactions in

STRs through their respective ZOs, even if not completed by the

customers, irrespective of the amount of the transaction.

Branches/Offices should make STRs if they have reasonable

ground to believe that the transaction involves proceeds of crime

irrespective of the amount of the transaction and/or the threshold

limit envisaged for predicate offences in part B of Schedule of

PMLA, 2002. The same principle should be followed at HO level

while scrutinizing the STR alerts generated through AML system

centrally.

The Suspicious Transaction Report (STR) is required to befurnished to FIU-IND by the Principal Officer of the Bankwithin 7 days of arriving at a conclusion that any transaction,


whether cash or non-cash, or a series of transactions integrally

connected are of suspicious nature. The Principal Officer should

record his reasons for treating any transaction or a series of

transactions as suspicious.

It should be ensured that there is no undue delay in arriving at

such a conclusion once a suspicious transaction report is

received from a branch or any other office. Such report should

be made available to the competent authorities on request.

However, it should be carefully noted that Branches shouldnot put any restrictions on operations in the accountswhere an STR has been made. Moreover, branches shouldkeep the fact of furnishing of STR strictly confidential, asrequired under PML Rules. It should also be ensured thatthere is no tipping off to the customer at any level.

*An indicative list of Reasons/Examples of suspicioustransactions is provided in Appendix-VIII

7.3.4 Trade Based Money Laundering (TBML)-Observance of High Customer Due

Diligence through Red Flag Indicators (RFI) : Trade Based Money Laundering

(TBML) has been recognized as one of the main methods by which proceeds of crime

and unaccounted money may be moved cross-border by criminal organizations and

terrorist financiers for disguising its origin and integrating into formal economy.

Global Financial Integrity, in its report of December 2014, has observed that ‘trade

mis- invoicing’ has accounted for 77.8% of the illicit financial flows. Trade mis-

invoicing is an offence under Section 135 of the Customs Act, 1963 and a predictive

offence for money laundering under Prevention of Money Laundering Act 2002.

In TBML, inter-country movement of fund happens through ‘trade mis-invoicing’, the

techniques of which may be broadly classified as under :- Simple Techniques:

i) Over invoicing

ii) Under invoicing

iii) Multiple invoicing

iv) Over/under shipments or no shipment

v) Manipulation of description of goods

Complex Techniques: Combinations of several simple techniques

With a view to recognizing indicators which may help in identifying non-genuine


trade transactions out of billions of the trade transactions without affecting the free flow of

trade, FIU-IND has constituted a Working Group of senior bankers, and based

on their recommendations certain ‘Red-Flags’ have been identified. These Red FlagIndicators (RFIs), given in Appendix-VII, should be used at transaction level for

identifying suspicious transactions related to TBML.

Branches are advised to undertake enhanced measures for Customers’ Due

Diligence (CDD) in order to put a check on such money laundering.

7.4Screening of Cash Withdrawals and Deposits for the Purpose of CTR:

Subsequent to migration of all branches to CBS, the Cash Transaction Reports (CTRs)covering all transactions of the value of more than Rs.10 lakhs or its equivalent in

foreign currency and all series of cash transactions integrally connected to each other which

have been valued below Rs.10 lakhs or its equivalent in foreign currency where such series of

transactions have taken place within a month and the monthly aggregate value of such

transactions exceeds Rs.10 lakhs or its equivalent value in foreign currency, is being

generated centrally by CBS, Project Office for submission of monthly CTR to FIU-IND.

However, the copy of monthly CTR submitted by the Bank pertaining to the concerned branch is

being placed on the reports folder every month. The following action points are to be adhered by

the branches and Zonal Offices in this regard.

i. Action points for Branches :

The copy of the monthly CTR report should be perused carefully to find any abnormalityor suspicion in the accounts. If any transaction appears suspicious the same shouldbe reported immediately to the Zonal Office for onward reporting to Head Office.Thus, all CTRs thus reported in branch folder must be scrutinized at the branchlevel for STR alerts.

It should also be ensured that the monthly CTR report available in the branch should beproduced before auditors/inspectors when asked for.

Branches are also advised to meticulously follow the instruction on “Maintenanceof records of transactions; “Information to be preserved’ and “Maintenance andPreservation of records”.

ii. Action points for Zonal Offices :

Zonal Offices will closely monitor the high value transactions in the branches and guidethe branches in reporting suspicious transactions to Head Office. Zonal Offices willscrutinize the reports received from the branches and investigate abnormalityor suspicious transaction, if any, by deputing officials.

Zonal Offices will specially monitor the cash transactions reported in ‘CTR for Rs.1 croreand above’, lists of which are provided to ZOs in every month from HO AML & KYC Cell,


to ensure verification of the genuineness of those transactions with regard to the businessactivities of the concerned customers to have a re-look over the submission ofany Suspicious Transaction Report (STR), if needed. The KYC particulars should alsobe thoroughly verified for those accounts to ensure proper due diligence.

Zonal Heads, during their periodical branch visits, will verify such high value transactionaccounts in discussion with the Branch Heads.

7.5 Requirements/obligations under International Agreements Communications fromInternational Agencies/Combating Financing of Terrorism (CFT):

Bank shall ensure that in terms of Section 51A of the Unlawful Activities

(Prevention) (UAPA) Act, 1967, they do not have any account in the name of

individuals/entities appearing in the lists of individuals and entities, suspected of having terrorist

links, which are approved by and periodically circulated by the United Nations Security

Council (UNSC).

Lists of terrorist entities notified by Government of India as received through Reserve Bank of India

are circulated to the Branches / Offices by Head Office, to exercise caution if any transaction is

detected with such entities. The Instruction Circulars issued pertaining to the list of banned/

terrorist organization should be properly preserved by the Branches. In case the name of any

banned organization appears as payee/endorsee/applicant, reporting of such transactions as and

when detected is to be done by the Branch to Head Office through respective Zonal Office. Head

Office in turn will report the matter to RBI/appropriate authority designated by Govt. In terms ofPrevention of Money Laundering Act, 2002, suspicious transaction should include, inter-alia, transactions which give rise to a reasonable ground of suspicion that these mayinvolve financing of the activities relating to terrorism.As and when list of terrorist individuals and entities, approved by Security CouncilCommittees established pursuant to various United Nations’ Security Council Resolutions(UNSCRs) are received from RBI, the same is circulated to the branches/offices whichshould ensure to update the consolidated list of such individuals and entities.The UN Security Council has adopted Resolutions 1988 (2011) and 1989 (2011) which haveresulted in splitting of the 1267 Committee's Consolidated List into two separate lists,namely:

(b) The “ISIL (Da’esh) & Al-Qaida Sanctions List”, which includes names ofindividuals and entities associated with the Al-Qaida. The updated ISIL & Al- QaidaSanctions List is available at

https://scsanctions.un.org/fop/fop?xml=htdocs/resources/xml/en/consolidated.xml&xslt=htdocs/resources/xls/en/al-qaida-r.xls

(c) The “1988 Sanctions List”, consisting of individuals (Section A of theconsolidated list) and entities (Section B) associated with the Taliban which is available at

https://scsanctions.un.org/fop/fop?xml=htdocs/resources/xml/en/consolidated.xml&xslt=htdocs/resources/xls/en/taliban-r.xls.


Details of accounts resembling any of the individuals/entities in the lists shall be

reported to FIU-IND apart from advising Ministry of Home Affairs as required under UAPA

notification dated August 27, 2009.

Bank has implemented the functionality of Real-time scanning of UNSCR list while creating or

amending CIF in the CBS system.

Some of the key points to be noted in such process are appended for meticulous compliance:-

While opening or amendment of any CIF, in case the name matches with that of the Caution List,

the system will prevent for opening/amendment of such CIF. In such cases user has to go through

‘Pre-verification process’ for further verification of other identification details.

User should take prudent decision whether to accept or reject based on the identification details

provided by the customer vis-à-vis the details displayed in the screen on pre-verification process.

Particularly, verification of details must be ensured in case of acceptance and subsequent

‘supervisory override’.

However, branches/ offices are advised to ensure enhanced due diligence while establishing any

banking relationship with any customer having resemblance with the names of the UNSCR lists.

In case of matching of all details, opening/amendment should not be made and the case must be

reported forthwith to the respective zonal offices under copy to Head Office, AML & KYC Cell (e-

mail : [email protected])

In this connection, Ho IC No. 14619/AML&KYC/2016-17/05 dated 04.11.2016 issued by Head

Office AML & KYC Cell may be referred for detail workflow of the functionality and the process to

be adopted by the Branches.

In addition to the above, other UNSCRs circulated by the Reserve Bank in respect ofany other jurisdictions/ entities from time to time shall also be taken note of.

Freezing of Assets under Section 51A of Unlawful Activities (Prevention) Act,1967:

The procedure laid down in the UAPA Order dated August 27, 2009 (Annex I) of this Policycum guidelines shall be strictly followed and meticulous compliance with the Order issued bythe Government shall be ensured.

7.6 Jurisdictions that do not or insufficiently apply the FATFRecommendations:

(a) FATF Statements circulated by Reserve Bank of India from time to time, and publiclyavailable information, for identifying countries, which do not or insufficiently applythe FATF Recommendations, shall be considered. Risks arising from the deficiencies inAML/CFT regime of the jurisdictions included in the FATF Statement shall be taken intoaccount.

(b) Special attention shall be given to business relationships and transactions withpersons (including legal persons and other financial institutions) from or in countriesthat do not or insufficiently apply the FATF Recommendations and jurisdictionsincluded in FATF Statements.


Explanation: The process referred to in Section 55 a & b do not preclude REs from havinglegitimate trade and business transactions with the countries and jurisdictions mentioned inthe FATF statement.

(c) The background and purpose of transactions with persons (including legal personsand other financial institutions) from jurisdictions included in FATF Statements andcountries that do not or insufficiently apply the FATF Recommendations shall beexamined, and written findings together with all documents shall be retained andshall be made available to Reserve Bank/other relevant authorities, on request.

7.7 Adherence to Foreign Contribution Regulation Act (FCRA), 1976:The provisions of the Foreign Contribution (Regulation) Act, 1976 regulates the receipt of foreign

contribution in the country. While accepting such contributions, Branches may open accounts orcollect cheques only in favour of associations, which are registered under the ForeignContribution Regulation Act ibid. by Government of India. A certificate to the effect that theassociations registered with the Government of India should be obtained from theconcerned associations at the time of opening of the account or collection of cheques.

While granting registration or prior permission, the Ministry of Home Affairs, Government of India

invariably endorses a copy thereof to the concerned branch. Branches should desist fromopening accounts in the name of banned organisations and those without requisiteregistration. Branches / Offices may access the website of Government of India

(http://mha.nic.in/fcra/fcra.html) which contains the names of associations registered with them u/s

6(1)(a) of FCRA, 1976. List of banned organisations as circulated by Head Office from time to time

should be properly preserved and referred as and when required. The Branches / Offices should

strictly comply with the requisite legal requirements. Failure to comply would have serious

implications.

Branches / Offices should also comply with and follow at all times the procedures which apply in

each of the day to day operations which broadly include:

Identifying customers thoroughly when opening accounts

moving money around between accounts

recording transactions

reporting suspicious transactions

The Branches maintaining accounts under the purview of FCRA, 1976 should ensure that

mandatory annual statements statutory under the Act are submitted by the account holders to the

appropriate Govt. department. Failing compliance by the customer, credit against FC remittances

may be withheld under advice to the customer/ beneficiary.

Branches should submit details of the foreign contributions credited to the accounts of Association /

Organisation, if any, on a half-yearly (March / September) basis to the Zonal Office within 15 days

from the closure of half-year in the prescribed format.

Zonal Offices in turn should submit the consolidated position to Foreign Department, Head Office

within one month from the closure of the half-year.


7.8 Anti-Money Laundering Focus:Money laundering is the process by which criminals attempt to hide and disguise the true origin and

ownership of the proceeds of criminal activities, thereby avoiding prosecution, conviction and

confiscation of criminal funds.

Generally, the money laundering process involves three stages:

Placement: Physically disposing of cash derived from illegal activity. One way to accomplish this is

by placing criminal proceeds into traditional financial institutions or non-traditional financial

institutions such as currency exchanges, casinos or check – cashing services.

Layering: Separating the proceeds of criminal activity from their source through the use of layers of

financial transactions. These layers are designed to hamper the audit trail, disguise the origin of

funds and provide the anonymity. Some examples of services that may be used during this phase

are:

i. Early surrender of an annuity with regard to penalties,

ii. Fraudulent letter of credit transactions; and

iii. Illicit use of bearer shares.

Integration: Placing the laundered proceeds back into the economy in such a way that they reenter

the financial system as apparently legitimate funds.

7.9 Implementation of UNSCR 2140(2014) and 2216(2015) pertaining to Yemen:

Reserve Bank of India issued notification No. RBI/2015-16/243 DBR.AML.No.6912/14.06.001/2015-

16 dated November 20, 2015 on the ‘Order’ issued by Ministry of External Affairs dated September

21, 2015, published in the Gazette of India dated 23.09.2015, on implementation of United Nations

Security Council Resolution 2140 (2014) and 2216 (2015) on Yemen.

In exercise of the powers conferred by Section 2 of the United Nations (Security Council) Act, 1947,

the Central Govt. of India has passed the order based on the United Nations Security Council

Resolution 2140(2014) and 2216(2015) which reads inter-alia as under :-

(a) immediately freeze all funds, other financial assets and economic resources which are

on its territories and which are owned or controlled, directly or indirectly, by the

designated individuals or entities, or by individuals or entities acting on their behalf or at

their direction, or by entities owned or controlled by them;

(b) prevent any funds, financial assets or economic resources being made available by

Indian nationals or by any individuals or entities within its territories, to or for the benefit

of the designated individuals or entities with the provision to exempt;

(i) funds and basic expenses;

(ii) extraordinary expenses; and

(iii) expenses related to judicial, administrative or arbitral lien or judgment,

subject to the procedures specified in sub-paragraph (a), (b) or (c) of paragraph 12 of the

Resolution 2140 (2014) as may be applicable in the instant case


(c) prevent the entry into or transit through its territories of designated individuals with the

provision to exempt travel or entry or transit;

(i) justified on the grounds of humanitarian needs, including religious obligation as

determined by the Committee on a case by case basis;

(ii) for the fulfillment of a judicial process;

(iii) to further the objectives of peace and national reconciliation in Yemen as determined by

the Committee on a case to case basis;

(iv) to advance peace and stability as may be determined on a case to case basis, subject to

the procedures specified in sub-paragraphs (a), (b), (c) and (d) of paragraph 16 of the

Resolution 2140 (2014), as may be applicable in the instant case

(d) prevent the direct or indirect supply, sale or transfer to, or for the benefit of Al Abdullah

Saleh, Abdullah Yahya al Hakim, Abd al-Khaliq al-Huthi and the individuals or entities

designated by the Committee, established pursuant to paragraph 19 of the Resolution

2140 (2014), pursuant to sub-paragraph (d) of paragraph 20 of the Resolution 2216

(2015), the individuals and entities listed in the annex to the resolution 2216 (2015), and

those acting on their behalf or at their direction in Yemen, from or through Indian

territories or by Indian nationals, or using Indian flag vessels or aircraft, of arms and

related materiel of all types, including weapons and ammunition, military vehicles and

equipment, paramilitary equipment, and spare parts for the aforementioned, and

technical assistance, training, financial or other assistance, related to military activities

or the provision, maintenance or use of any arms and related materiel, including the

provision of armed mercenary personnel whether or not originating in Indian territories.

CHAPTER - VIIIOther Instructions

8.1 Secrecy Obligations and Sharing of Information:a) Banks shall maintain secrecy regarding the customer information which arises out of the

contractual relationship between the banker and customer.

b) While considering the requests for data/information from Government and other

agencies, banks shall satisfy themselves that the information being sought is not of

such a nature as will violate the provisions of the laws relating to secrecy in the banking

transactions.

c) The exceptions to the said rule shall be as under :-

i. Where there is a duty to the public to disclose,


ii. The interest of bank requires disclosure and

iii. Where the disclosure is made with the express or implied consent of the

customer.

d) NBFCs shall maintain confidentiality of information as provided in Section 45NB of RBI

Act 1934.

8.2 Due Diligence for detecting Suspicious Transactions related to Shell Companies:A shell company is an entity that has no active business and usually exists only in name as a

vehicle for another company’s business operations (Black’s Law Dictionary).In essence, shells

are corporations that exist mainly on paper, have no physical presence, employ no one and

produce nothing.

For a fee, company formation agents- in India mainly Chartered Accountants- assist individuals

with forming shell companies by filing required documents on their behalf. Third- party agents

and nominee incorporation services make it hard for Law Enforcement Agencies (LEAs) to trace

illegal activity to the original creator of the shell.

Normally shell companies are floated worldwide by persons broadly for undernoted

activities/objectives :

a) Rotation, misappropriation and siphoning off funds.

b) Creation of equity in their name.

c) Holding real estate properties / trading in Capital Market / market manipulation.

d) Converting unaccounted money through placement, layering and round tripping.

e) Tax evasion.

As the name suggests the shell companies are hollow i.e they have no physical presence other

than a mailing address, no active or actual business operations, no significant assets or no

sizeable workforce. Generally there would be multiple companies located at a single address,

sharing a common registered address. Such a company is incorporated for serving as a conduit

for fictitious business transactions, leaving no trace about the actual beneficiary.

Further, shell companies have certain common features and attributes:

1) Nominal paid up capital vis-a-vis authorized capital,

2) Huge balances in share premium A/c - share application money account,

3) No / nominal statutory payments like VAT, Service Tax, Income Tax, GST,

4) Stock in trade is minimum or zero,

5) Low operating earnings or expenses,

6) No / Minimum Fixed Assets which remains the same year after year,


7) Huge investments in shares / unsecured loans in (i) Private Limited Companies, (ii)

Unlisted Public Limited Companies, (High debtors and creditors without any immovable

assets),

8) Huge Cash in hand / Cash at Bank,

9) Number of Companies registered at same address,

10) Frequent change in Directors/Common Directors,

11) Generally Trading Companies with one of the object being investment in securities

12) Change in Company name / Registered Office,

13) Shareholding pattern- majority shareholders are Private Ltd Co / Unlisted Public Ltd.

Co.

In view of the above, it is advised that the field functionaries should be more vigilant andshould restrict themselves while dealing with the companies approaching forestablishing new banking relationship based on the above mentioned characteristics.Further, branches should refer to these characteristics while dealing with the existingaccounts of companies and for reporting of STRs through their respective ZOs/FGMOs toHead Office in line with the direction issued vide HOIC no. 14191 dated 15th March, 2016.

8.3 CDD Procedure and sharing KYC information with Central KYC Records Registry(CKYCR):Branches shall capture the KYC information for sharing with the CKYCR in the

manner mentioned in the Rules, as required by the revised KYC templates prepared

for ‘individuals’ and ‘Legal Entities’ as the case may be. Government of India has

authorised the Central Registry of Securitisation Asset Reconstruction and Security

Interest of India (CERSAI), to act as, and to perform the functions of the CKYCR vide Gazette

Notification No. S.O. 3183(E) dated November 26, 2015.

The ‘live run’ of the CKYCR would start with effect from July 15, 2016 in phased manner

beginning with new ‘individual accounts’. Accordingly, Bank will take the following steps in

this respect :-

i. Bank shall invariably upload the KYC data pertaining to all new individual accounts

opened on or after January 1,2017 with CERSAI in terms of the provisions of

the Prevention of Money Laundering (Maintenance of Records) Rules, 2005.

SCBs are, however, allowed time upto February 1, 2017 for uploading date in respect

of accounts opened during January 2017.

ii. Bank shall upload the KYC data pertaining to all new individual accounts opened on or

after from April 1, 2017 with CERSAI in terms of the provisions of PML (Maintenance of

Records) Rules, 2005.

iii. Operational Guidelines (version 1.1) for uploading the KYC data have been released by

CERSAI. Further, ‘Test Environment’ has also been made available by CERSAI


for the use of Bank.

In order to comply with the aforesaid requirement, our Bank has already taken following

steps:

New CIF and Account Opening Form (Refer HOIC 14784 dated 02/01/2017) have been

introduced by Bank based on CKYC requirement vis-à-vis Data Gaps in CBS.

CIF Creation & Amendment Screen has been redesigned in CBS which is already

available to Branches/Offices in their Menu under CBS Application. The redesigned

screen contains some additional fields required for CKYC besides realignment of

existing fields under single menu for CIF Creation/Amendment which were earlier

available through different menu/navigation.

An additional menu has been provided in CBS Application to upload Customer’sscanned KYC Document (POI &POA)/ Photograph & Signature by the Branches so

that the same may be centrally available for uploading on CERSAI Portal along with

CKYC data.

Field functionaries may be guided by HO IC No. HO/DIT/CBS/15175 dated 1st

August, 2017.

Bank has successfully completed the KYC data uploading work in test environment

provided by CERSAI and necessary registration for uploading of data in real

environment will be started very soon.

8.4 Reporting requirement under Foreign Account Tax Compliance Act (FATCA)and Common Reporting Standards (CRS):

Under FATCA and CRS, REs shall adhere to the provisions of Income Tax Rules

114F, 114G and 114H and determine whether they are a Reporting Financial

Institution as defined in Income Tax Rule 114F and if so, shall take following steps for

complying with the reporting requirements :-

a) Register on the related e-filling portal of Income Tax Department as Reporting Financial

Institutions at the link https://incometaxindiaefiling.gov.in/ post login -

My Account --> Register as Reporting Financial Institution,

b) Submit online reports by using the digital signature of the ‘Designated

Director’ by either uploading the Form 61B or ‘NIL’ report, for which, the schema

prepared by Central Board of Direct Taxes (CBDT) shall be referred to.

Explanation: REs shall refer to the spot reference rates published by Foreign Exchange

Dealers’ Association of India (FEDAI) on their website at

http://www.fedai.org.in/RevaluationRates.aspx for carrying out the due diligence

procedure for the purposes of identifying reportable accounts in terms of Rule 114H.

c) Develop Information Technology (IT) framework for carrying out due diligence procedure

and for recording and maintaining the same, as provided in Rule 114H.


d) Develop a system of audit for the IT framework and compliance with Rules 114F,

114G and 114H of Income Tax Rules.

e) Constitute a “High Level Monitoring Committee” under the Designated Director or any

other equivalent functionary to ensure compliance.

f) Ensure compliance with updated instructions/ rules/ guidance notes/ Press releases/

issued on the subject by Central Board of Direct Taxes (CBDT) from time to

time and available on the web site

http://www.incometaxindia.gov.in/Pages/default.aspx. REs may take note of the

following :

i. updated Guidance Note on FATCA and CRS

ii. a press release on ‘Closure of Financial Accounts’ under Rule 114H (8).

8.5 Period for presenting payment instruments: Payment of cheques/drafts/pay

orders/banker’s cheques, if they are presented beyond the period of three months from the

date of such instruments, shall not be made.

8.6 White-listing of Accounts for AML System:Accounts eligible for white-listing are those of Government department/ undertaking, Schedule

Bank, RBB, Co-Operative Bank, various funds managed/regulated by the Government/ Quasi-

Government bodies where the scope of suspicious transaction is negligible.

The accounts for white-listing should be screened by the controlling offices in consultation with

the branch keeping records at the Zonal Office for future reference. All such selected accounts

are to be reported by the Zonal Head under his/her signature to Head Office (AML & KYCCell) for ‘white listing’ giving proper reason in each case maintaining top secrecy.

White-listing of accounts is not applicable for impersonal accounts like Sundry Creditors etc.

which are prone to operational risk through fraudulent means. Therefore, field level functionaries

should monitor those accounts to avoid unnecessary routing of transactions through it.

8.7 Operation of Bank Accounts & Money Mules:The instructions on opening of accounts and monitoring of transactions shall be strictly

adhered to, in order to minimise the operations of “Money Mules” which are used to

launder the proceeds of fraud schemes (e.g., phishing and identity theft) by criminals who

gain illegal access to deposit accounts by recruiting third parties which act as “money

mules.” If it is established that an account opened and operated is that of a Money Mule,

it shall be deemed that the bank has not complied with these directions.

8.8 Collection of Account Payee Cheques:Account payee cheques for any person other than the payee constituent shall not be

collected. Banks shall, at their option, collect account payee cheques drawn for an


amount not exceeding rupees fifty thousand to the account of their customers who are

co-operative credit societies, provided the payees of such cheques are the

constituents of such co-operative credit societies.

8.9 Unique Customer Identification Code (UCIC):(a) A Unique Customer Identification Code (UCIC) shall be allotted while entering

into new relationships with individual customers as also the existing customers by banks

and NBFCs.

(b) The banks/ NBFCs shall, at their option, not issue UCIC to all walk- in/occasional

customers such as buyers of pre-paid instruments/purchasers of third party products

provided it is ensured that there is adequate mechanism to identify such walk-in

customers who have frequent transactions with them and ensure that they are allotted

UCIC.

8.10 Introduction of New Technologies – Credit Cards/ Debit Cards/ Smart Cards/Gift Cards/ Mobile Wallet/ Net Banking/ Mobil e Banking/ RTGS/ NEFT/ ECS/IMPS etc.

Adequate attention shall be paid by REs to any money-laundering and financing of terrorism

threats that may arise from new or developing technologies and it shall be ensured

that appropriate KYC procedures issued from time to time are duly applied before

introducing new products/services/technologies. Agents used for marketing of credit cards

shall also be subjected to due diligence and KYC measures.

8.11 Correspondent Banks:

Banks shall have a policy approved by their Boards, or by a committee headed by theChairman/CEO/MD to lay down parameters for approving correspondent bankingrelationships subject to the following conditions :-

(a) Sufficient information in relation to the nature of business of the bankincluding information on management, major business activities, level of AML/CFTcompliance, purpose of opening the account, identity of any third party entitiesthat will use the correspondent banking services, and regulatory/supervisoryframework in the bank’s home country shall be gathered.

(b) Post facto approval of the Board at its next meeting shall be obtained for the proposals

approved by the Committee.

(c) The responsibilities of each bank with whom correspondent banking

relationship is established shall be clearly documented.

(d) In the case of payable-through-accounts, the correspondent bank shall be

satisfied that the respondent bank has verified the identity of the customers


having direct access to the accounts and is undertaking on-going 'due

diligence' on them.

(e) The correspondent bank shall ensure that the respondent bank is able to

provide the relevant customer identification data immediately on request.

(f) Correspondent relationship shall not be entered into with a shell bank.

(g) It shall be ensured that the correspondent banks do not permit their accounts to be

used by shell banks.

(h) Banks shall be cautious with correspondent banks located in jurisdictions which

have strategic deficiencies or have not made sufficient progress in implementation

of FATF Recommendations.

(i) Banks shall ensure that respondent banks have KYC/AML policies and procedures in

place and apply enhanced 'due diligence' procedures for transactions carried

out through the correspondent accounts.

8.12 Wire transfer: Wire transfers are being used as an expeditious method for transferring funds

between bank accounts. Wire transfers include transactions occurring within the national

boundaries of a country or from one country to another. As wire transfers do not involve actual

movement of currency, they are considered as a rapid and secure method for transferring

value from one location to another. Bank shall ensure the following while effecting wire

transfer:-a) All cross-border wire transfers including transactions using credit or debit card shall be

accompanied by accurate and meaningful originator information such as name,

address and account number or a unique reference number, as prevalent in the

country concerned in the absence of account.

Exception: Interbank transfers and settlements where both the originator and

beneficiary are banks or financial institutions shall be exempt from the above

requirements.

b) Domestic wire transfers of rupees fifty thousand and above shall be

accompanied by originator information such as name, address and account number.

c) Customer Identification shall be made if a customer is intentionally

structuring wire transfer below rupees fifty thousand to avoid reporting or

monitoring. In case of non-cooperation from the customer, efforts shall be made to

establish his identity and STR shall be made to FIU-IND.

d) Complete originator information relating to qualifying wire transfers shall be preserved

at least for a period of five years by the ordering bank.

e) A bank processing as an intermediary element of a chain of wire transfers shall

ensure that all originator information accompanying a wire transfer is retained


with the transfer.

f) The receiving intermediary bank shall transfer full originator information

accompanying a cross-border wire transfer and preserve the same for at least

five years if the same cannot be sent with a related domestic wire transfer, due

to technical limitations.

g) All the information on the originator of wire transfers shall be immediately made

available to appropriate law enforcement and/or prosecutorial authorities on

receiving such requests.

h) Effective risk-based procedures to identify wire transfers lacking complete originator

information shall be in place at a beneficiary bank.

i. Beneficiary bank shall report transaction lacking complete originator

information to FIU-IND as a suspicious transaction.

ii. The beneficiary bank shall seek detailed information of the fund remitter with the

ordering bank and if the ordering bank fails to furnish information on the

remitter, the beneficiary shall consider restricting or terminating its business

relationship with the ordering bank.

8.13Issue and Payment of Demand Drafts, etc.:

Any remittance of funds by way of demand draft, mail/telegraphic transfer/NEFT/IMPS or

any other mode and issue of travellers’ cheques for value of rupees fifty thousand and above

shall be effected by debit to the customer’s account or against cheques and not against cash

payment. Further, the name of the purchaser shall be incorporated on the face of the demand

draft, pay order, banker’s cheque, etc., by the issuing bank. These instructions took effect for

such instruments issued on or after September 15, 2018.

8.14Quoting of PAN:Permanent account number (PAN) of customers shall be obtained and verified while

undertaking transactions as per the provisions of Income Tax Rule 114B applicable to

banks, as amended from time to time. Form 60 shall be obtained from persons who

do not have PAN.

Further, Reserve Bank of India vide Notification No. RBI/2016-17/183

DBR.AML.BC.48/14.01.01/ 2016-17 dated December 15, 2016 has advised to refer the

following provisions of the Master Direction on Know Your Customer (KYC) while reviewing the

compliance of the directions :-

(i) Section 8(d) and (e), wherein it is mentioned that concurrent/internal audit system of the

Regulated Entities (REs) has to verify the compliance with KYC/AML policies and

procedures and submit quarterly audit notes and compliance to the Audit Committee,


(ii) Section 23, wherein instructions on operation of ‘Small Accounts’ are given, and

(iii) Section 67, wherein it is advised that the Permanent account number (PAN) of

customers shall be obtained and verified while undertaking transactions as per the

provisions of Income Tax (I.T.) Rule 114B applicable to banks, as amended from time to

time. Form 60 shall be obtained from persons who do not have PAN. It is clarified that in

terms of I.T.Rule 114 B, transactions include opening of accounts with the Bank.

In order to ensure strict compliance with the above provisions, the Bank has been advised

by RBI as under-

(i) Bank should strictly comply with the extant instructions stipulated at Section 8(d) and (e)

of the Master Direction;

(ii) In respect of ‘Small Accounts’, the prescribed limits/conditions shall not be breached and

compliance therewith shall be strictly monitored. If any customer desires to have

operations beyond the stipulated limits, the same shall be allowed only after complying

with requirements for opening a normal account including completion of CDD/KYC

procedures detailed in Sections 16/17 and provisions of Section 67 of the Master

Direction which include quoting of PAN/Form 60 while opening an account with the bank.

If any account is rendered ineligible for being classified as a small account due to

credits/balance in the account exceeding the permissible limits, withdrawals may be

allowed within the limit prescribed for small accounts where the limits thereof have not

been breached.

(iii) BSBD Accounts (PMJDY accounts are akin to BSBDAs), which are not KYC compliant

accounts are to be treated as ‘Small Accounts’ and are subjected to the limitations

applicable to such accounts. Hence, for allowing normal operations in such accounts,

the procedures explained at (ii) above are to be complied with. If any account is

rendered ineligible for being classified as a small account due to credits/balance in the

account exceeding the permissible limits, withdrawals may be allowed within the limit

prescribed for small accounts where the limits thereof havenot been breached.

(iv) In respect of KYC compliant accounts where the required CDD procedure has been

complied with, branches/offices shall ensure compliance regarding quoting of

PAN/obtaining of Form 60 for all transactions in terms of I.T.Rule 114 B which includes

opening of accounts with the bank. No debit transaction, transfer or otherwise shallbe allowed in accounts which do not comply with the above mentionedrequirements. To begin with, this rule shall be strictly applied in accounts whereboth the thresholds listed below are reached:-

a) balance of rupees five lakh or more; and

b) the total deposits (including credits by electronic or other means) madeafter November 9, 2016, exceed rupees two lakh.


It is clarified that provisions of Section 67 of the Master Direction are subject to the

exemptions granted to Government, Consular office etc., as provided in Income Tax

Rule 114B.

8.15Selling Third party products: Bank acting as agents while selling third party products

as per regulations in force from time to time shall comply with the following aspects

for the purpose of these directions :-(a) the identity and address of the walk-in customer shall be verified for

transactions above rupees fifty thousand as required under Section 13(e) of this

Directions.

(b) transaction details of sale of third party products and related records shall be

maintained as prescribed in Chapter VII Section 46.

(c) AML software capable of capturing, generating and analysing alerts for the

purpose of filing CTR/STR in respect of transactions relating to third party

products with customers including walk-in customers shall be available.

(d) transactions involving rupees fifty thousand and above shall be undertaken only

by –

debit to customers’ account or against cheques; and

obtaining and verifying the PAN given by the account based as well as walk-in

customers.

(e) Instruction at ‘d’ above shall also apply to sale of Bank’s own products, payment of

dues of credit cards/sale and reloading of prepaid/travel cards and any other

product for rupees fifty thousand and above.

8.16 At-par cheque facility availed by co-operative banks:(a) The ‘at par’ cheque facility offered by commercial banks to co-operative banks shall be

monitored and such arrangements be reviewed to assess the risks including credit

risk and reputational risk arising there from.

(b) The right to verify the records maintained by the customer cooperative banks/ societies

for compliance with the extant instructions on KYC and AML under such

arrangements shall be retained by banks.

(c) Cooperative Banks shall:

i. ensure that the ‘at par’ cheque facility is utilized only:

a. for their own use,

b. for their account-holders who are KYC complaint, provided that all

transactions of rupees fifty thousand or more are strictly by debit to the


customers’ accounts,

c. for walk-in customers against cash for less than rupees fifty thousand

per individual.

ii. maintain the following:

a. records pertaining to issuance of ‘at par’ cheques covering, inter alia,

applicant’s name and account number, beneficiary’s details and date of

issuance of the ‘at par’ cheque,

b. sufficient balances/drawing arrangements with the commercial bank

extending such facility for purpose of honouring such instruments.

iii. ensure that ‘At par’ cheques issued are crossed ‘account payee’

irrespective of the amount involved.

8.17Issuance of Prepaid Payment Instruments (PPIs):PPI issuers shall ensure that the instructions issued by Department of Payment and

Settlement System of Reserve Bank of India through their Master Direction are strictly

adhered to.

8.18Hiring of Employees and Employee training:

a) Adequate screening mechanism as an integral part of their personnel

recruitment/hiring process shall be put in place.

b) On-going employee training programme shall be put in place so that the members of

staff are adequately trained in AML/CFT policy. The focus of the training shall be

different for frontline staff, compliance staff and staff dealing with new customers.

The front desk staff shall be specially trained to handle issues arising from lack of

customer education. Proper staffing of the audit function with persons adequately trained

and well-versed in AML/CFT policies of the RE, regulation and related issues shall be

ensured.

8.19 Adherence to Know Your Customer (KYC) guidelines by BFCs/RNBCs and personsauthorised by NBFCs/RNBCs including brokers/agents etc.:

(a) Persons authorised by NBFCs/ RNBCs for collecting the deposits and their

brokers/agents or the like, shall be fully compliant with the KYC guidelines

applicable to NBFCs/RNBCs.

(b) All information shall be made available to the Reserve Bank of India to verify the

compliance with the KYC guidelines and accept full consequences of any violation by

the persons authorised by NBFCs/RNBCs including brokers/agents etc. who are

operating on their behalf.

(c) The books of accounts of persons authorised by NBFCs/RNBCs including

brokers/agents or the like, so far as they relate to brokerage functions of the company,


shall be made available for audit and inspection whenever required.

CHAPTER - IXGeneral Guidelines

Our bank has established an effective KYC programme by approving appropriate systems and

procedures. It covers proper management oversight, systems and controls, segregation of duties,

training and other related matters. Responsibility is explicitly allocated within the bank for ensuring

that the bank's policies and procedures are implemented effectively. Bank has devised procedures

for creating risk profiles of existing and new customers (to be visible with hotkey “F9’’), assess

risk in dealing with various countries, geographical areas and also the risk of various products,

services, transactions, delivery channels, etc. Bank’s policies are in place for effectively managing

and mitigating risks adopting a risk-based approach.

Internal audit and compliance functions have an important role in evaluating and ensuring adherence

to the KYC policies and procedures. As a general rule, the compliance function should provide an

independent evaluation of the bank’s own policies and procedures.

Concurrent/Internal Auditors should specifically check and verify the application of KYC procedures

at the branches and comment on the lapses observed in this regard. The compliance in this regard is

put up before the Audit Committee of the Board on quarterly intervals.

9.1 Roles & responsibilities of bank’s officers & staff: Bank officers/employees will conduct

themselves in accordance with the highest ethical standards and in accordance with the extant

regulatory requirements and laws. They should not knowingly provide advice or other

assistance to individuals who are indulging in laundering activities.

Bank officers/employees who suspect any sort of money-laundering activities in course of

banking business should refer the matter to appropriate authority immediately.

Bank officers/employees should not indulge in unnecessary dialogue or provide unwanted

guidance to the customers / intended customers to avoid dispute of any kind in future.

Failure to adhere to KYC / Money Laundering policies / procedures may subject bank

employees to appropriate disciplinary action or such penal actions and penalties that may be

stipulated under any law or regulatory directive.

In general terms there are FIVE golden rules to be followed:

1. You MUST NOT assist anyone whom you know or suspect to be laundering money that has

been derived from any crime.

2. You MUST report any transaction which you suspect might be related to drugs, terrorism or

other serious crimes.


3. You MUST NOT reveal in any way to anyone that a customer is being investigated or that

they have been the subject of a report except to your Branch Manager and controlling

authorities.

4. You MUST NOT go overboard in seeking information for KYC compliance and thereby

invading into client’s privacy, to avoid intrusion.

5. You MUST NOT divulge customer information for cross selling or any other like purposes.

9.2 Duties/ responsibilities of officers/staff: The following duties/responsibilities arising to the

officers/ staff out of the KYC guidelines.

Staff/Officer/Branch Manager vested with the authority to open new accounts

To interview the potential customers intending to open account.

To verify the introductory reference/ customer profile.

To arrive at threshold limit for each account and to exercise due diligence in identifying

suspicious transactions.

To ensure not to open account in the names of terrorist/banned organisations.

To adhere with the provisions of Foreign Contribution Regulation Act (FCRA), 1976.

To comply with the guidelines issued by the Bank from time to time in respect of opening

and conduct of account.

Branch Manager

To scrutinize and satisfy himself the information furnished in the Account opening form/

customer Profile/ threshold limit are in strict compliance with KYC Guidelines before

authorizing Opening of account.

To ensure that Customer Due Diligence (CDD)/Enhanced Due Diligence (EDD) has been

carried out while opening of account.

To ensure reporting of STRs based on off-line alert parameters in deserving cases.

Zonal Office/FGM Office/Head Office

Prompt reporting of information regarding suspicious transactions to concerned law enforcing

Authority in consultation with Head Office.

Nodal Officers

Every FGM Office and Zonal office will identify and nominate a Nodal Officer (not less than the

rank of a Chief Manager) for implementation of KYC norms & AML measures including

monitoring of suspicious transaction. The Nodal Officer so identified should have sufficient

experience in operational banking and working computer knowledge.


The indicative roles and responsibilities of the Nodal Officers are appended:-

To co-ordinate all operational issues related to AML & KYC.

To keep functioning as a ‘liaison officer’ in between the branches and the controlling

offices, and to ensure implementation of KYC norms & AML measures

To keep field functionaries apprise of AML & KYC matters like off-line alert monitoring for

picking up suspicious transactions for reporting under STR, proper marking of each

account with occupation and activity code.

To arrange for submission of KYC particulars as and when demanded by higher office.

To ensure that no account exists with junk/ invalid PAN.

To verify all cash transactions of Rs.1.00 crore and above occurred during a month

(furnished by Head Office regularly) to ascertain genuineness of transactions regarding

business activities of the customers and decide as to whether any suspicious transaction

report needs to be submitted for these accounts.

To follow-up concurrent audit report (Annexure-SR2) for 100% rectification of KYC

irregularities to ensure no carryover of same account in the next concurrent audit report.

To monitor newly opened account for at least 2 quarters giving emphasis in high volume

& high value transactions.

Any other issues related to AML & KYC norms.

Concurrent auditors wherever posted

To verify and record comments on the Effectiveness of measures taken by Branches/level of

implementation of KYC guidelines and to point out the shortcomings.

Inspecting Officer of the Bank

The Inspecting Officers while inspecting the branches should check the status of compliance on

KYC & AML Norms and arrange for rectification of deficiencies/shortcomings, if any.

9.3 Evaluation of KYC Guidelines by Internal Audit and Inspection System:

The Concurrent Auditor of the branches and Inspecting Officials while conducting audit /

inspection of the branches / offices should verify compliance of the KYC guidelines and

prevention of money laundering at branches and report the cases of deviations, if any, in the

report.

9.4 Training to officers/ staff: Bank is having an ongoing employee training programme so that

the members of officers/ staff are adequately trained in AML/CFT policy. Since training system

plays a crucial role in manifestation of policy guidelines, training inputs on implementation of

KYC policies should form an integral part of structured training modules/ syllabus so that


officers/ staff are adequately trained for their role and responsibilities as appropriate to their

hierarchical level.

The training programme should have different focus on frontline officials, compliance officials

and officials dealing with new customers. The front desk official needs to be specially trained to

handle issues arising from lack of customer education. All concerned officers/ staff members

should fully understand the rationale behind the KYC policies and implement them consistently.

9.5 Confidentiality of customer information: Information collected from customers for the

purpose of opening of account should be treated as confidential and details thereof should not

be divulged for the purpose of cross selling, etc. Information sought from the customer should

be relevant to the perceived risk and be nonintrusive.

Branches/ offices should, therefore, ensure that information sought from the customer isrelevant to the perceived risk, is not intrusive, and is in conformity with the guidelinesissued in this regard. Any other information that is sought from the customer should be called

for separately only after the account has been opened, with his/her express consent and in a

different form, distinctly separate from the application form. It should be indicated clearly to the

customer that providing such information is optional.

9.6 Avoiding hardship to customers: While issuing operational instructions to branches, it should

be kept in mind that the spirit of the instructions issued by the Reserve Bank/ other regulatory

authorities so as to avoid undue hardships to individuals who are otherwise classified as low risk

customers.

9.7 Sensitizing the customers: Implementation of AML/CFT policy may require certain information

from customers of a personal nature or which had not been called for earlier. The purpose of

collecting such information could be questioned by the customer and may often lead to

avoidable complaints and litigation. Branches/ offices should, therefore, get themselves

prepared with specific literature/pamphlets, etc., to educate the customer regarding the

objectives of the AML/CFT requirements for which their cooperation is solicited. The front desk

officials should be specially trained to handle such situations while dealing with the customers.

9.8 KYC for the Existing Accounts: While the revised KYC guidelines will apply to all new

customers, the same will also be applied to all existing customer accounts on the basis of

materiality and risk. Transactions in existing accounts should be continuously monitored and

any unusual pattern in the operation of the account should be reviewed on customer due

diligence measures.

Term/ recurring deposit accounts or accounts of similar nature will be treated as new accounts

at the time of renewal and revised KYC procedures should be applied meticulously.

Where the branches were unable to apply KYC measures due to non-furnishing of information /

non-cooperation by the customers, their accounts will remain blocked / frozen after issuing due

notice to the customers explaining the reasons for taking such a decision and when such


customers approach bank for transaction etc., then KYC norms be complied with. However,

prior approval must be taken from zonal office before closure of the account.

9.9 Applicability to Branches and Subsidiaries outside India: The revised KYC guidelines shall

also apply to the branches and majority owned subsidiaries located abroad, especially, in

countries, which do not or insufficiently apply the FATF Recommendations, to the extent local

laws in the host country permit. When local applicable laws and regulations prohibit

implementation of these guidelines, the same should be brought to the notice of Head Office

and in turn to Reserve Bank of India. In case there is a variance in KYC/AML standards

prescribed by the Reserve Bank and the host country regulators, branches/overseas

subsidiaries of the bank are required to adopt the more stringent regulation of the two.

9.10Technology requirements: The AML software in use at banks/FIs needs to be comprehensive

and robust enough to capture all cash and other transactions, including those relating to walk-in

customers, sale of gold/silver/platinum, payment of dues of credit cards/reloading of

prepaid/travel cards, third party products, and transactions involving internal accounts of the

bank.

9.11 Penalty for Non-Adherence to KYC norms: Amendment has been made on Section 13(2) of

PMLA 2002 vide Govt. of India Notification dated 04.01.2013, which confers power to the

Director, FIU-IND on the following lines:-

“If the Director, in course of any inquiry, finds that a reporting entity or its designated director on

the Board or any of its employees has failed to comply with the obligations under this Chapter,

then, without prejudice to any other action that may be taken under any other provisions of this

Act, he may –

a) issue a warning in writing; or

b) direct such reporting entity or its designated director on the Board or any of its employees,

to comply with specific instructions; or

c) direct such reporting entity or its designated director on the Board or any of its employees,

to send reports at such interval as may be prescribed on the measures it is taking; or

d) by an order, impose a monetary penalty on such reporting entity or its designated director

on the Board or any of its employees, which shall not be less than ten thousand rupees but

may extend to one lakh rupees for each failure.”

Under the circumstances, any violation of essential safeguards and laid down procedures in

opening and operations of deposit accounts and non-compliance of KYC norms by the branch

staff / officials and for lapses or connivance in perpetrating irregularities/fraudulent operations in

accounts would attract punitive action against them.

Zonal Heads while visiting the branches should invariably check as to whether the KYC

guidelines are strictly followed by the Branches. In case of deviation, all requisite steps should

be taken to rectify the shortcomings under close monitoring.


Appendix-IIndicative list of High/Medium Risk Customers

Characteristics of High Risk Customers:

1. Individuals and entities listed in various United Nations Security CouncilResolutions (UNSCRs) such as UN 1267 etc.

2. Individuals or entities listed in the schedule to the order under section 51A of theUnlawful Activities (Prevention) Act, 1967 relating to the purposes of prevention of, and forcoping with terrorist activities.

3. Individuals or entities in watch lists issued by Interpol and other similar internationalorganizations.

4. Customers with dubious reputation as per public information available orcommercially available watch lists.

5. Individuals and entities specifically identified by regulators, FIU and other competentauthorities as high risk.

6. Customers conducting their business relationship or transactions in unusual circumstancessuch as significant and unexplained geographic distance between the institution andthe location of the customer, frequent and unexplained movement of accounts todifferent institutions, frequent and unexplained movement of funds betweeninstitutions in various geographic locations etc.

7. Customers based in high risk countries / jurisdictions or locations

8. Politically exposed persons (PEPs) of foreign origin, customers who are closerelatives of

PEPs and accounts of which a PEP is the ultimate beneficial owner.

9. Non-resident customers and foreign nationals.

10. Embassies/consulates

11. Off-shore (foreign) corporation/business

12. Non face-to-face customers

13. High net worth individuals

14. Firms with “Sleeping partners”

15. Companies having close family shareholding or beneficial ownership

16. Complex business ownership structures, which can make it easier to concealunderlying beneficiaries, where there is no legitimate commercial rationale.


17. Shell companies which have no physical presence in the country in which it is incorporated.The existence simply of a local agent or low level staff does not constitute physical presence.

18. Investment Management/ Money Management Company/ Personal Investment Company

19. Accounts for “gatekeepers” such as accountants, lawyers or other professionals fortheir clients where the identity of the underlying client is not disclosed to the financialinstitution.

20. Client Accounts managed by professional service providers such as law firms,accountants, agents, brokers, fund managers, trustees, custodians etc.

21. Trusts, charities, NGOs/Non- Profit Organisations (NPOs) (Especially those operating on a“cross-border” basis) unregulated clubs and organizations receiving donations(excluding NPOs/NGOs promoted by United Nations or its agencies)

22. Money Service Business: including seller of : Money Orders/ Travelers’ Checks/Money

Transmission/ Check Cashing/ Currency Dealing or Exchange

23. Business accepting third party cheques (except Super markets or retail stores thataccept payroll cheques/ cash payroll cheques)

24. Gambling/ Gaming including “Junket Operators” arranging gambling tours.

25. Dealers in high value or precious goods (e.g. Jewel, gem and precious metals dealers, artand antique dealers and auction houses, estate agents and real estate brokers)

26. Customers engaged in business which is associated with higher levels of corruption(e.g. arms manufacturers, dealers and intermediaries.)

27. Customers engaged in industries that might relate to nuclear proliferation activitiesor explosives.

28. Customers that may appear to be Multi level marketing companies etc.

Characteristics of Medium Risk Customers

1. Non-Bank Financial Institution

2. Stock brokerage

3. Import/Export

4. Gas Station

5. Car/Boat/ Plane dealership

6. Electronics (wholesale)

7. Travel Agency

8. Used Car sales


9. Telemarketers

10. Providers of telecommunications service, internet café, IDD call service, phone cards,phone center

11. Dot-com company or internet business

12. Pawn shops

13. Auctioneers

14. Cash intensive business such as restaurants, retail shops, parking garages, fast foodstores, movie theaters etc.

15. Sole Practitioners or Law Firms (small, little known)

16. Notaries (small, little known)

17. Secretarial Firms (small, little known)

18. Accountants (small, little known firms)

19. Venture Capital companies

Indicative List of High/Medium risk Products & Services

1. Electronic funds payment services such as Electronic cash (e.g. stored value and payrollcards) Fund transfers (domestic and international) etc.

2. Electronic banking

3. Private banking (domestic and international)

4. Trust and asset management services

5. Monetary instruments such as Travelers’ Cheque

6. Foreign Correspondent accounts

7. Trade Finance (such as letter of credit)

8. Special use of concentration accounts

9. Lending activities, particularly loans secured by cash collateral and marketable securities

10. Transactions undertaken for non-account holders (occasional customrs)

11. Provision of safe custody and safety deposit boxed

12. Currency Exchange transactions

13. Project financing of sensitive industries in high risk jurisdictions

14. Trade Finance services and transactions involving high risk jurisdictions

15. Services offering anonymity or involving third parties

16. Services involving banknote and precious metal trading and delivery


17. Services offering cash, monetary or bearer instruments; cross-border transactions, etc.

Indicative List of High/Medium risk Geographies Countries/Jurisdictions

1. Countries subject to sanctions, embargoes or similar measures in the United NationsSecurity Council Resolutions (UNSCR)

2. Jurisdictions identified in FATF public statement as having substantial money launderingand terrorist financing (ML/TF) risks (www.fatf-gafi.org)

3. Jurisdictions identified in FATF public statement with strategic AML/CFTdeficiencies (www.fatf-gafi.org)

4. Tax havens or countries that are known for highly secretive banking and corporatelaw practices

5. Counties identified by credible sources as lacking appropriate AML/CFT laws, regulationsand other measures.

6. Countries identified by credible sources as providing funding or support for terroristactivities that have designated terrorist organizations operating within them

7. Countries identified by credible sources as having significant levels of criminal activity

8. Countries identifies by the bank as high risk because of its prior experiences,transaction history or other factors (e.g. legal considerations, or allegations of officialcorruption)

Locations

1. Locations within the country known as high risk for terrorist incidents or terroristfinancing activities ( e.g. sensitive locations/ cities and affected districts)

2. Locations identified by credible sources as having significant levels of criminal,terrorist, terrorist financing activity.

3. Locations identified by the bank as high risk because of its prior experiences,

transaction history or other factors.


Appendix- IIKYC documents for eligible FPIs under PIS

FPI TypeDocument Type Category I Category II Category III

Entity Level

ConstitutiveDocuments(Memorandu mand Articlesof Association,Certificate ofIncorporationetc.)

Mandatory Mandatory Mandatory

Proof ofAddress

Mandatory(Power of

Attorney {PoA}mentioning the

address isacceptable asaddress proof)

Mandatory(Power ofAttorney

mentioning theaddress is

acceptable asaddress proof)

Mandatory other thanPower of Attorney

PAN 33 Mandatory Mandatory Mandatory

FinancialData

Exempted * Exempted * Mandatory

SEBIRegistrationCertificate

Mandatory Mandatory Mandatory

BoardResolution@@

Exempted * Mandatory Mandatory

SeniorManagement(WholeTimeDirectors/Partners/Trustees/etc.)

List Mandatory Mandatory Mandatory

Proof ofIdentity

Exempted * Exempted * Entity declares* on letterhead full name, nationality,

date of birth or submitsphoto identity proof

Proof ofAddress

Exempted * Exempted * Declaration on LetterHead *

Photographs Exempted Exempted Exempted *


AuthorizedSignatories

List andSignatures

Mandatory – listof GlobalCustodian

signatories can begiven in case ofPoA to Global

Custodian

Mandatory - list ofGlobal Custodiansignatories can be

given in case ofPoA to Global

Custodian

Mandatory

Proof ofIdentity


Proof ofAddress



UltimateBeneficialOwner (UBO)

List Exempted * Mandatory (candeclare “no

UBO over 25%”)

Mandatory

Proof ofIdentity


Proof ofAddress



* Not required while opening the bank account. However, FPIs concerned may submit anundertaking that upon demand by Regulators/Law Enforcement Agencies the relative document/s wouldbe submitted to the bank.@@ FPIs from certain jurisdictions where the practice of passing Board Resolution for the purpose ofopening bank accounts etc. is not in vogue, may submit ‘Power of Attorney granted to GlobalCustodian/Local Custodian in lieu of Board Resolution’

Category Eligible Foreign InvestorsI. Government and Government related foreign investors

such as Foreign Central Banks, Governmental Agencies, Sovereign WealthFunds, International/ Multilateral Organizations/ Agencies.


II. a) Appropriately regulated broad based funds such asMutual Funds, Investment Trusts, Insurance/Reinsurance Companies, Other Broad Based Funds etc.

b) Appropriately regulated entities such as Banks, Asset Management Companies,Investment Managers/ Advisors, Portfolio Managers etc.

c) Broad based funds whose investment manager is appropriately regulated.d) University Funds and Pension Funds.e) University related Endowments already registered with

SEBI as FII/Sub Account.

III. All other eligible foreign investors investing in India underPIS route not eligible under Category I and II such as Endowments, CharitableSocieties/Trust, Foundations, Corporate Bodies, Trusts, Individuals, Family Offices, etc.