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TMI BlogKnow Your Customer (KYC) norms / Anti-Money Laundering (AML) standards/Combating of Financing of Terrorism (CFT)/Obligation of banks under PMLA, 2002X X X X Extracts X X X X X X X X Extracts X X X X ..... o the same. ANNEXURE Sr. No. Particulars Existing Instructions After amendment to PML Rules Change in Instructions of the RBI 1 Definition of Designated Director - Rule 2 (ba) New definition added in the PML Rules. Designated Director means a person designated by the reporting entity to ensure overall compliance with 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t; (ii) deposits, 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; (iii) the use of a safety deposit box or any other form of safe deposit; (iv) entering into any fiduciary relationship; (v) any payment made or received in whole or in part of any contractual or other legal obligation; (vi) any payment made in respect of playing games of chance for cash or kind including such activities associated with casino; and (vii) establishing or creating a legal person or legal arrangement.' Banks are required to take note of these changes. 4 Rule 14(i) and Proviso to Rule 2(d) New instructions Rule 14(i) provides that the 'Regulator' may prescribe enhanced or simplified measures to verify the identity of the customers taking into consideration the type of customer, business relationship, nature and value of transactions based on the overall money laundering and terrorist financing risks involved A proviso has been added to the defini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 5 Rule 5 (1)(a) reads as: Every reporting entity shall maintain information in respect of transactions with its client referred to in rule 3 *[in hard and soft copies] in accordance with the procedure and manner as may be specified by its regulator from time to time. Vide amendments to rules notified on February 12, 2010 words 'hard and soft copies' were removed. The rule provides that the regulator has to specify the procedure and manner of maintaining records. It has been decided that banks may maintain records of the identity of clients, and records in respect of transactions with its client referred to in rule 3 in hard or soft format. 8 Rule 10(2) (2) The records of the identity of clients shall be maintained in hard and soft copies in a manner as may be specified by its regulators from time to time. (2) The records of the identity of clients shall be maintained in a manner as may be specified by its regulators from time to time. Regulator has to specify the procedure and manner of maintaining the records of the identity of clients. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly, it is has been decided that where a customer categorised as low risk expresses inability to complete the documentation requirements on account of any reason that the bank considers to be genuine, and where it is essential not to interrupt the normal conduct of business, the bank may complete the verification of identity within a period of six months from the date of establishment of the relationship. 13 Rule 9(2) Reliance on third party due diligence No existing instructions on reliance on third party due diligence For the purpose of identifying and verifying the identity of customers at the time of commencement of an account-based relationship, reporting entity may rely on a third party; subject to the conditions that- (a) the reporting entity immediately obtains necessary information of such client due diligence carried out by the third party; (b) the reporting entity takes adequate steps to satisfy itself that copies of identification data and other relevant documentation relating to the client due diligence requirements will be made available from the third party upon re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B. Where the client is a trust, the banking company and financial institution, as the case may be, shall identify the beneficial owners of the client and take reasonable measures to verify the identity of such persons, through the identity of the settler of the trust, the trustee, the protector, 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. C. Where the client or the owner of the controlling interest is a company listed on a stock exchange, or is a majority- owned subsidiary of such a company, it is not necessary to identify and verify the identity of any shareholder or beneficial owner of such companies. (a) where the client 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 a controlling ownership interest or who exercises control through other means. Explanation.- For the purpose of this sub-clause- 1. Controlling ownership interest means ownership of or entitlement to more than twenty-five percent of shares or capital or p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d one proof of address such as (i) telephone bill, (ii) Bank Account Statement, (iii) letter from any recognized public authority, (iv) electricity bill, (v) ration card, (vi) letter from employer (subject to satisfaction of the bank), (vii) a rent agreement indicating the address of the customer duly registered with State Government of similar registration authority. Any one document from the Officially Valid Document is only allowed. They are: the passport, the driving license, the Permanent Account Number (PAN) Card, the Voter's Identity Card issued by Election Commission of India, job card issued by NREGA duly signed by an officer of the State Government, the letter issued by the Unique Identification Authority of India containing details of name, address and Aadhaar number. It is implied that proof of address also follows from the above documents only. In view of the change in the definition of 'Officially Valid Documents,' henceforth, only the documents mentioned in the revised PML Rules would be accepted for opening accounts of individuals. Banks would not have the discretion to accept any other document for this purpose. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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