Know Your Customer (KYC) Direction, 2016
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) like Banks, etc. are required to follow certain customer identification procedure (KYC) while undertaking a transaction either by establishing an account based relationship or otherwise and monitor their transactions. Accordingly, RBI has issued Master Directions for KYC compliance by all banks, etc.
There shall be a Know Your Customer (KYC) policy duly approved by the Board of Directors of REs or any committee of the Board to which power has been delegated. The KYC policy shall include following four key elements:
a) Customer Acceptance Policy;
b) Risk Management;
c) Customer Identification Procedures (CIP); and
d) Monitoring of Transactions