There has been an amendment in the master directions of KYC. RBI has also issued a circular in this regard.
KYC New Rules: Reserve Bank of India (RBI) has made several changes in the rules related to “Know Your Customer” i.e. KYC. The central bank has also issued a circular in this regard. The new rules have come into effect with immediate effect. This step has been taken to prevent money laundering. Master instructions have been amended.
Through KYC, financial organizations check and verify the identity of their customers. They also ensure whether the customer is involved in illegal activities like money laundering, terrorist financing etc. This also ensures the safety of both customers and the institution.
Changes in master instructions on KYC
In the circular, RBI said, “Whenever the regulated institution receives extra or updated information from a customer, the regulated institution will provide the updated information to CKYCR within 7 days or within the period notified by the Central Government, which will update the KYC record of the existing customer in CKYR. CKYCR will then electronically inform all reporting entities that have dealt with the respective customer about the update of the KYC record of the respective customer. Once the record is updated, CKYCR will inform the RI about it. The RI will then update the KYC record.”
These rules were also amended (RBI Circular On KYC)
Paragraph 10 Customer Acceptance Policy has been changed. IRs will implement the CDD process at the UCIC level. If an existing KYC compliant customer of an RI wants to open another account or wants to obtain another product or service from the same RI, then there will be no need for a new CDD exercise regarding the identity of the customer.
The “clarification” that “high-risk accounts should be monitored more closely” applies to sub-paragraphs A and B of paragraph 37. Now the “clarification” has been replaced.
The phrases “updated” have been added in clauses (ii) and (iv) of sub-paragraph (A) of paragraph 38 to provide better clarity. Also, it will apply in clauses (iii) and (iv) of sub-paragraph (C).
After the change in the master directions, the provisions will now be read as “paragraphs” instead of “sections”.
Changes have also been made in KYC reporting. The designation of the Central Nodal Officer for UPA has been changed from “Additional Secretary” to “Joint Secretary”.
