The Reserve Bank of India (RBI) announced revisions to its Master Directions on Know Your Customer (KYC) on November 6, 2024, with the new provisions coming into effect immediately. KYC plays a vital role in preventing illicit activities such as money laundering and terrorist financing, while also ensuring the protection of both the organization and the customer.
The Reserve Bank of India (RBI) announced amendments to its Master Directions on Know Your Customer (KYC) on November 6, 2024, with the revised provisions coming into effect immediately.
These updates align KYC regulations with recent changes in anti-money laundering and counter-terrorism laws, specifically the Prevention of Money Laundering (Maintenance of Records) Rules, 2005, and instructions from the Government of India on implementing Section 51A of the Unlawful Activities (Prevention) Act (UAPA), 1967.
The changes include several key provisions:
Customer Acceptance Policy (Paragraph 10): RBI has mandated that regulated entities (REs) apply the Customer Due Diligence (CDD) process at the level of the Unique Customer Identification Code (UCIC). This means existing KYC-compliant customers do not need fresh CDD when availing new services within the same RE.
Monitoring of High-Risk Accounts (Paragraph 37): The explanatory note specifying that “high-risk accounts require intensified monitoring” now applies explicitly to specified sub-paragraphs within Paragraph 37.
Periodic KYC Updation (Paragraph 38): To clarify periodic compliance, the term “updation” is added alongside “periodic updation,” specifying this requirement in certain clauses to ensure regular updates on customer information.
Central KYC Records Registry (CKYCR) (Paragraph 56): REs are now required to upload or update KYC records of individual and Legal Entity (LE) accounts incrementally in CKYCR during periodic updates or when new information is received. REs must notify CKYCR of KYC updates within seven days, and CKYCR will electronically inform all associated REs of any updates.
KYC Identifier Retrieval (Paragraph 56j): For establishing account relationships or identity verification, REs can use the KYC Identifier from CKYCR to access KYC records online, avoiding repeated document submissions unless customer information changes, or if downloaded records are incomplete, expired, or deemed necessary for verification.
Designation Changes (Annex II): The designation of the Central Nodal Officer for the Unlawful Activities (Prevention) Act, 1967 (UAPA) implementation has been updated from “Additional Secretary” to “Joint Secretary.”
Additionally, the Master Direction now references “paragraphs” instead of “sections” for internal consistency.
These amendments enhance KYC processes to prevent money laundering and terrorism financing while easing compliance for KYC-compliant customers.
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