FCC RegUpdate

Reserve Bank of India (“RBI”) introduced certain amendments to the Master Direction – Know Your Customer (KYC) Direction, 2016 (“KYC Directions”) with an objective to align the KYC Directions with the recent changes carried out to the Prevention of Money Laundering (Maintenance of Records) Rules, 2005 (“PMLA Rules”) under the Prevention of Money Laundering Act, 2002 (“PMLA”), the Government Order and instructions titled “Procedure for Implementation of Section 12A of the Weapons of Mass Destruction (WMD) and their Delivery Systems (Prohibition of Unlawful Activities) Act, 2005 (WMD Act, 2005)” and the FATF Recommendations.

As per the amendment, the percentage of controlling ownership for determination of the beneficial owner for both company and trust have been lowered to 10% from the erstwhile thresholds of 25% and 15%, respectively. The definitions of Politically Exposed Persons, and Non-profit organization (“NPO”) have been aligned with the PMLA Rules. Customer Due Diligence through CKYCR registry, Cloud deployment for Video based Customer Identification Process (V-CIP), Enhanced due diligence for non-face to face customer accounts are a few other important updates part of the amendment.

The amendment also require banks to obtain additional information from customers for wire transfers, including the name and address of the beneficiary and the purpose of the transaction. Banks are also required to monitor transactions and report any suspicious activity to the Financial Intelligence Unit (FIU).