In a move aimed at bolstering customer verification procedures, the Reserve Bank of India (RBI) has issued fresh Know Your Customer (KYC) guidelines for banks.
These guidelines call for a risk-based approach in KYC updates for both banks and non-banking financial companies (NBFCs).
Noteworthy Amendments in Master Direction
The central bank has made significant changes to its ‘Master’ guidelines concerning KYC.
Under the revised directives,
entities including banks, NBFCs, and other organizations under the purview of RBI are now obligated to conduct due diligence on their customers according to prescribed procedures.
Why the Change?
The RBI’s decision to amend the KYC guidelines is in response to the government’s fresh directives relating to Anti-Money Laundering Rules, Unlawful Activities (Prevention) Act (UAPA), and Weapons of Mass Destruction and their Delivery Systems (Prohibition of Unlawful Activities) Act.
Recommendations of FATF Incorporated
Furthermore, the Reserve Bank of India has incorporated some changes in line with recommendations from the Financial Action Task Force (FATF).
The latest master instructions outline the shift toward a risk-based approach for periodic KYC updates,
requiring entities under the central bank’s purview to adopt this approach.
This aims to ensure that information collected during customer investigations is retained, particularly in cases of high risk.
Stay informed about these updated guidelines to ensure compliance and security in your financial transactions.
