KNOW YOUR CUSTOMER (KYC) 1. KYC guidelines have been issued by RBI u/s 35-A of B R Act.

In addition, the banks also have to comply with the provisions of Prevention of Money Laundering Act 2002. 2. OBJECTIVE: Preventing use of banks by criminals for money laundering purposes. 3. PRECAUTIONS: Banks to take precautions before opening and after opening of accounts. 4. Before opening the account, the banks are required to do proper verification through introduction, proof of identity and proof of address of the customers. 5. Introduction can be taken from existing customer with 6 months' satisfactorily conducted account or from persons known to the bank. 6. Documents for customer identity include passport, PAN card, Voter I-Card, driving license, Identity card to bank's satisfaction, letter from recognized public authority. 7. Documents for proof of address include telephone bill, electricity bill (even in the name of relative with whom living), bank a/c statement, letter from recognized public authority, ration card, letter from employer. 8. Relaxation for small depositors: Simplified criteria of identification and introduction to be followed where the balance shall not exceed Rs.50000 and total credit in a year does not exceed Rs.1 lac. In these cases the certification of address and photograph by the introducer is enough. However, if the amount of total credit exceed Rs.80000 or balance exceeds Rs.40000, notice to be sent to the customer. 9. Monitoring of transactions : Transactions are to be monitored on the basis of customer risk categorisation. The risk categories can be (1) Low risk customers (2) Medium risk customers (3) High risk customers. 10. Risk review of customers : Risk review should be done periodically not less than once in 6 months. Change of risk category can be considered in not less than 5 years in case of low risk customers and not less 2 years in case of medium / high risk customers. 11. Record of transactions: Banks to keep a record of cash transactions of Rs.10 lac and above. 12. Reporting of transactions : Banks to send report of transactions to Financial Intelligence Unit - India. 13. Cash transaction report (CTR) covering cash transactions of above Rs.10 lac, to be sent on a monthly basis, by 15th of the next month. Individual transactions below Rs.50000 not to be reported. 14. Suspicious transaction report (STR) to be submitted within 7 working days of occurrences in case of suspicion about a chain of transactions of small amount. 15. Preservation of records: Banks to preserve records of these transactions for a period of min 10 years from date of transaction. Record of documents to be kept for min 10 years from date of termination of relationship. 16. Remittances in cash : Banks to issue TCs, DDs, MTs and TTs for Rs.50000 and above only by debit to customers' account and not by accepting cash. 17. Principal Officer: Banks are to appoint a Sr. Mgmt. Officer, to be designated as Principal Officer responsible for monitoring and reporting.