Tag Archives: KYC

frauds – KYC updation

https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=52216

The Reserve Bank has been receiving complaints/reports about customers falling prey to frauds being perpetrated in the name of KYC updation. The usual modus operandi in such cases include receipt of unsolicited communication, such as, calls, SMSs, emails, etc., by customer urging him/her to share certain personal details, account / login details/ card information, PIN, OTP, etc. or install some unauthorised/ unverified application for KYC updation using a link provided in the communication. Such communications are also reported to carry threats of account freeze/ block/closure. Once customer shares information over call/message/unauthorised application, fraudsters get access to customer’s account and defraud him/her.

Members of public are hereby cautioned not to share account login details, personal information, copies of KYC documents, card information, PIN, password, OTP, etc. with unidentified persons or agencies. Further, such details should not be shared through unverified/unauthorised websites or applications. In case they receive any such requests, customers are requested to get in touch with their bank/branch.

It is also clarified that while the Regulated Entities (REs) are required to undertake periodic updation of KYC, the process of periodic updation of KYC has been simplified to a large extent vide circular dated May 10, 2021. Further, vide circular dated May 5, 2021, REs have been advised that in respect of customer accounts where periodic updation of KYC is due and pending as on date, no restrictions on operations of such account shall be imposed till December 31, 2021, for this reason alone, unless warranted under instructions of any regulator/ enforcement agency/court of law, etc.

Leave a comment

Filed under Uncategorized

aadhar authentication e-KYC licence

RBI is vide its circular dated 13th September, 2021 opening up the window for NBFCs, payment system providers and payment system participants to obtain aadhar authentication e-KYC licence (KYC User Agency) or sub KUA. What is this now? I wonder what happened to the Central KYC registry. There are no parameters specified, which means any such NBFCs etc. can apply?

https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12161&Mode=0

Application for Aadhaar e-KYC Authentication Licence

In terms of Section 11A of the PML Act, 2002, entities other than banking companies may, by notification of the Central Government, be permitted to carry out authentication of client’s Aadhaar number using e-KYC facility provided by the Unique Identification Authority of India (UIDAI). Such notification shall be issued only after consultation with UIDAI and the appropriate regulator.

A detailed procedure for processing of applications under the aforementioned Section for use of Aadhar authentication services by entities other than banking companies has been provided by the Department of Revenue, Ministry of Finance vide their circular dated May 9, 2019.

2. Accordingly, Non-Banking Finance Companies (NBFCs), Payment System Providers and Payment System Participants desirous of obtaining Aadhaar Authentication License – KYC User Agency (KUA) License or sub-KUA License (to perform authentication through a KUA), issued by the UIDAI, may submit their application to this Department for onward submission to UIDAI. The applications can also be forwarded over email. The format of the application is provided in the Annex to this circular.

Leave a comment

Filed under banking laws

prepaid payment instruments

RBI circular dated 19th May, 2021 on the subject which is self explanatory

Prepaid Payment Instruments (PPIs) –

(i) Mandating Interoperability;

(ii) Increasing the Limit to ₹2 lakh for Full-KYC PPIs; and

(iii) Permitting Cash Withdrawal from Full-KYC PPIs of Non-Bank PPI Issuers

This has reference to paragraphs 10 and 11 of the Statement on Developmental and Regulatory Policies dated April 07, 2021 wherein it was announced that (a) PPI interoperability shall be made mandatory, (b) the limit for full-KYC PPIs shall be increased from ₹1 lakh to ₹2 lakh, and (c) cash withdrawal shall be permitted using full-KYC PPIs of non-bank PPI issuers.

2. A reference is also invited to the Master Direction DPSS.CO.PD.No.1164/02.14.006/2017-18 dated October 11, 2017 on Issuance and Operation of PPIs (as amended from time to time) and Circular DPSS.CO.PD.No.808/02.14.006/2018-19 dated October 16, 2018 on PPIs – Guidelines for Interoperability.

3. Accordingly, the following are advised –

  1. It shall be mandatory for PPI issuers to give the holders of full-KYC PPIs (KYC-compliant PPIs) interoperability through authorised card networks (for PPIs in the form of cards) and UPI (for PPIs in the form of electronic wallets);
  2. Interoperability shall be mandatory on the acceptance side as well;
  3. The interoperability shall be enabled by March 31, 2022; and
  4. PPIs for Mass Transit Systems (PPI-MTS) shall remain exempted from interoperability while Gift PPI issuers have the option to offer interoperability.

4. The maximum amount outstanding in respect of full-KYC PPIs (KYC-compliant PPIs) has been increased from ₹1 lakh to ₹2 lakh. All other conditions mentioned under paragraphs 9.1 (ii) and 9.2 of the Master Direction on PPIs dated October 11, 2017 shall continue to be applicable.

5. The feature of cash withdrawal shall be permitted in respect of full-KYC PPIs issued by non-bank PPI issuers as well. The following conditions shall, however, be applicable –

  1. Maximum limit of ₹2,000 per transaction with an overall limit of ₹10,000 per month per PPI;
  2. All cash withdrawal transactions performed using a card / wallet, shall be authenticated by an Additional Factor of Authentication (AFA) / PIN;
  3. Any PPI issuer offering this facility shall put in place proper customer redressal mechanisms. Complaints in this regard shall fall under the ambit of the respective ombudsmen schemes and instructions on limiting liability of customers; and
  4. PPI issuers shall put in place suitable cooling period for cash withdrawal upon opening the PPIs or loading / re-loading of funds into PPIs to mitigate the risk of fraudulent use of PPIs.

5. The cash withdrawal limit from Points of Sale (PoS) terminals using debit cards and open system prepaid cards issued by banks in India advised vide circular DPSS.CO.PD.No.449/02.14.003/2015-16 dated August 27, 2015 has also been rationalised to ₹2,000 per transaction within an overall monthly limit of ₹10,000 across all locations (Tier 1 to 6 centres). The requirement of submission of data to RBI mentioned at paragraph 6 of the circular has been dispensed with. All other provisions shall, however, continue to be applicable.

Leave a comment

Filed under banking laws

Bank KYC norms eased

Periodic Updation of KYC –
Restrictions on Account Operations for Non-compliance

Please refer to Section 38 of the Master Direction on KYC dated February 25, 2016, in terms of which Regulated Entities (REs) have to carry out periodic updation of KYC of existing customers. Keeping in view the current COVID-19 related restrictions in various parts of the country, REs are advised that in respect of the customer accounts where periodic updation of KYC is due and pending as on date, no restrictions on operations of such account shall be imposed till December 31, 2021, for this reason alone, unless warranted under instructions of any regulator/ enforcement agency/court of law, etc.

Regulated entities are also advised to continue engaging with their customers for having their KYC updated in such cases

Leave a comment

Filed under banking laws

relaxation in compliance timelines

SEBI circular dated 1st October, 2020 on the subject.

In view of the prevailing situation due to Covid-19 pandemic and representation received from the Stock Exchanges, it has been decided to further extend the timelines for compliance with the regulatory requirements by the trading members / clearing members, mentioned in the SEBI circulars, as under:

https://www.sebi.gov.in/legal/circulars/oct-2020/relaxation-in-timelines-for-compliance-with-regulatory-requirements_47778.html

Leave a comment

Filed under securities laws

video based KYC

IRDAI circular dated 21st September, 2020 on the subject.

In order to simplify the process of Know Your Customer (KYC), it is proposed to leverage the various electronic platforms to make it customer friendly.

2.   The Insurers are hereby permitted to use the “Video Based Identification Process (VBIP)” as described below:

3.   “Video Based Identification Process (VBIP)”is an alternative (optional)electronic process of Identification / KYC in paperless form, carried out by the insurer/authorised person (person authorised by the insurer and specifically trained for face-to-face VBIP) by undertaking seamless, secure, real-time, consent based audio-visual interaction with the customer/beneficiary to obtain identification information including the necessary KYC documents required for the purpose of client due diligence and to ascertain the veracity of the information furnished by the customer/ beneficiary.

4.   Insurers may undertake live VBIP by developing an application which facilitates KYC process either online or face-to-face in-person verification through video. This may be used for establishment/continuation/ verification of an account based relationship or for any other services with an individual customer/beneficiary, as the case may be, after obtaining his/her informed consent and shall adhere to the following stipulations:

a)    The Insurer/authorised person while performing the VBIP for KYC shall record clear live video of the customer/beneficiary present for identification and obtain the identification information in the form as below:

                     i.    Aadhaar Authentication if voluntarily submitted by the Customer/ beneficiary, subject to notification by the government under Section 11 A of Prevention of Money-Laundering Act (PMLA)

or

                 ii.      Offline Verification of Aadhaar for identification, if voluntarily submitted by the Customer/beneficiary

or

                iii.      OVD (As defined in rule 2(d) under PML Rules 2005) provided in the following manner –

iii(1) As digitally signed document of the OVD, issued to the DigiLocker by the issuing authority

or

iii(2) As a clear photograph or scanned copy of the original OVD, through the eSign mechanism.

b)   The insurer/authorised person shall ensure that the online video is clear and the customer/beneficiary along with the authorised person in the video shall be easily recognisable and shall not be covering their face in any manner.

c)    Live location of the customer/beneficiary (Geotagging) shall be captured (both for online/ face-to-face VBIP) to ensure that customer/beneficiary is physically present in India.

d)   The authorised person/ Insurer shall ensure that the photograph and other necessary details of the customer/beneficiary in the Aadhaar/ OVD matches with the customer/beneficiary present for the VBIP.

e)    The authorised person/ Insurer shall ensure that the sequence and/or type of questions during video interactions are varied in order to establish that the interactions are real-time and not pre-recorded.

f)     In case of offline verification of Aadhaar using XML file or Aadhaar Secure QR Code, if voluntarily submitted by the Customer/ beneficiary, it shall be ensured that the generation of XML file or QR code is recent and not older than 3 days from the date of carrying out VBIP.

g)    All accounts opened or any service provided based on VBIP shall be activated only after being subject to proper verification by the insurer to ensure that the integrity of process is maintained and is beyond doubt.

h)   Insurers shall ensure that the process is a seamless, real-time, secured, end-to-end encrypted audio-visual interaction with the customer/ beneficiary and the quality of the communication is adequate to allow identification of the customer/ beneficiary beyond doubt. Insurers shall carry out the liveliness check in order to guard against spoofing and such other fraudulent manipulations.

i)     To ensure security, robustness and end to end encryption, the insurers shall carry out software and security audit and validation of the VBIP application as per extant norms before rolling it out and thereafter from time to time.

j)     The audio-visual interaction shall be triggered from the domain of the insurers itself, and not from third party service provider. The VBIP process shall be operated by the Insurer/authorized persons. The activity log along with the credentials of the official performing the VBIP shall be preserved.

k)   Insurers shall ensure that the video recording bears the GPS coordinates, date (DD:MM:YY) and time stamp (HH:MM:SS) along with other necessary details, which shall be stored in a safe and secure manner as per Prevention of Money-Laundering (PML) Rules.

While exercising Online VBIP, the Insurer shall exercise extra caution and the additional necessary details viz. IP address etc. shall be preserved by the insurer to substantiate the evidence at the time of need.

l)     Insurers are encouraged to take assistance of the latest available technology (including Artificial Intelligence (AI) and face matching technologies etc.) to strengthen and ensure the integrity of the process as well as the confidentiality of the information furnished by the customer/beneficiary. However, the responsibility of identification shall rest with the insurer.

m)  Authorized person of the insurer shall facilitate face to face VBIP process only at the customer/beneficiary end.

However, the ultimate responsibility for client due diligence will be with the insurer.

n)   Insurer shall maintain the details of the concerned Authorised person, who is facilitating the VBIP.

o)    Insurers shall ensure to redact or blackout the Aadhaar number as per extant PML Rules.

p)   Insurer will adhere to the IRDAI Cyber security guidelines as amended from time-to-time along with the necessary security features and standard as mentioned in Annexure – I

It is emphasized once again that it shall be the responsibility of the insurers that the above guideline is followed scrupulously.

Any matter not specifically mentioned herein, but mandated under the extant PMLA/ Aadhaar Act / Information Technology Act etc. and Rules framed there under by the Central Government of India shall be complied with accordingly.

Member (Life)

Annexure I

1.   The Video KYC application and related APIs/Web Services shall undergo application security testing (both gray box and white box) through an CERT-In empanelled vendor and all reported vulnerabilities shall be mitigated before moving into production.

2.   The infrastructure components used for hosting Video KYC application shall undergo vulnerability assessment and secure configuration review through an CERT-In empanelled vendor and all reported vulnerabilities shall be mitigated before moving into production.

3.   There shall be an end-to-end encryption from the customer/beneficiary to the hosting point of the Video KYC application. The minimum encryption standards and key lengths like AES 256 for encryption should be used.

4.   If the Video KYC application and video recordings are located at a third party location and/or in Cloud then the third party location and/or cloud hosting location shall be in India.

Leave a comment

Filed under insurance

independent directors

The time limit for mandatory registration of independent directors in a special portal for that purpose has been extended again to 30th April, 2020. The registration process itself is not a cumbersome process but the fact that registrations is required is by itself something to ponder about. Why everybody on this earth has to undergo multiple registrations and multiple KYCs at various portals is something that the authorities need to ponder. We are at an age when A.I. is taking over our lives, the very need to have multiple identity nos is redundant.

Leave a comment

Filed under Uncategorized

merchanting trade transactions

RBI circular dated 23rd January, 2020 regarding revised guidelines on merchanting trade transactions

https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=11799&Mode=0

Attention of Authorised Dealer Category-I banks (AD banks) is invited to A.P. (DIR Series) Circular No.115 dated March 28, 2014 containing directions relating to merchanting trade transactions.

2. With a view to further facilitate merchanting trade transactions, the existing guidelines have been reviewed and the revised guidelines as under, are being issued in supersession of the A.P. (DIR Series) Circular ibid:

  1. For a trade to be classified as merchanting trade, goods acquired shall not enter the Domestic Tariff Area.
  2. Considering that in some cases, the goods acquired may require certain specific processing/ value-addition, the state of goods so acquired may be allowed transformation subject to the AD bank being satisfied with the documentary evidence and bonafides of the transaction.
  3. The MTT shall be undertaken for the goods that are permitted for exports / imports under the prevailing Foreign Trade Policy (FTP) of India as on the date of shipment. All rules, regulations and directions applicable to exports (except Export Declaration Form) and imports (except Bill of Entry) shall be complied with for the export leg and import leg respectively.
  4. AD bank shall satisfy itself with the bonafides of the transactions. Further, KYC and AML guidelines shall be scrupulously adhered to by the AD bank while handling such transactions.
  5. The entire merchanting trade is to be routed through the same AD bank. The AD bank shall verify the documents like invoice, packing list, transport documents and insurance documents (if originals are not available, Non-negotiable copies duly authenticated by the bank handling documents may be taken) and satisfy itself about the genuineness of the trade. The AD bank may, if satisfied, rely on online verification of Bill of Lading/ Airway Bill on the website of International Maritime Bureau or Airline web check facilities. However, the AD bank shall ensure that the requisite details are made available /retrievable at the time of Inspection/Audit/investigation of the transactions.
  6. The entire MTT shall be completed within an overall period of nine months and there shall not be any outlay of foreign exchange beyond four months. The commencement date of merchanting trade shall be the date of shipment / export leg receipt or import leg payment, whichever is first. The completion date shall be the date of shipment / export leg receipt or import leg payment, whichever is the last.
  7. Short-term credit either by way of suppliers’ credit or buyers’ credit may be extended for MTT to the extent not backed by advance remittance for the export leg, including the discounting of export leg LC by the AD bank, as in the case of import transactions. However, Letter of Undertaking (LoU)/ Letter of Comfort (LoC) shall not be issued for supplier’s/ buyer’s credit.
  8. Any receipts for the export leg, prior to the payment for import leg, may be parked either in Exchange Earners Foreign Currency (EEFC) account or in an interest-bearing INR account till the import leg liability arises. It shall be strictly earmarked/ lien-marked for the payment of import leg and the liability of the import leg, as soon as it arises, shall be extinguished out of these funds without any delay. If such receipts are kept in interest-bearing INR account, hedging thereof may be allowed by the AD bank at the request of its customer, as per extant regulations. No fund/non-fund-based facilities shall be extended against these balances.
  9. In case of discounting of export leg LC where payment for import leg is still to be made (even if partially), the proceeds shall be utilized in the manner prescribed at point no. 2 (viii) above.
  10. Payment for import leg may also be allowed to be made out of the balances in EEFC account of the merchant trader.
  11. Merchanting traders may be allowed to make advance payment for the import leg on demand made by the overseas supplier. In case where inward remittance from the overseas buyer is not received before the outward remittance to the overseas supplier, AD bank may handle such transactions based on its commercial judgement. It may, however, be ensured that any such advance payment for an import leg beyond USD 500,000/- per transaction, shall be made against Bank Guarantee / an unconditional, irrevocable standby Letter of Credit from an international bank of repute. Overall prudential limits on allowing such advance payments by a customer may be fixed by the AD bank.
  12. Letter of Credit to the supplier for the import leg is permitted against confirmed export order, keeping in view the foreign exchange outlay of four months and completion of the MTT within nine months and subject to compliance with the instructions issued by Department of Banking Regulation on “Guarantees and Co-acceptances”, as amended from time to time.
  13. AD bank shall ensure one-to-one matching in case of each MTT and report defaults in any leg by the traders to the concerned Regional Office of the Reserve Bank, on half yearly basis in the format as annexed, within 15 days from the close of each half year, i.e. June and December;
  14. Merchant traders with outstanding of 5% or more of their annual export earnings shall be liable for caution listing.

3. The merchanting traders shall be genuine traders of goods and not mere financial intermediaries. Confirmed orders must be received by them from the overseas buyers. AD banks shall satisfy themselves about the capabilities of the merchanting trader to perform the obligations under the order. The merchanting trade shall result in profit which shall be determined by subtracting import payments and related expenses from export proceeds for the specific MTT.

4. Write-off of unrealized amount of export leg:

i. AD bank may write-off the unrealized amount of export leg, without any ceiling, on the request made by the Merchanting trader, in the following circumstances:

  1. The MTT buyer has been declared insolvent and a certificate from the official liquidator specifying that there is no possibility of recovery of export proceeds has been produced.
  2. The goods exported have been auctioned or destroyed by the Port / Customs / Health authorities in the importing country and a certificate to that effect has been produced.
  3. The unrealized amount of the export leg represents the balance due in a case settled through the intervention of the Indian Embassy, Foreign Chamber of Commerce or similar Organization;

provided, the MTT is in adherence to all other provisions except the delays in timelines (either for outlay or completion period of MTT or both) attributed to reasons mentioned at a, b and c above.

ii. In addition to above, write-off as at (i) shall be subject to following conditions:

  1. AD bank shall satisfy itself with the bonafides of the transactions and ensure that there are no KYC/AML concerns.
  2. The transaction shall not be under investigation under FEMA by any of the investigating agency/ies.
  3. The counterparty to the merchant trader is not from a country or jurisdiction in the updated FATF Public Statement on High Risk & Non-Co-operative Jurisdictions on which FATF has called for counter measures.

5. Third party payments for export and import legs of the MTT are not allowed.

6. Agency commission is not allowed in MTTs. However, AD banks may allow payment of agency commission up to a reasonable extent by way of outward remittance under exceptional circumstances, subject to the following conditions:

  1. MTT has been completed in all respects.
  2. The payment of agency commission shall not result in the MTT ending into a loss.
  3. The Merchanting trader shall make a specific request to the AD bank in this regard.

7. AD bank may approach Regional Office (RO) concerned of the Reserve Bank for regularization of the MTT for deviation, if any, from the prescribed guidelines and the MTT shall be closed only after receiving approval from the RO concerned of the Reserve Bank.

8. Reporting for merchanting trade transactions under FETERS shall be done on gross basis, against the undermentioned codes:

Trade Purpose Code under FETERS Description
Export P0108 Goods sold under merchanting /receipt against export leg of merchanting trade
Import S0108 Goods acquired under merchanting /payment against import leg of merchanting trade

9. AD banks shall bring the contents of this circular to the notice of their constituents concerned for strict compliance.

10. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Leave a comment

Filed under Uncategorized

KYC – bank accounts of proprietory firms

RBI’s KYC requirements for opening bank accounts of proprietory firms were way too stringent and cumbersome with the result that many proprietory firms were unable to open current accounts at all for starting their businesses. Proprietory firms are the simplest way of starting any business in India with the opening of current accounts being the first and main step in the process, other requirements such as registrations with tax authorities coming only after some threshold had been reached.

Now the RBI has eased its KYC requirements for opening bank accounts for proprietorship firms with the requirement that only of the two documents are required for doing so.

The extant guidelines on KYC for opening bank accounts for proprietorship concerns were as follows as the RBI Master Circular dated 1st July, 2014.

Accounts of proprietary concerns

Apart from following the extant guidelines on customer identification procedure as applicable to the proprietor, banks should call for and verify the following documents before opening of accounts in the name of a proprietary concern:

Proof of the name, address and activity of the concern, like registration certificate (in the case of a registered concern), certificate/licence issued by the Municipal authorities under Shop & Establishment Act, sales and income tax returns, CST/VAT certificate, certificate/registration document issued by Sales Tax/Service Tax/Professional Tax authorities, Licence issued by the Registering authority like Certificate of Practice issued by Institute of Chartered Accountants of India, Institute of Cost Accountants of India, Institute of Company Secretaries of India, Indian Medical Council, Food and Drug Control Authorities, registration/licensing document issued in the name of the proprietary concern by the Central Government or State Government Authority/Department. Banks may also accept IEC (Importer Exporter Code) issued to the proprietary concern by the office of DGFT, the complete Income Tax Return (not just the acknowledgement) in the name of the sole proprietor where the firm’s income is reflected, duly authenticated/acknowledged by the Income Tax authorities and utility bills such as electricity, water, and landline telephone bills in the name of the proprietary concern as required documents for opening of bank accounts of proprietary concerns.

Any two of the above documents would suffice. These documents should be in the name of the proprietary concern.

Now the revised KYC norms provide any one of the above documents would suffice to open a bank account in the name of the proprietory concern.

The relevant portion of the RBI circular dated March, 13, 2015 states as under:

Reserve Bank has been receiving representations pointing out difficulties in complying with the requirement of furnishing two documents as activity proof while opening accounts of sole proprietary firms in certain cases. It is possible that in some types of activities there is genuine difficulty in procuring two such documents. The matter has, therefore, been reviewed with a view to ease the process of opening bank accounts of proprietary concerns in such cases. The default rule is that any two documents, out of those listed in paragraph 2.5 (h) of the Master Circular, should be provided as activity proof by a proprietary concern. However, in cases where the banks are satisfied that it is not possible to furnish two such documents, they would have the discretion to accept only one of those documents as activity proof.  In such cases, the banks, however, would have to undertake contact point verification, collect such information as would be required to establish the existence of such firm, confirm, clarify and satisfy themselves that the business activity has been verified from the address of the proprietary concern.

3. It is also clarified here that the list of registering authorities indicated in paragraph 2.5 (h) of the Master circular is only illustrative and therefore includes license/certificate of practice issued in the name of the proprietary concern by any professional body incorporated under a statute, as one of the documents to prove the activity of the proprietary concern.

A copy of the RBI circular is given in this link i.e. http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=9599&Mode=0

Leave a comment

Filed under Uncategorized

Bank account KYC – address proof

RBI has clarified vide this circular that Banks should not harass customers for producing multiple address proofs. If they have given permanent address proof, then that is sufficient and therefore Banks have been warned from asking for too many proofs for the address of the customers.

http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=9279&Mode=0

2. In this regard, it has been brought to our notice that despite issuing clear instructions regarding the requirement of one proof of address whether permanent or current, some banks are still insisting on submission of a proof of address for the current address even when a customer produces a proof of permanent address, which prevents many prospective customers, especially migrant workers, from opening bank accounts.

3. In view of the above, banks are advised to ensure that customers are not unnecessarily asked to submit additional proofs of addresses for current addresses in cases where proofs of addresses for permanent addresses are already available. Banks are requested to confirm latest by October 17, 2014, that the above mentioned instruction has been communicated to all their branches and the same have been meticulously complied with.

Leave a comment

Filed under Uncategorized

e-KYC services of UIDAI for insurance companies

IRDA has mandated vide its circular dated 21st October 2013 that e-KYC services of UIDAI can be accepted as valid KYC documents by all the insurance companies. This has been made possible pursuant to the amendment to the Prevention of Money Laundering Act wherein UIDAI identity has been made acceptable for KYC purposes. Further with UIDAI going the e-way by adopting e-UIDAI it is but natural that a boost has been given to the KYC process of UIDAI. IRDA circular is given below

 

Ref:IRDA/SDD/CIR/AML/207/10/2013 Date:21-10-2013
e-KYC services of UIDAI
Attention is drawn to the following circulars issued by the Authority:
 
i.      IRDA/F&I/CIR/AML/151 /07/2011 dated July 5, 2011 wherein insurers were informed of the amendments to the Prevention of Money Laundering (Maintenance of Records) Amendment Rules 2010 by which “the letter issued by the Unique Identification Authority of India containing details of name, address and Aadhaar number” was considered as officially valid document that may be obtained as part of Customer Identification Procedure, for the purposes of identification. 
ii.    Master Circular 2010 on AML/CFT guidelines clause 3.1.1 (iv) wherein it has been indicated that “No further documentation is necessary for proof of residence where the document of identity submitted also gives the proof of residence.”
 
2.         You may be aware that the Unique Identification Authority of India (UIDAI) has  operationalized e-KYC services recently. The acceptability of these services for KYC purposes under the Prevention of Money-laundering (Maintenance of Records) Rules, 2005, was discussed with the Department of Revenue, Ministry of Finance and operational issues were taken up with the insurers.
 
3.         Now, following confirmation from the Ministry that e-KYC services may be accepted as a valid process for KYC verification under the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005, it has been decided that e-KYC services of UIDAI is acceptable for KYC verification subject to specific and express consent of the customer to access his/her data through UIDAI system.
 
4.         It may further be noted that in cases where e-KYC services are availed for KYC verification, certification requirements under clause 3.1.1 (iv) of the Master Circular (2010) AML/CFT guidelines shall be deemed to be complied with.
 
5.         Insurers may take note of the above.
 
 
(R.K. Nair)
Member (F&I)

 

Leave a comment

Filed under Uncategorized