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Kyc Policy Essay

5509 words - 23 pages

By Speed Post NHB/ND/DRS/Pol-No. 33/2010-11 October 11, 2010 All Registered Housing Finance Companies Dear Sir, GUIDELINES ON ‘ KNOW YOUR CUSTOMER’ & ‘ANTI MONEY LAUNDEERNG MEASURES’ FOR HFCs Please refer to our Circular NHB(ND)/DRS/POL. No. 13/2006 dated April 10, 2006 and circulars issued subsequent thereto from time to time on the above subject advising Housing Finance Companies (HFCs) to ensure that a proper policy framework on ‘Know Your Customer‘ and ‘Anti money Laundering Measures’ is put in place with the approval of their Board. In this connection we wish to inform that the said Guidelines have since been reviewed in the light of subsequent developments including amendments in the ...view middle of the document...

2. For the purpose of KYC policy, a ‘Customer’ may be defined as: • a person or entity that maintains an account and/or has a business relationship with the HFC; • one on whose behalf the account is maintained (i.e. the beneficial owner); • beneficiaries of transactions conducted by professional intermediaries, such as Stock Brokers, Chartered Accountants, Solicitors, etc. as permitted under the law, and • any person or entity connected with a financial transaction which can pose significant reputational or other risks to the HFC, say, a wire transfer or issue of a high value demand draft as a single transaction. Customer Acceptance Policy 3. HFCs should develop a clear Customer Acceptance Policy laying down explicit criteria for acceptance of customers. The Customer Acceptance Policy must ensure that explicit guidelines are in place on the following aspects of customer relationship in the HFC:(i) No account is opened in anonymous or fictitious/benami name(s); (ii) Parameters of risk perception are clearly defined in terms of the location of customer and his clients and mode of payments, volume of turnover, social and financial status, etc. to enable categorization of customers into low, medium and high risk (HFCs may choose any suitable nomenclature, viz. level I, level II, level III etc.); customers requiring very high level of monitoring, e.g. Politically Exposed Persons (PEPs – as explained in Annex I) may, if considered necessary, be categorised even higher; (iii) Documentation requirements and other information to be collected in respect of different categories of customers depending on perceived risk and keeping in mind the requirements of Prevention 2

(iv)

(v)

(vi)

of Money Laundering Act, 2002 (Central Act No. 15 of 2003) (hereinafter referred to as PMLA), rules framed thereunder and guidelines issued from time to time; Not to open an account or close an existing account where the HFC is unable to apply appropriate customer due diligence measures, i.e. HFC is unable to verify the identity and /or obtain documents required as per the risk categorisation due to non co-operation of the customer or non reliability of the data/information furnished to the HFC. It may, however, be necessary to have suitable built-in safeguards to avoid harassment of the customer. For example, decision to close an account may be taken at a reasonably high level after giving due notice to the customer explaining the reasons for such a decision; Circumstances, in which a customer is permitted to act on behalf of another person/entity, should be clearly spelt out in conformity with the established law and practices, as there could be occasions when an account is operated by a mandate holder or where an account may be opened by an intermediary in a fiduciary capacity; and Necessary checks before opening a new account so as to ensure that the identity of the customer does not match with any person with known criminal background or with banned...

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