6 rules related to KYC have changed, RBI issued circular, know details here

KYC New Rules: The Reserve Bank of India (RBI) has made several changes in the rules related to “Know Your Customer” i.e. KYC. The central bank has also issued a circular in this regard. The new rules have come into effect with immediate effect. This step has been taken to prevent money laundering. The master instructions have been amended.

Through KYC, financial organizations check and verify the identity of their customers. They also ensure that the customer is not involved in illegal activities like money laundering, terrorist financing etc. This also ensures the safety of both the customer and the institution.

Changes in Master Instructions on KYC

In the circular, the RBI said, “Whenever the regulated entity receives additional or updated information from a customer, the regulated entity shall provide the updated information to the CKYCR within 7 days or within such period as may be notified by the Central Government, as per the provisions of the CKYR. Will update the KYC records of the existing customer. CKYCR will then electronically notify all reporting entities that have worked with the concerned customer about the update of the KYC records of the concerned customer. Once the records are updated, CKYCR will inform the RI about the same. After this RI will update the KYC records.”

These rules were also amended (RBI Circular On KYC)

Paragraph 10 Customer Acceptance Policy has been changed. IRs will implement the CDD process at the UCIC level. If an existing KYC compliant customer of an RI wishes to open another account or avail any other product or service from the same RI, there will be no need for fresh CDD exercise with respect to customer identification.

This “clarification” that “high-risk accounts should be monitored more closely” applies to sub-paragraphs A and B of Article 37. “Explanation” has now been substituted.

The phrase “update” has been added to clauses (ii) and (iv) of sub-paragraph (a) of paragraph 38 to provide better clarity. Further, it shall also apply to clauses (iii) and (iv) of sub-paragraph (c).

Following the changes in the Master Instructions, the provisions will now be read as “paragraphs” instead of “sections”.

Changes have also been made in KYC reporting. The designation of the Central Nodal Officer for UPA has been changed from “Additional Secretary” to “Joint Secretary”.