RBI Know Your Customer KYC new order: The central bank has amended the ‘Master’ guidelines regarding KYC. Under this, banks, NBFCs and other institutions under the purview of RBI will have to conduct due diligence of their customers as per the prescribed procedures.
RBI Know Your Customer KYC new order: Reserve Bank of India (RBI) has issued new guidelines for Know Your Customer (KYC) to strengthen the customer verification system. Under this, banks and non-banking financial companies (NBFCs) have been asked to adopt a risk-based approach while working on KYC updates from time to time.
Changes made in master direction
After review, the Central Bank has amended the ‘Master’ guidelines regarding KYC. Under this, banks, NBFCs and other institutions under the purview of RBI will have to conduct due diligence of their customers as per the prescribed procedures.
What is the reason behind the change?
The RBI amendment comes after new government directives related to anti-money laundering rules, Unlawful Activities (Prevention) Act (UAPA) and Weapons of Mass Destruction and their Delivery Systems (Prohibition of Unlawful Activities) Act.
Guidelines prepared on FATF recommendations
RBI said that it has also updated some instructions as per the recommendations of FATF (Financial Action Task Force). The new master instructions state that the risk-based approach for periodic updates of KYC has been changed.
This step has been taken to ensure that information collected as part of customer investigations is retained, especially where the risk is high.