RBI KYC Rules: The Reserve Bank of India (RBI) has changed the rules related to Know Your Customer (KYC). Through a notification in this regard, RBI has announced changes in the master guidelines. It was also said that these changes will be implemented with immediate effect. KYC of customers is done by banks from time to time. This is done to ensure that the customer is who he claims to be.
What is KYC?
KYC simply means ‘Know Your Customer’. It is a process through which banks and other financial institutions verify the identity of their customers. KYC helps in preventing activities like fraud and money laundering. Now, changes in these were announced by RBI on 6 November. KYC is important for financial institutions to verify the identity of their customers. KYC also helps in preventing wrong activities like money laundering and terrorist funding.
What is ‘Digital KYC’?
‘Digital KYC’ simply means capturing of live photograph of the customer and an officially valid document or valid Aadhaar. Where offline verification cannot be done, the latitude and longitude of the place where such live photograph is being captured. By the authorized officer of RE as per the provisions contained in the Act.
RBI’s recent change
According to the notification issued by the Reserve Bank of India (RBI) on November 6, ‘The Master Guidelines on KYC have been amended to align the guidelines with the amendments made in the Prevention of Money Laundering Rules, 2005 through a gazette notification on July 19, 2024 (b) incorporating instructions as per the amendment issued on April 22, 2024 on the order of the Government of India dated February 2, 2021 ‘Procedure for implementation of section 51A of the Illegal Activities (Prevention) Act, 1967′, and (c) amending some existing instructions’.
Why is KYC necessary?
KYC helps prevent activities like fraud, money laundering and terrorist funding. It ensures that the customer’s money is safe and does not go into the wrong hands. It helps in complying with various financial rules and laws.
