quick success series, an initiative of sblc ... -...
TRANSCRIPT
Quick
Success
Series
KYC & AML
GUIDELINES
Updated By: J .K Arun Manager (Training),
SBLC Deoghar
Mobile- 9801002594
Email- [email protected]
Updated up to 15.01.2018
QUICK SUCCESS SERIES, an initiative of SBLC
Deoghar to facilitate the preparation of promo-
tion seeking personnel of our Bank, appears to
have succeeded in its objective to a large ex-
tent, as the readers are still approaching us for
its revision/updation despite availability of
plenty of other study materials.
We would not have been able to sustain this
unique effort of ours, without the active support
and continuous encouragement of our DGM
cum Circle Development officer Sri Bijayananda
Padhi. We are deeply indebted to him for his co-
operation and guidance.
Kumar Priyank, Chief Manager (Training),
Sanjay Kumar Sharma, Manager (Training) and
Jitendra Kumar Arun, Manager (Training) at this
SBLC have owned up this project and have tak-
en pains to keep it relevant to the users by up-
dating & improving it at half yearly interval.
Though every care has been taken while updat-
ing the contents, we request our readers to
point out any lapses at the earliest. Needless to
mention this book is not a substitute of circular
instructions issued by the Bank from time to
time. For detailed guidelines please refer to
Bank’s latest circulars. Soft copy of this edition
is available on our ftp://10.151.51.33 in QSS
folder and on SBI TIMES>PATNA CIRCLE>SBLC
Deoghar site.
Team SBLC Deoghar is humbled by the response
and recognition, it is receiving from the readers
within and beyond the circle. We wish the
readers grand success in their endeavours.
Kumar Umeshwar Singh Assistant General Manager,
State Bank Learning Centre,
Deoghar- 814112
Phone- 06432-232895
Fax - 06432-231810
E-mail: [email protected]
KYC & AML GUIDELINES
Updated up to 15.01.2018
2
• Our Bank has been observing 1st
August every year as "KYC com-
pliance and Fraud Prevention Day"
in order to create awareness about
KYC compliance and fraud preven-
tion, among the staff.
• It has been decided to observe 1st September every year as “Risk
Awareness Day / Jokhim Jagrukta
Diwas” in the Bank.
• It has been decided to observe 2nd
November, every year as “AML-CFT
Day” in the Bank.
� OFFICIALLY VALID DOCUMENT
(OVD)
(e Cir. SL 47/2017-18 dated 23.10.2017)
OVDs consist only the following five
OVDs :
i. Passport
ii) Driving licence,
iii. Voter's Identity Card issued by
Election Commission of India,
iv. Job card issued by NREGA duly
signed by an officer of the State Gov-
ernment,
v. Letter issued by the National Popu-
lation Register containing details of
name, address, or any other docu-
ment as notified by the Central Gov-
ernment in consultation with the
Regulator
Aadhaar & Permanent Account Num-
ber (PAN) are no longer in the list of
Officially Valid Documents (OVDs)
but these two documents have been
made mandatory for the Account
Opening of resident individual who is
eligible for Aadhaar under Aadhaar
Act 2016.
In pursuance of clause (a) and clause
(c) of sub rule (17) of rule 9 of the
Prevention of Money laundering
(Maintenance of Records) Rules,
2005, the Central Government hereby
notifies the 31st March, 2018 or six
months from the date of com-
mencement of account based rela-
tionship by the client, whichever is
later, as the date of submission of the Aadhaar Number, and Permanent Ac-
count Number or Form 60 by the
clients to the reporting entity.
DEEMED OVD : (e cir Sl.No.: 1003/2017 – 18 dated 23.11.17)
Central Govt. has given some relaxa-
tion in case of officially valid docu-
ment furnished by the customer also
does not contain updated address,
the following documents shall be
deemed to be officially valid doc-
uments for the limited purpose of
proof of address:
i) Utility bill which is not more than
two months old of any service pro-
vider (electricity, telephone, postpaid
mobile phone, piped gas, water bill);
(ii) Property or Municipal tax receipt;
(iii) Pension or family pension pay-
ment orders (PPOs) issued to retired
employees by Government
Departments or Public Sector Under-
takings, if they contain the address.
KYC & AML GUIDELINES
Updated up to 15.01.2018
3
(iv) letter of allotment of accommo-
dation from employer issued by State
Government or Central Government
Departments, statutory or regulatory
bodies, public sector undertakings,
scheduled commercial banks, finan-
cial institutions and listed companies
and leave and license agreements
with such employers allotting official
accommodation; Provided that the
customer shall submit updated offi-
cially valid document with current
address within a period of three
months of submitting the above
deemed “officially valid docu-
ments”
KYC REQUIREMENT FOR ACCOUNT
OPENING OF AN INDIVIDUAL : (e Cir.847/2017-18 dated 23.10.2017)
SCENARIO DOCUMENTS
Aadhaar &
PAN available
Aadhaar & PAN
Aadhaar available
Pan not available
Aadhaar + Form
60 & one OVD
PAN available
Aadhaar not
available
Aadhaar enrol-
ment proof + PAN
Aadhaar Not
available &
PAN not available
Aadhaar enrol-
ment proof +
Form 60 & one
OVD
In case the identity information relat-
ing to the Aadhaar number or PAN
submitted by the customer does not
have current address of the custom-
er, he/she shall submit an OVD show-
ing the current address to the Bank.
INDIVIDUAL WHO IS NOT ELIGIBLE
FOR AADHAR
SCENARIO DOCUMENTS
PAN available
Aadhaar not
available
PAN & One OVD
Aadhaar Not
available & PAN
not available
Form 60 & one
OVD
In case the customer is not a resident
or is a resident in the States of Jam-
mu and Kashmir, Assam or Magha-
laya.
SCENARIO DOCUMENTS
PAN available
Aadhaar not
available
PAN + One OVD
Aadhaar Not
available & PAN
not available
Form 60 & one
OVD
In terms of Government of India, Min-
istry of Finance, Department of Fi-
nancial Services Letter No. F.
No.20/2/2010FI/ (Vol. II) (C58530)
dated 2nd August, 2017, it is clarified
that in case the customer is not a res-
ident (as defined in clause (v) of sec-
tion 2 of the Aadhaar (Targetted De-
livery of Financial and Other Subsi-
dies, Benefits and Services) Act, 2016,
i.e. he is not an individual who has
resided in India for period/ periods
amounting in all to 182 days or more
in the 12 months immediately pre-
ceding the date of application for
aadhaar enrolment), or is a resident
in the States of Jammu & Kashmir,
Assam or Meghalaya, he may be al-
KYC & AML GUIDELINES
Updated up to 15.01.2018
4
lowed to open such an account with-
out submission of Aadhaar number.
ONE TIME PIN (OTP) BASED e KYC
process for Aadhaar verification (e cir.sl906/2017-18 dated 03.11.17)
Bank has been advised to provide an
option for One Time Pin (OTP) based
eKYC process verifica-
tion/authentication of Aadhaar for
onboarding of customers.
Accounts opened in terms of this
provision i.e., using OTP based eKYC,
Are subject to the following condi-
tions:
i. There must be a specific consent
from the customer for authentication
through OTP
ii. the aggregate balance of all the de-
posit accounts of the customer shall
not exceed rupees one lakh.
iii. the aggregate of all credits in a fi-
nancial year, in all the deposit taken together, shall not exceed rupees two
lakh.
iv. As regards borrowal accounts, on-
ly term loans shall be sanctioned. The
aggregate amount of term loans sanc-
tioned shall not exceed rupees sixty
thousand in a year.
v. Accounts, both deposit and bor-
rowal, opened using OTP based eKYC
shall not be allowed for more than
one year within which Customer Due
Diligence (CDD) procedure, i.e. Bio-
metric based eKYC authentication, is
to be completed..
vi. If the CDD procedure is not com-
pleted within a year, in respect of de-
posit accounts, the same shall be
closed immediately. In respect of
borrowal accounts, no further debits
shall be allowed.
vii. A declaration shall be obtained
from the customer to the effect that
no other account has been opened
nor will be opened using OTP based
KYC either with the same Bank or
with any other Bank. Further, while
uploading KYC information to CKYCR,
Bank is required to clearly indicate
that such accounts are opened using
OTP based eKYC so that other Banks
shall not open accounts based on the
KYC information of accounts opened
with OTP based eKYC procedure.
viii. Bank shall have strict monitoring
procedures including systems to gen-
erate alerts in case of any noncom-
pliance/ violation, to ensure com-
pliance with the abovementioned conditions.
PERIODIC UPDATION THROUGH e
KYC (process using OTP based au-
thentication)
eKYC process using OTP based au-
thentication, for the purpose of peri-
odic updation is allowed, provided,
while onboarding, the customer was
subjected to KYC process as per Cus-
tomer Due Diligence Measures (Proof
of Identity & Proof of address ob-
KYC & AML GUIDELINES
Updated up to 15.01.2018
5
tained from the prescribed set of
documents) or Aadhaar authenti-
cated through eKYC process using
Biometric authentication.
RBI GUIDELINES ON CENTRAL
KNOW YOUR CUSTOMER REGI-
STRY (CKYCR) (e cir SL 314/2017-18 dated 28.06.17)
As per CKYCR guidelines , the data
(Customer Information, Photograph,
Signature, KYC Documents) in re-
spect of all account based relation-
ships established by the Bank are re-
quired to be uploaded on CKYCR por-
tal within T+2 days of such estab-
lishment of relationship. Account
based relationship includes all types
of loan accounts, non fund based ac-
counts like Bank Guarantee, Letter of
Credit etc. and all type of deposits ac-
counts.
CIS in respect of both individual and
non-individuals needs to be supe-
rimposed on the Loan/BG/LC appli-
cation form in case of existing as well
as from prospective borrowers for all
types of loan accounts (including
non-fund based accounts), as per re-
vised CKYCR template.
KYC/AML REVISED POLICY AND
PROCEDURAL GUIDELINES ( e-cir. Sl.no: 1472/15-16 dt:02/03/16)
• Reserve Bank of India has specified Know Your Customer (KYC) stan-
dards to be followed by banks and
measures to be taken in regard to
Anti Money Laundering (AML) and
Combating of Financing of Terror-
ism (CFT).
• Obligations cast on banks under
the Prevention of Money Launder-
ing Act (PMLA), 2002
• Recommendations made by the
Financial Action Task Force
(FATF) on AML standards and CFT
• Paper issued on Customer Due Di-
ligence (CDD) for banks by the Ba-
sel Committee on Banking Supervi-
sion
• The Policy / procedural guidelines,
as incorporated in the Master Cir-
cular, are applicable to all domestic
branches/offices of the Bank U/S
Section 3 of the Prevention of
Money Laundering Act, 2002
(PMLA) has defined the “offence of
money laundering”
• Non compliance with
KYC/AML/CFT standards can lead
to use of the technology channels
of the Bank for Money Launder-
ing/financing terrorism activities
and thus expose the Bank to risks such as Operational Risk, Reputa-
tion Risk, Compliance Risk and Le-
gal Risk etc.
OBLIGATIONS UNDER PREVEN-
TION OF MONEY LAUNDERING
ACT, 2002
Section 12 of PMLA places the follow-
ing obligations on the Bank :-
(i) maintaining a record of prescribed
transactions.
(ii) furnishing information of pre-
scribed transactions to the specified
authority.
KYC & AML GUIDELINES
Updated up to 15.01.2018
6
(iii) verifying and maintaining
records of the identity of its clients
(in other words complying with the
KYC requirements) and identifying
the beneficial owners, if any, of such
clients.
(iv) preserving records in respect of
(i) and (ii) above for a period of five
years from the date of transactions,
and in respect of (iii) above for a pe-
riod of five years after the cessation
of relationship with the clients in re-
spect of account opening forms and
KYC documents.
• The KYC/AML/CFT Policy of the
Bank has the following key ele-
ments:
� Customer Acceptance Policy
� Customer Identification Proce-
dures
� Monitoring of Transactions and
� Risk Management
• Bank’s Customer Acceptance Policy
(CAP) lays down the criteria for
acceptance of customers.
• Customer identification requires
identifying the customer and veri-
fying his/her identity by using reli-
able, independent source docu-
ments, data or information.
• Thus, the first requirement of Cus-
tomer Identification Procedures
(CIP) to be satisfied is that a pros-
pective customer is actually who
he/she claims to be. The second
requirement of CIP is to ensure
that sufficient information is ob-
tained on the identity and the pur-
pose of the intended nature of the
banking relationship.
• This would enable risk profiling of
the customer and also to determine
the expected or predictable pattern
of transactions.
• Identification data, as under, would
be required to be obtained in re-
spect of different classes of cus-
tomers:
Risk Categorisation: The revised
list of classification of custom-
ers/groups of customers, under
different category of risk, (e Cir. sl 1472/2015-16 dt:02/03/2016)
Accounts pertaining to Central/State
Governments, PSUs and JVs with
Govt., Regulators, FIs, Statutory Bod-
ies, salaried persons/pensioners of
these organizations, “Small Accounts”
and any product(s) that are specifi-
cally mandated to be opened under
“Low Risk”, are to be assigned, ab-
initio (from the beginning), Low Risk.
Low Risk:-
1. Salaried Employees (whose salary
is well defined)
2. Customer belonging to lower eco-nomic strata, accounts opened under
financial inclusion
3. NGOs/NPOs promoted by UN or its
agencies.
4. Government owned Companies/
Departments and (State/Central),
PSUs, JVs with Govt., Regulators, FIs,
Statutory bodies etc.
KYC & AML GUIDELINES
Updated up to 15.01.2018
7
5. All customers not classified either
as High/Medium Risk Categories
6. Individual Account holder with Credit/debit summations below ₹50
lacs per annum
7. Non Individual account holders
with credit debit summations below ₹2 crores per annum.
Medium Risk :-
1. New customers (CIFs) opened un-
der Low Risk while onboarding, dur-
ing first 180 days of opening the ac-
count, except those pertaining to
Central/State Governments, PSUs
and JVs with Govt., Regulators, FIs,
Statutory Bodies, salaried per-
sons/pensioners of these organiza-
tions, “Small Accounts” and any
product(s) that are specifically man-
dated to be opened under Low Risk.
2. Non-Bank Financial Institution
3. Stock Brokers
4. Import/Export customers
5. Telemarketers
6. Pawn Shops
7. Auctioneers
8. Venture Capital Companies
9. All In-operative accounts
10. Individual Account holder with Credit/debit summations of ₹50.00
lacs to below ₹2.00 Crores per annum
11. Non Individual account holders
with credit debit summations of ₹2.00 crores to below ₹10.00 Crores
per annum
High Risk:- 1. Politically Exposed person of for-
eign origin
2. Bullion Dealers/jewellers
3. Non Resident Customers (NRIs)
4. Trust Charities, NGOs & Organisa-
tions receiving donations from India
& abroad
5. Non Face-to-Face Customers
6. Customers domiciled in/having
transactions with High Risk Coun-
tries
7. Firms with Sleeping partners
8. Companies having close family
shareholding
9. Multi-Level Marketing Companies
10. Accounts of Mules
11. Customers of dubious reputation
12. High Net worth Individuals - Indi-
viduals with total deposits of Rs.1.50
Crores or more
13. Pooled Accounts
14. Individual/entities involved in
any fraud/forgery/anti national ac-
tivity / terrorism /
tax evasion/insider trading may be
classified as High Risk
15. Account opened/operated by
Power of Attorney Holders
16. Individual Account holder with
Credit/debit summations of Rs.2.00
crores & more per annum 17. Non Individual account holders
with credit debit summations of
Rs.10.00 crores & more per annum
18. Customer accounts where STR
has already been filed with FIU.
Action required on re-
categorisation Accounts with “low
risk” & where simplified proce-
KYC & AML GUIDELINES
Updated up to 15.01.2018
8
dure is followed, into Medium or
High Risk
If a ‘low risk’ category customer for
whom simplified procedure is ap-
plied, is recategorised as ‘moderate
or ‘’high’ risk category at the time of
review of the risk categorisation,
then Branches/offices should obtain
one of the five OVDs for proof of iden-
tity and proof of address immediate-
ly. In the event such a customer fails
to submit such an OVD, Branches
should initiate action for termination
of the business relationship after giv-
ing due notice
REPORTING
In terms of rules of Prevention of
Money Laundering Act 2002, banks
are obliged to file following reports
to Financial Intelligence Unit-India
(FIU-IND) i. Cash Transactions Reports (CTRs)
ii. Counterfeit Currency Reports (CCRs)
iii. Suspicious Transactions Reports (STRs)
iv. Non Profit Organisations Transactions
Report (NTRs)
v. Cross Border Wire Transaction Reports
���� In terms of Rule 8 of PML Rules,
while furnishing information to the
Director, FIU IND, delay of each day
in not reporting a transaction or de-
lay of each day in rectifying a misre-
presented transaction beyond the
time limit specified in the Rule shall
constitute a separate violation and
hence all reporting should be done
as per the timelines prescribed As
per provisions of PML Act.
� Any deficiency in filing the manda-
tory reports by reporting entities
will attract minimum penalty of
Rs.10,000/- which may go to
Rs.100000/- per instance per day.
ONLINE REPORTTING OF CCR (e Cir. 597/2016-17 dated 05.08.2016)
Under the provisions of the PML Act
2002 to report all instances of detec-
tion and seizure of counterfeit Cur-
rency Notes through CCRs to the FIU-
IND through AML / CFT Department
of the Bank.
The Branch’s authorized officials can
access the functionality through URL
address:
https://ccr.statebanktimes.in for key-
ing in the details of “Counterfeit Cur-
rency Notes” detected at the
Branches. The information so given
shall be available to the BOD, Corpo-
rate Centre, Mumbai for its compila-
tion and final submission to the FIU-
IND through CCRs.
The system of consolidated reporting
of Counterfeit Currency Notes to the
ABD, Belapur, Mumbai through FSLO
for it’s final reporting to RBI will be
continued as hitherto. Extant instruc-
tions regarding filing of FIR in all eli-
gible cases shall remain unchanged.
KYC & AML GUIDELINES
Updated up to 15.01.2018
9
TRANSACTION THRESHOLDS FOR
FILTERING TRANSACTIONS FOR
GENERATION OF ALERTS
� Bank has decided to fix following
thresholds, subject to review from
time to time, for filtering transactions
and generating STR alerts.
Low Risk - Rs.50.00 lacs
Medium Risk - Rs.30.00 lacs
High Risk - Rs.10.00 lacs
Monitoring of transactions for the
purpose of generating Suspicious
Transaction Reports (STR) is being done with the help of AMLOCK soft-
ware,
� Subjective STRs: Subjective STRs are
those which are escalated, based on
alerts or information received from
Branches / staff / media reports /
law enforcement agencies etc.
� e mail ID for reporting STR
Bank has set up AML/CFT Cell (ear-
lier knows as KYC AML CELL), at Jai-
pur. It will be analyzing the alerts on
transactions handled across the Bank
with the help of AMLOCK software
acquired from M/s 3i-Infotech for
eventual generation of Suspicious
Transactions Reports (STRs), it is re-
quired, to be submitted to the Finan-
cial Intelligence Unit India (FIU-IND)
by the Principal Officer (KYC/AML).
Presently PRM Cell is analysing
alerts, based on ATM / POS / e-Com
transactions, generated on various
business rules built in the Proactive
Risk Manager software.
� Counterfeit Currency Reports
(CCRs): All instances of counterfeit
currency and forgery of valuable se-
curity and documents are to be sub-
mitted to FIU-IND through the Prin-
cipal Officer.
� SUSPICIUS TRANSACTIONS : SCRU-
TINY OF UNUSUAL TRANSACTIONS :
Particular of Transac-
tions
Scrutiny By
Cash Trans-
actions upto Rs.50,000/=
Transfer
tractions upto
Rs.1,00,000/=
Senior Asstt. For
transactions handled by him
Cash trans-
actions upto
Rs.1,00,000/
=
Transfer
transaction
upto
Rs.4,00,000/
=
Senior Special
Assistant for
transactions
handled by him.
Cash trans-
actions upto
Rs.2,00,000/
=
Transfer
transactions
upto
Rs.5,00,000/
=
Manager of Divi-
sion/Ser. Man-
ager /B.M for all
such transac-
tions not scruti-
nized by any of
the above.
“In terms of Section 2(v) of FEMA
1999, definition of a person resident
in India does not include a person
who has come to or stays in India for
any purpose which would indicate
his stay for a definite period. Accor-
dingly, foreign students coming to
India would be considered as “non-
resident” and a resident account
cannot be opened for them.” (e.cir.sl.no1176/2013 – 14 dt:28/01/2014))
KYC & AML GUIDELINES
Updated up to 15.01.2018
10
OPENING/OPERATING ACCOUNT
OF FOREIGN STUDENT (e Cir.
316/2017-18 dt28.06.17)
Following risk mitigation measures
must be put in place while open-
ing/operating accounts of foreign
students:
(I) Correct feeding of customer's oc-
cupation and Nationality Code in CBS
at the time of account opening for ac-
curate MIS and scrutiny.
(ii) Obtain local address proof of the student within a period of 30 days of
opening the account, verify them and
incorporate the data in CBS invaria-
bly.
(iii) Branch operating functionaries
should recheck customer's occupa-
tion and Nationality Code of existing
foreign students and update their
above data in CBS. (iv) Partial freezing of a/c operation
in case expiry of visa.
(v) Regular monitoring of the trans-
actions of foreign students at various
levels on the basis of threshold limit
fixed by the branch and nature of In-
land Remittance.
(vi) Extra Due Diligence (EDD)
should be exercised by the branch if
inland remittances in form of cash
deposit or transfer from nonhome lo-
cations on frequent intervals are ob-
served. Branches should report with-
out fail any suspicious transactions to
AML/CFT Department, Jaipur in
terms of eCircular no. CFO/AMLCFT/26/15-16
dated 11/01/2016
� TRUST/NOMINEE OR FIDUCIARY
ACCOUNTS
While opening a Trust account,
branches should take reasonable
precautions to verify the identity of
the trustees and the settlers of trust
(including any person settling assets
into the trust), guarantors, protec-
tors, beneficiaries and signatories. In
the case of a 'foundation', steps
should be taken to verify the founder
managers/directors and the benefi-
ciaries.
ACCOUNTS OF COMPANIES
The certified copies of the following
documents:
(i) Certificate of incorporation;
(ii) Memorandum and Articles of As-
sociation;
(iii) A resolution from the Board of
Directors and power of attorney
granted to its managers, officers or
employees to transact on its behalf;
(iv) PAN of the Company; and
(v) (a) Aadhaar number and (b) PAN
or Form 60 as defined in the Income-
tax Rules, 1962, issued to managers,
officers or employees holding an at-torney to transact on the company’s
behalf or where an Aadhaar number
has not been assigned, proof of appli-
cation towards enrolment for Aad-
haar and in case Permanent Account Number is not submitted an officially
valid document shall be submitted.
Provided that for the purpose of this
clause if the managers, officers or
employees holding an attorney to
transact on the company's behalf are
not eligible to be enrolled for Aad-
haar number and do not submit the
KYC & AML GUIDELINES
Updated up to 15.01.2018
11
Permanent Account Number, certi-
fied copy of an officially valid docu-
ment shall be submitted.
Also Ensure that proper OVDs (ap-
plicable for company) are available in
records. Wherever possible, OVDs
have been verified from a Govt. con-
trolled e-platform for
its genuineness.
ii) PAN of Companies have been ob-
tained, verified and kept on record.
iii) Verify incorporation credentials
of Company from website
www.mca.gov.in.
iv) Record in CBS / AOFs the detail of
BOs & extent of their ownership, if
already not done.
PARTNERSHIP FIRM
The certified copies of the following
documents:—
(i) registration certificate;
(ii) partnership deed; and
(iii) PAN of the Partnership Firm;
(iv) (a) Aadhaar number; and (b)
Permanent Account Number or Form
60 as defined in the Incometax Rules,
1962, issued to the person holding an
attorney to transact on its behalf or
where an Aadhaar number has not
been assigned, proof of application
towards enrolment for Aadhaar and
in case Permanent Account Number
is not submitted an officially valid
document shall be submitted.
Provided that for the purpose of this
clause, if the person holding an attor-
ney to transact on the company's be-
half is not eligible to be enrolled for
Aadhaar number and does not submit
the PAN, certified copy of an officially
valid document shall be submitted.
TRUST
The certified copies of the following
documents:
(i) registration certificate;
(ii) trust deed;
(iii) PAN of the Trust; and
(iv) (a) Aadhaar number; and (b)
Permanent Account Number or Form
60 as defined in the Incometax Rules,
1962, issued to the person holding an
attorney to transact on its behalf or
where Aadhaar number has not been
assigned, proof of application to-
wards enrolment for Aadhaar and in
case Permanent Account Number is
not submitted an officially valid doc-
ument shall be submitted:
Provided that for the purpose of this
clause if the person holding an attor-
ney to transact on the company's be-
half is not eligible to be enrolled for
Aadhaar
number and does not submit the
Permanent Account Number, certi-fied copy of an officially valid docu-
ment shall be submitted.
Unincorporated association or a
body of individuals
The certified copies of the following
documents:
(i) resolution of the managing body
of such association or body of indi-
viduals;
KYC & AML GUIDELINES
Updated up to 15.01.2018
12
(ii) power of attorney granted to him
to transact on its behalf;
(iii) (a) the Aadhaar number; and (b)
Permanent Account Number or Form
60 as defined in the Incometax Rules,
1962, issued to the person holding,
an attorney to transact on its behalf
or where Aadhaar number has not
been assigned, proof of application
towards enrolment for Aadhaar and
in case the PAN is not submitted an
officially valid document shall be
submitted; and
(iv) such information as may be re-
quired by the Bank to collectively es-
tablish the legal existence of such an
association or body of individuals:
Provided that for the purpose of this
clause if the person holding an attor-
ney to transact on the company’s be-
half is not eligible to be enrolled for
Aadhaar number and does not submit
the PAN, certified copy of an officially
valid document shall be submitted.
� SELF HELP GROUPS: In order to
address the difficulties faced by Self
Help Groups (SHGs) in complying
with KYC norms while opening sav-ings bank accounts and credit linking
of their accounts, it has been decided
by RBI to simplify certain norms for
SHGs. Accordingly, KYC verification
of all the members of SHG need not be done while opening the savings
bank account of the SHG; KYC veri-
fication of all the office bearers
would suffice. As regards KYC verifi-
cation at the time of credit linking of
SHGs, ( since KYC would have already
been verified while opening the sav-
ings bank account and the account
continues to be in operation and is to
be used for credit linkage) no sepa-
rate KYC verification of the members
or office bearers is necessary.
� ACCOUNTS OF POLITICALLY EX-
POSED PERSONS
Politically exposed persons are indi-
viduals who are or have been en-
trusted with prominent public func-
tion in a foreign country, e.g. Heads of
States or of Governments, senior poli-
ticians, senior govern-
ment/judicial/military officers, se-
nior executives of state owned corpo-
rations, important political party offi-
cials, etc. Branches should gather suf-
ficient information on any per-
son/customer of this category in-
tending to establish a relationship
and check all the information availa-
ble on the person in the public do-
main. Branches should verify the
identity of the person and seek in-
formation about the sources of funds
before accepting the PEP as a cus-
tomer. Branches should open such
accounts with the approval of con-
trollers in respect of branches / BPR
outfits headed by officials of Junior Management/Middle Management. In
respect of branches / BPR outfits
headed by officers of Senior Man-
agement and above, such approval
should be accorded by the branch/operating unit head in per-
son.
Such accounts should be subjected to
enhanced monitoring on an ongoing
basis. The above norms should also
be applied to the accounts of the fam-
KYC & AML GUIDELINES
Updated up to 15.01.2018
13
ily members and close relatives of
PEPs.
� ACCOUNTS OF NONFACE TO FACE
CUSTOMERS
In the case of non face to face cus-
tomers, apart from applying the usual
customer identification procedures,
there must be specific and adequate
procedures to mitigate the higher
risk involved. Certification of all the
documents presented should be in-sisted upon and, if necessary, addi-
tional documents may be called for.
In such cases, banks may also require
the first payment to be effected
through the customer’s accounts with
another bank which, in turn, adheres
to similar KYC standards. In the case
of cross border customers, there is
the additional difficulty of matching
the customer with the documentation
and the bank may have to rely on
third party certification/introduction.
In such cases, it must be ensured that
the third party is a regulated and su-
pervised entity and has adequate KYC
systems in place as responsibility for
correctness of identity/residence
proof lies with the branch monitoring
such account or handling the transac-
tion. Non face to face customers are
those with whom the Branch has no
direct interaction at the time of open-
ing the account e.g. NRI customers
who opened the account without vi-
siting the branch. Branches should
insist on certification of documents
for photo ID and proof of residence
by either of the following:
(i) Banker
(ii) Notary Public
(iii) Indian Embassy
� INDIVIDUAL NRE ACCOUNTS:
Accounts to be opened on the basis
of the following documents: Pass-
port and Residence Visa Copies,
duly attested by (i) Banker (ii) No-
tary Public (iii) Indian Embassy
� ACCOUNTS OF MINORS:
Often a family member or guardian
would open an account for a minor.
If minor is less than 10 years of
age, ID proof of the person who
will operate the account is to be
obtained. In cases where minor can
operate the account independently, KYC procedure for identifica-
tion/address verification as in the
case of any other individual would
apply.
PIO: Person of Indian Origin
OCI: Overseas Citizen of India
KUA – KYC User Agency FIU-IND-Financial Intelligence Unit India
KYCR-Central Know Your Customer Registry
PEP –Politically Exposed Person
� HINDU UNDIVIDED FAMILY (HUF):
HUF comes into being because of a
particular concept under Hindu Law
whereby all the members of the fami-
ly reside together jointly, carry on a
business activity jointly and hold the
property jointly and therefore, it is
termed as Hindu Undivided Family.
Declaration from the Karta. Proof of
Identification of Karta. Prescribed
KYC & AML GUIDELINES
Updated up to 15.01.2018
14
Joint Hindu Family Letter signed by
all the adult coparceners.
� TRUST/NOMINEE OR FIDUCIARY
ACCOUNTS
There exists the possibility that
trust/nominee or fiduciary accounts
can be used to circumvent the cus-
tomer identification procedures.
Bank should determine whether the
customer is acting on behalf of an-
other person as trustee/nominee or
any other intermediary. If so, bank
should insist on receipt of satisfac-
tory evidence of the identity of the
intermediaries and of the persons on
whose behalf they are acting, as also
obtain details of the nature of the
trust or other arrangements in place. While opening an account for a trust,
bank should take reasonable precau-
tions to verify the identity of the trus-
tees and the settlers of trust (includ-
ing any person settling assets into the
trust), grantors, protectors, benefici-
aries and signatories. Beneficiaries
should be identified when they are
defined. In the case of a ‘foundation’, steps should be taken to verify the
founder managers/directors and the
beneficiaries, if defined.
� PROPRIETARY CONCERNS
While obtaining prescribed docu-
ments for opening of accounts of
proprietary concerns, the bank
should take reasonable measures to
identify the beneficial owner (s) and
verify his/her/their identity in a
manner so that it is satisfied that it
knows who the beneficial owner(s)
is/are. Accordingly, apart from above
mentioned customer identification
procedure, branches should call for
and verify the following documents
before opening of accounts in the
name of proprietary concern:- i)
Proof of the name, address and activi-
ty of the concern like registration cer-
tificate (in the case of a registered
concern), ii) certificate/license issued
by the Municipal authorities under
Shop & Establishment Act, iii) sales
and income tax returns, iv) CST/VAT
certificate, certificate/registration
document issued by Sales
Tax/Service Tax/Professional Tax au-
thorities, v) License issued by the Re-
gistering authority like Certificate of
Practice issued by Institute of Char-
tered Accountants of India, Institute
of Cost Accountants of India, Institute
of Company Secretaries of India, In-
dian Medical Council, Food Drug and
Control Authorities, vi) registra-
tion/licencing documents issued in
the name of the proprietary concern
by the Central Government or the
State Government Authori-
ty/Department. vii) Banks may also
accept IEC (Importer Exporter Code) issued to the proprietary concern by
the office of DGFT as an identity doc-
ument for opening of the Bank ac-
count.
� Any two of the above documents
would suffice. These documents
should be in the name of the proprie-
tary concern.
� These guidelines will apply to all new
customers, as well as accounts of ex-
isting customers. The KYC documents
KYC & AML GUIDELINES
Updated up to 15.01.2018
15
as per these guidelines for the exist-
ing accounts should be obtained and
the KYC particulars are updated.
� NRI customers are classified as “High
Risk Customer” and therefore it is
necessary to carry out KYC re-check
for this segment at the periodicity of
every two years, as per the Regulato-
ry requirement. Presently, NRI cus-
tomers can submit fresh documents
for e-KYC as per following: a. Cus-
tomers visiting the branch in per-
son: KYC documents viz- Proofs of
Identity and Overseas address proof
etc have to be submitted across the
counters.
� b. Customers not visiting the
branch: The KYC documents have to
be sent to the home branch through
post or courier from overseas. Addi-
tionally, third party attestation of all
the requisite KYC documents is also
required. Each of the single / joint
NRI account holder has to submit fol-
lowing additional document in addi-
tion to the proofs of identity and
overseas address as part of KYC doc-
uments: The NRI should be a resident
of any of the listed 30 (thirty) coun-
tries only (e.cir.sl.no:1447/2014-
15 dt:16/03/2015)
� Key features of KYC due diligence for
NRIs are mentioned below:
a) The KYC due diligence will entail
obtention of “Proof of Status”, “Proof
of Identity”, “Proof of Permanent Ad-
dress (either of Overseas or Indian)”
and “Current Address document
(overseas only)”. The customer has
the liberty to indicate one of these
addresses as the address for corres-
pondence. For customers not visiting
our branches i.e. non- face to face
customers, an additional proof will be
needed.
b) In case of NRIs/PIOs/OCIs, they will
mandatorily give copy of their pass-
port for “Proof of Identity”, and the
same document can also be accepted
for “Proof of Permanent Address”
(provided there is no change in per-
manent address). In case they want to
give permanent address other than
the one appearing in Passport, then
any of the Officially Valid Document
(OVD) carrying the address should be
obtained.
(e.cir.sl.no:103/2015-16
dt:22/04/2015
� The e-KYC auto population functio-
nality has since been rolled out in the
Branch as well as to our Business
Correspondent (BC) Kiosk Banking
channel across the country.
� A periodic report of all KYC non-
compliant NRI CIFs for every branch
and a cumulative report for control-
lers, on the monthly basis, as de-scribed below:
I. Report for branches:
a. Name of this report will be as,
“KYCNRI <number of report> - NRI
KYC Branch wise Report.pdf’ b. This report has to be downloaded
by the branch from
https://sbedwp.statebanktimes.in/S
BIEDW/, by entering valid creden-
tials of the concerned branch official
(HRMS credential with appropriate
privileges) c. Report will be uploaded
by 17th of every month for the ‘KYC
KYC & AML GUIDELINES
Updated up to 15.01.2018
16
non-compliant NRI CIFs’ as on the
last day of previous month.
II. Report for controllers:
a. Name of this report will be as,
“NON KYC NRI DATA for Control-
lers as on <month name>”
b. Report will be uploaded by 17th of
every month for the ‘KYC non-
compliant NRI CIFs’ as on the last day
of previous month.
c. This report can be downloaded
from
http://10.0.10.22/pr/newindexh.jsp
� “Money Mules” can be used to
launder the proceeds of fraud
schemes (e.g. phishing and identity
theft) by criminals who gain illegal
access to deposit accounts by re-
cruiting third parties to act as “mon-
ey mules.” In some cases these third
parties may be innocent while in
others they may be having complici-
ty with the criminals.
� In a money mule transaction, an indi-
vidual with a bank account is re-
cruited to receive cheque deposits or
wire transfers and then transfer these funds to accounts held on be-
half of another person or to other
individuals, minus a certain commis-
sion payment. Money mules may be
recruited by a variety of methods,
including spam emails, advertise-
ments on genuine recruitment web
sites, social networking sites, instant
messaging and advertisements in
newspapers. When caught, these
money mules often have their bank
accounts suspended, causing incon-
venience and potential financial loss,
apart from facing likely legal action
for being part of a fraud. Many a
times the address and contact details
of such mules are found to be fake or
not up to date, making it difficult for
enforcement agencies to locate the
account holder.
� The operations of such mule accounts
can be minimized by following the
guidelines on opening of accounts
and monitoring of transactions. It is,
therefore, advised to strictly adhere
to the guidelines on KYC/AML/CFT
issued from time to time and to
those relating to periodical updation
of customer identification data after
the account is opened and also to
monitoring of transactions in order
to protect the bank and the bank’s customers from misuse by such
fraudsters. The officer-in-charge
vested with the authority to open
the account, should ensure com-
pliance with the KYC guidelines. The
employee/officer, who has inter-
viewed the customer should sub-
scribe his signature, in the space
provided in the account opening form, for having interviewed the
prospective customer and should
ensure that all aspects of KYC guide-
lines are complied with.
� BUSINESS CORRESPONDENTS
(BCs)/BUSINESS FACILITATORS
(BFs) Bank has established alternate
channels for personal banking and
rural banking and has appointed
above functionaries to facilitate as-
signed activities. These functionaries
will have inter alia, role in
KYC/AML/CFT measures implemen-
KYC & AML GUIDELINES
Updated up to 15.01.2018
17
tation which has been spelt out here
under :- 1) Business Correspondents
(BCs) Will facilitate filling up of ac-
count opening forms, procurement
of KYC documents, photograph etc.
and put up to the home Branch 2)
Business Facilitators (BFs) where
the account will reside. Necessary
verification will be done at Home
branch. It is pertinent to mention
that while functionaries of alternate
channels will facilitate completion of
KYC formalities in respect of ac-
counts opened through them, prima-
ry responsibility of ensuring KYC
compliance in respect of all accounts
maintained with it including review
of KYC, risk categorization, monitor-
ing of transactions etc. will rest with
the parent branch.
� The Customer Identification Pro-
cedures are to be carried out at the
following stages:- (e-cir. Sl.no: 840/2014-15 dt:14/10/2014)
� While establishing a banking rela-
tionship;
� When the bank feels it is necessary to
obtain additional information from
the existing customers based on the
conduct or behaviour of the account.
� Customer identification data (includ-
ing photograph/s) should be periodi-
cally updated after the account is
opened.
� Full KYC exercise will be required to
be done at least every two years for
high risk individuals and entities.
� Full KYC exercise will be required to
be done at least every ten years for
low risk and at least every eight
years for medium risk individuals
and entities.
� Customer Identification will also be
carried out in respect of non account
holders approaching bank for high
value transactions as well as any per-
son or entity connected with a finan-
cial transaction which can pose sig-
nificant reputational or other risks to
the Bank.
� Letters of Thanks in all instances of
opening of new accounts to be sent
by registered post at the recorded
addresses to all customers with dual
purpose of thanking them for open-
ing the account with the Bank and for
verification of genuineness of ad-
dress furnished by the account
holder. Undelivered envelopes in this
regard would be required to be fol-
lowed-up closely at branch / CPC
level and proper noting is to be made
in the formalities register at the
branches. Copies of letters are to be
kept on record.
� When signatories change, care should
be taken to ensure that the identity of
any new signatories has been veri-fied.
� A number of cheque books are
being returned as undelivered due to
the recipient’s address being incor-
rect. The customer, while applying for a cheque book has the option of
requesting the delivery of the cheque
book at the address recorded in CBS
or on any other address of his choice.
The cheque book requisition slip
provided in the cheque book gives
the account holder two options for
entering the address for dispatch –
KYC & AML GUIDELINES
Updated up to 15.01.2018
18
Address alongside – which is the ad-
dress recorded in the CBS Address
given overleaf – which the account
holder needs to write overleaf in case
he wishes to take the delivery of the
cheque book at any other address of
his choice.
� Transfer of Non –KYC Compliant
Accounts-
In case of the transfer of accounts
where KYC non-compliant accounts,
the customer should be asked to
make it KYC compliant before trans-
fer. CBS does not permit transfer of
Non-KYC accounts.
TRANSFER OF INOPERATIVE ACCOUNT: :
(e Cir Sl. No. : 560/16 – 17 dated 28.07.16)
Inoperative Accounts should be made
operative before its transfer to the
transferee branch. Therefore, trans-
feree branch should ensure that ac-
count is made operative by customer
before submitting the application for
transfer of account
The Mental Health Act, 1987 provides
for a law relating to the treatment and care of mentally ill persons and
to make better provision with respect
to their property and affairs. Accord-
ing to the said Act, “mentally ill per-
son” means a person who is in need of treatment by reason of any mental
disorder other than mental retarda-
tion. Sections 53 and 54 of this Act
provide for the appointment of guar-
dians for mentally ill persons and in
certain cases, managers in respect of
their property. The prescribed ap-
pointing authorities are the district
courts and collectors of districts un-
der the Mental Health Act, 1987.
The National Trust for Welfare of
Persons with Autism, Cerebral Palsy,
Mental Retardation and Multiple Dis-
abilities Act, 1999 provides for a law
relating to certain specified disabili-
ties. Clause (j) of Section 2 of that Act
defines a “person with disability” to
mean a person suffering from any of
the conditions relating to autism, ce-
rebral palsy, mental retardation or a
combination of any two or more of
such conditions and includes a per-
son suffering from severe multiple
disabilities. This Act empowers a Lo-
cal Level Committee to appoint a
guardian, to a person with disabili-
ties, who shall have the care of the
person and property of the disabled
person.
Banks should take note of the legal
position stated above and may rely
on and be guided by the or
ders/certificates issued by the com-
petent authority, under the respec-
tive Acts, appointing guar-
dians/managers for the purposes of
opening/operating bank accounts. In case of doubt, care may be taken to
obtain proper legal advice.
e KYC
� Aadhaar based e-KYC Services has
been made live in the Bank. The printed e-KYC certificate can be used
for CIF/account opening in CBS sub-
ject to satisfying other account open-
ing requirements. The certificate
generated through e-KYC application
is solely meant for e-KYC purpose
and for use within our Bank only. (e.cir.sl.no.85/14– 15dt:25/04/2014)
KYC & AML GUIDELINES
Updated up to 15.01.2018
19
• KYC Requirements
� Pehla Kadam: Date of Birth proof
of the Minor + KYC of the Parent
� Pehli Udaan:Date of Birth proof of
the Minor + KYC of Minor
� Pehla Kadam is a Savings Bank
account for minor of any age oper-
ated jointly with his/her Par-
ent/Guardian or singly by Par-
ent/Guardian, while Pehli Udaan
is a singly operated Savings Bank
Account for a Minor aged 10 years
and above and who can sign uni-
formly.
� These accounts offer a complete
bouquet of banking products to the
children.
� Bank has implemented the UNI-
FORM CUSTOMER IDENTIFICA-
TION CODE (UCIC) – a relationship
number - in the form of Customer
Information File (CIF) to all cus-
tomers of the Bank simultaneously
with the introduction of CBS in the
Bank. As per RBI guidelines, all the multiple CIFs, either at the same
Branch or at different Branches, of
the same customer should be de-
duped/ merged into a single CIF
(the process being called de-
duplication of CIFS) - to meet the
requirements of RBI guidelines.
(e.cir.sl.no.711/2014 – 15
dt:18/09/2014)
Foreign Contribution (Regulation)
Act, 2010
(e Cir. Sl. No. : 1513/2016 – 17 dt
15.02.2017)
Branches while opening accounts
under FCRA should ensure com-
pliance with provisions of the FCRA
Act 2010,Reserve bank guidance on
Foreign Contribution (Regulation)
Act, 2010 and Foreign Contribution
(Regulation) Rules, 2011.
The Act stipulates that every person
who has been granted a certificate of
registration / prior permission shall
receive foreign contribution in a sin-
gle account and only through such
Branches of a bank as may be speci-
fied in his / her application. It strict-
ly prohibits the receipt or deposit
of any other funds (other than for-
eign contribution) in such ac-
counts.
If Registration No. is available de-
tails of Registered Association &
FCRA Certificate may be verified
from: https://fcraonline.nic.in/home/index.aspx
If FCRA Registration No. is not
available:Goto: https://fcraonline.nic.in/home/index.aspx. Then click on information bank link
at the top of the page where the fol-
lowing data is available :
• List of associations registered under
FCRA
• List of associations granted prior
permission Under FCRA
• List of associations whose registra-
tion has been cancelled
• List of associations that have filed
annual returns.
KYC & AML GUIDELINES
Updated up to 15.01.2018
20
• List of associations that have not
filed annual returns.
• List of associations that have filed
quarterly returns.
Note: If you don't have the details to
key in on the abovementioned screen
then find the state from the benefi-
ciary bank branch details and identify
state. Even if you put only state, it
will fetch you all the Registered Asso-
ciations in all the Districts in that
state.
GUIDELINES FOR RECEIVING OF
FOREIGN CONTRIBU-
TION/DONATIONS BY NGOs (e cir. Sl. No. : 496/2016 – 17 dated 13.07.2016)
i. Foreign contribution should be
provided only to FCRA designated ac-
count of the FCRA registered NGOs. ii. Non-FCRAA/Cs cannot receive for-
eign donations.
iii. In case of Non-FCRA NGOs, foreign
contribution can be received by tak-
ing prior permission from Ministry of
Home Affairs (MHA).
iv. Any FCRA-registered NGO, which
receives donation / contribution
from abroad cannot further transmit
it to any non-FCRA NGOs.
v. No local contributions can be re-
ceived in an FC Account of a FCRA
registered organisation.
vi. The foreign NGOs, which have been put under “Prior approval cat-
egory (PAC)”, can receive foreign
contribution only after taking prior
permission from Ministry of Home
Affairs, Government of India.
Prohibition of display of Aadhaar
number of residents in public do-
main (e cir. Sl. No. : 1411/2015 – 16
dated 16.02.2016)
As per the Supreme Court order
dated 11.08.2015, it is the responsi-
bility of those agencies to:
a) Protect the identity of Aadhaar
card holders by maintaining the ne-
cessary confidentiality of his Aadhaar
number; and
b) To ensure that Aadhaar numbers
are not posted, displayed, or made
available in public domain such as in-
ternet, web, public notices etc.
In case there is a requirement to pub-
lish a list of individuals by any de-
partment or any agency through a
public notice, such list shall not con-
tain Aadhaar numbers.”
‘Officially Valid Documents’(In case
change in name on account of mar-
riage or otherwise) Reserve Bank has advised Banks that
it has been receiving references/ re-
presentations from banks and indi-
viduals regarding the problems faced
by persons who change their name due to marriage or otherwise, in
submitting an ‘Officially Valid Docu-
ment’ (OVD) while opening a new
bank account or during
periodic updation exercise or incor-
porating the name change in the ex-
isting accounts. The OVD issued in
the original name, which is not up-
KYC & AML GUIDELINES
Updated up to 15.01.2018
21
dated due to various reasons, still
show the maiden/ previous name of
such persons.
Banks are advised that they may ac-
cept a copy of marriage certificate is-
sued by the State Government or Ga-
zette notification indicating
change in name together with a certi-
fied copy of the ‘officially valid docu-
ment’ in the existing name of the per-
son while establishing an account
based relationship or while under-
going periodic updation exercise.
Fictitious Offer of Funds” (FOF)
(e cir SL 508/2017-18 dt 11.10.2017)
Fictitious Offer of Funds” (FOF) cases
are defined as those illegal activities
whereby one individual / group /
entity deceives or misleads another
individual or entity by making false
promises to give some benefits
against payment of money in speci-
fied accounts of the fraudsters. The
money subsequently gets withdrawn
from these accounts by the fraudster.
Fictitious offers may include job of-
fers, mobile tower installation offers,
admission offers in reputed Educa-
tional Institute, winning lottery, offer
of gifts from foreign land, offer of money from reputed organisations
like IMF, RBI etc,
In all such cases, Branch is required
to file an STR and the proposed SOP
for dealing with the same is as under:
i) Complaint from victims of fictitious
offers be taken in writing under vic-
tim’s full signature supported by ID
proof and followed by recording the
complaint in complaint register. Fur-
ther, to make a suitably worded re-
porting to controller with a simulta-
neous action of temporary hold in the
account of the alleged recipient (cul-
prit) for the value under complaint
wherever, the complainant provides
/ branch unravels convincing
grounds / evidence to justify the
same.
Simultaneously, advise the complai-
nant that our hold will work tempo-
rarily for 2-3 days only and that he
should invoke legal recourses availa-
ble against the recipient (culprit).
ii) Branch will report all such qualify-
ing cases as defined above at the mail
id. [email protected] with a cap-
tion on top “ CARE-FICTITIOUS OF-
FER CASE” and endorse a copy to
AGM (S&I) of the concerned Circle or
the MLRO of the BU in case of MCG
and CAG.
iii) The AGM (S&I) will be the Nodal
Officer for ensuring filing of all such
STRs to AML-CFT at
[email protected]. Each case
where an STR has been filed by the Branch will be monitored by the AGM
(S&I) or the MLRO of the BU in case
of MCG and CAG and details submit-
ted to AML-CFT cell for onward re-
porting to FIU.
iv) In case the perpetrator of FOF
maintains an account with SBI, then
KYC & AML GUIDELINES
Updated up to 15.01.2018
22
inform the home branch immediately
for cross-checking the KYC docu-
ments and other credentials of their
customers.
v) The customer should also be ad-
vised to lodge a complaint / FIR with
the appropriate LEA in case the cul-
prit doesnot maintain an account
with the Bank.
vi) Investigation and permanent
freezing / closure of the account of
perpetrator of FOF:
SHELL COMPANY
A Shell company is a company with-
out active business operations / sig-
nificant assets and is normally used
to disguise business ownership from
Law Enforcement Agencies.
As Shell companies apparently bear
most of the characters as of a normal
company registered under the Com-
panies Act, these can be distinguished
with genuine companies only on the
point of activities.
Branches are required to ensure me-
ticulous compliance of following to
restrain a Shell Company from having
a banking relationship with us.
a) At time of on boarding
i) Obtaining Board resolution regard-
ing opening of A/C
ii) Obtaining prescribed KYC docu-
ments / OVDs in respect of :
a. Company b. signatories / Directors
c. Beneficial owners (if any)
Note: PAN of Companies & AADHAR
of signatories / Directors / Beneficial
owners has to be obtained.
iii) Verification of incorporation cre-
dentials of Company from website
www.mca.gov.in
iv) Recording in CBS / AOFs the de-
tail of BOs(if any) & extent of their
ownership
c) Post account opening
The operating Official to keep close
watch over conduct of account of
companies from the following pers-
pective:
i) Verifying the reasonability of
transactions inconsistent to profile /
business activity of company.
ii) Sudden high value credits (by
cash/ by transfer) followed by im-
mediate transfer should be enquired
into with utmost care.
iii) Balance sheets should be obtained
and examined for major variances
with the turnovers in accounts.
Attributes common to Shell com-
panies:
i. No physical presence (other than a
mailing address)
ii. Sharing of common registered ad-dress by multiple companies.
iii. Nominal paid-up capital
iv. High reserves and surplus on ac-
count of receipt of high share pre-
mium
v. Investment in unlisted companies
vi. No dividend income
KYC & AML GUIDELINES
Updated up to 15.01.2018
23
vii. Private companies as majority
shareholders
viii. Low turnover and operating in-
come
ix. Nominal expenses
x. Nominal statutory payments
xi. Nominal stock in trade
xii. Minimum fixed assets.
xiii. Financial performance is notice-
ably inconsistent with that of other
businesses of comparable size in the
same industry
xiv. Directors are persons of very low
means: Individually they have no as-
sets nor any substantial source of in-
come.
xv. Request of Debits in account are
apparently raised to be purposeless.
xvi. In Bill collection / Bill discount-
ing transactions, goods or services
underlying the transactions do not
match with the company’s profile as
disclosed.
xvii. Transactions (Debit / Credit) in
A/C appears to have been done with
entities engaged in unrelated busi-
nesses