Understanding verification and updation of KYC forms in Goa

Last week, we took a basic look at the KYC (Know Your Customer/Client), which is common in India, including Goa, today.

An understanding of KYC is incomplete without an understanding of when  the KYC is required, verification processes and periodic updation.

WHEN IS THE KYC REQUIRED?

Customer identification is required by banks, all India financial institutions, non-banking finance companies, asset reconstruction companies, organisations that provide credit card and electronic/mobile payment services and authorised persons regulated by RBI:

• When an account-based relationship commences

• To carry out any international money transfer operations for a person who is not an account holder

• If there is a doubt about the authenticity/adequacy of the customer identification data obtained

• When the entity is selling third party products as an agent or when it is selling its own products or in the case of payment of credit card dues/sale and reloading of pre-paid/travel cards or other product for more than Rs 50,000

• To carry out transactions for a walk-in customer where the amount involved is Rs 50,000 or more, whether it is a single transaction or several transactions that appear to be connected

• If the entity has reason to believe that a customer (account-based or walk-in) is intentionally structuring a transaction into a series of transactions below the value of Rs 50,000

VERIFICATION PROCESSES

The KYC process can be carried out in any of the following two ways which are equal in terms of their authenticity:

• In-person KYC: The customer is required to come in person to carry out the KYC process. This can be done by visiting the office/branch.

• Online verification: The customer is required to upload a scanned copy of the Aadhar card.

UPDATION OF KYC

The entity is required to adopt a risk-based approach for periodic updation of KYC to ensure that the information collected under Customer Due Diligence (CDD) is kept up-to-date and relevant, particularly when there is a high risk.

From the date of opening of the account/last KYC verification, updation is to be carried out at least once in every:

• two years for high-risk customers

• eight years for medium risk customers, and

• ten years for low-risk customers

If there is no change in KYC information, a self-declaration can be provided by the customer from her/his e-mail registered with the entity, mobile number registered with the entity, ATMs, digital channels (online banking, internet banking, mobile application of the entity).

In the case of a change in the customer’s address, a self-declaration of the new address needs to be provided by the customer through the same channels as above. The declared address is to be verified through confirmation within two months, through address verification.

The entity, at its option, can obtain a copy of the OVD, which must be clearly specified in their duly approved KYC policy.

FOR MINORS

For customers who were minor at the time of opening an account, fresh photographs are to be obtained on their becoming major.

At this time, it is to be ensured that the Customer Due Diligence (CDD) documents as per the current CDD standards are available with the entity. If required, the entity may carry out fresh KYC of such customers.

This article seeks to present, in simple words, legal issues and doubts that we face in our day-to-day lives. It should not be taken as a substitute for a lawyer.

(The writer is a lawyer and company secretary with a focus on education, legal issues and governance, and enjoys working with individuals and organisations towards enhancing their effectiveness).