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Know your customer places a costly burden on businesses operating in the financial industry, especially smaller financial companies, where compliance costs are disproportionately heavy. [ 21 ] Customers may feel the information requested to be intrusive and burdensome, and may choose not to enter the business relationship as a result.
Anti-Money Laundering (AML) and Know Your Customer (KYC) norms: The RBI has put in place strict guidelines on AML and KYC to prevent money laundering and the financing of terrorism. Banks are required to carry out due diligence on their customers, monitor transactions, and report suspicious transactions to the relevant authorities.
This process comes under "know your customer" measures, which means knowing the identity of the customer and understanding the kinds of transactions in which the customer is likely to engage. By knowing one's customers, financial institutions can often identify unusual or suspicious behaviour, termed anomalies, which may be an indication of ...
In July 2016, FinCEN enacted new rules regarding beneficial ownership: [2] Financial institutions must collect from the legal entity customer the name, date of birth, address, and social security number or other government identification number (passport number or other similar information in the case of foreign persons) for individuals who own ...
Concerning know your customer rules and Bank Secrecy Act regulations, financial institutions are encouraged to keep track of customers employment status and other business dealings, including whether or not the financial activity of customers are consistent with their business activities, and report on customers' suspect activities to the ...
KYC – "Know Your Customer" refers to due diligence activities that financial institutions and other regulated companies must perform to ... RBI – Reserve Bank of ...
The RBI continues to change and relax policies regarding these accounts in an effort to better serve bank customers. [38] Know-your-customer (KYC) requirements for opening bank accounts were relaxed for small accounts in August 2005, eliminating a documentation barrier to banking.
On 14 March 2013 Reserve Bank of India conducted an inquiry into possible violation of its KYC (Know Your Customer) and AML (anti-money laundering) guidelines by ICICI Bank, HDFC Bank and Axis Bank. [5] [6] [7] Following the enquiry, penalty of Rs 5 crore on Axis Bank, Rs 4.5 crore on HDFC Bank and Rs 1 crore on ICICI Bank was imposed by RBI. [8]