RBI amends the master direction on Know Your Customer

Jan 13, 2020 | by Avantis RegTech Legal Research Team

The Reserve Bank of India (RBI) on January 09, 2020, has decided to amend the Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016 along with amendments to the Prevention of Money-laundering (Maintenance of Records) Rules, 2005 and Video based Customer Identification Process (V-CIP). The RBI has decided to permit V-CIP as a consent based alternate method of establishing the customer’s identity for customer onboarding to leverage the digital channels for Customer Identification Process (CIP) by Regulated Entities (REs). 

The followings are the amendments to the PML Rules:-

1. It amends the definition of Digital KYC and Equivalent e-document.

2. The customers for the purpose of Customer Due Diligence CDD) process, shall submit the followings:

a) Aadhaar number or Officially Valid Document (OVD) or 

b) the equivalent e-document thereof containing the details of his identity and address, and

c) Permanent Account Number or the equivalent e-document thereof or Form No. 60 as defined in Income-tax Rules, 1962; and such other documents.

3. Equivalent e-document has also been permitted for accounts of non-individual customer.

4. The changes due to introduction of Video based Customer Identification Process (V-CIP) are - 

Under the process of V-CIP, REs may undertake live V-CIP, to be carried out by an official of the RE, for establishment of an account based relationship with an individual customer, after obtaining his informed consent and shall adhere to the following stipulations:

a) The RE shall record video and capture photograph of customer present for identification and obtain the identification information by either using OTP or offline verification.

b) RE shall capture a clear image of PAN card to be displayed by the customer during the process.

c) Live location of the customer shall be captured to ensure that customer is physically present in India.

d) The official of the RE shall ensure that photograph of the customer in the Aadhaar/PAN details matches with the customer.

e) All accounts opened through V-CIP shall be made operational only after being subject to concurrent audit, to ensure the integrity of process.

f) RE shall ensure that the process is a seamless, real-time, secured, end-to-end encrypted audio-visual interaction with the customer and the quality of the communication is adequate to allow identification of the customer beyond doubt.

g) REs shall carry out software and security audit and validation of the V-CIP application before rolling it out to ensure security, robustness and end to end encryption.

h) REs shall ensure that the video recording is stored in a safe and secure manner.

i) REs are encouraged to take assistance of the latest available technology, including Artificial Intelligence (AI) and face matching technologies, to ensure the integrity of the process as well as the information furnished by the customer.

It shall come into force with immediate effect.

[RBI Notification No. DOR.AML.BC.No.27/14.01.001/2019-20]


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