RBI has asked banks and non-banking financial companies to adopt a risk-based approach regarding KYC (Know Your Customer) updates from time to time.
RBI KYC Guidelines: Reserve Bank of India has issued new guidelines for Know Your Customer (KYC) to strengthen the customer verification system. Under this, banks and non-banking financial companies (NBFCs) have been asked to adopt a risk-based approach regarding KYC updates from time to time.
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RBI made changes in master direction
After review, the Central Bank has amended the ‘Master’ guidelines regarding KYC. Under this, banks, NBFCs and other entities under the purview of RBI will have to conduct due diligence of their customers as per the prescribed procedures.
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Why did this change happen?
The RBI amendment came after the government’s new instructions related to Anti-Money Laundering Rules, Unlawful Activities (Prevention) Act (UAPA) and Weapons of Mass Destruction and their Delivery Systems (Prohibition of Unlawful Activities) Act.
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Guidelines made on FATF’s recommendations
RBI said that it had also updated some instructions as per the recommendations of FATF (Financial Action Task Force).
The latest master instructions state that the risk-based approach for periodic updates of KYC has been changed.
The step has been taken to ensure that information collected as part of customer investigations is retained, especially where the risk is high.
