Executive Summary:
This document from the Reserve Bank of India (RBI), dated May 29, 2019, informs regulated entities (REs) of amendments to the Master Direction (MD) on Know Your Customer (KYC) regulations, following Government of India notifications regarding the Prevention of Money-laundering rules and Aadhaar regulations. These amendments are effective immediately and require REs to update their KYC practices.
Key Points / Main Content:
Aadhaar Authentication and Officially Valid Documents (OVD):
* Banks can perform offline Aadhaar verification for individuals who voluntarily use their Aadhaar for identification.
* Proof of Aadhaar possession is added to the list of OVDs, submitted as issued by UIDAI.
Customer Identification:
* For individuals seeking benefits/subsidies under Section 7 of the Aadhaar Act, banks must obtain Aadhaar and perform eKYC authentication, based on the customer's declaration.
* For non-Direct Benefit Transfer (DBT) beneficiaries, REs must obtain a certified copy of any OVD (containing identity and address details) and a recent photograph.
* REs must ensure non-DBT beneficiary customers redact or blackout their Aadhaar number when submitting it for Customer Due Diligence.
Other KYC Requirements:
* REs (excluding banks) may identify customers through offline Aadhaar verification with consent.
* If the OVD lacks an updated address, certain "deemed OVDs" can be submitted temporarily as proof of address, provided an updated OVD is submitted within 3 months.
* For non-individual customers, PAN/Form No. 60 is required for companies and partnerships, along with other entity-related documents, including PAN/Form No. 60 of authorized signatories.
* Existing bank account holders must submit PAN or Form No. 60 within a government-specified timeframe, or the account may be temporarily ceased after accessible notice and a reasonable opportunity to be heard.
* Additional certifying authorities are specified for OVDs of Non-Resident Indian (NRI) and Person of Indian Origin (PIO) customers.
Impact Analysis:
Regulated Entities (REs):
* Impact: REs need to update their KYC procedures to align with the new amendments regarding Aadhaar usage, OVD acceptance, and customer identification processes, including additional requirements for non-individual customers.
* Action Required: Update KYC policies and procedures, train staff on new requirements, and implement systems to ensure compliance with the amended Master Direction.
Existing Bank Account Holders:
* Impact: Existing account holders may face temporary cessation of account operations if they fail to submit PAN or Form No. 60 within the timeline notified by the Government.
* Action Required: Submit PAN or Form No. 60 within the specified timeframe.
Non-Resident Indian (NRI) and Person of Indian Origin (PIO) Customers:
* Impact: Benefit from the expanded list of certifying authorities for OVDs.
* Action Required: Utilize the updated list of certifying authorities when providing OVDs for KYC purposes.
Customers Desiring Benefits/Subsidies under Aadhaar Act:
* Impact: Banks must obtain Aadhaar and perform eKYC authentication for these customers, based on their declaration.
* Action Required: Declare to the bank their desire to receive benefits/subsidies under the Aadhaar Act, 2016.
Non-DBT beneficiary customers:
* Impact: Are now required to redact or blackout their Aadhaar number when submitting it for Customer Due Diligence.
* Action Required: Redact or blackout their Aadhaar number when submitting it for Customer Due Diligence.
Key Entities Referenced
Prevention of Money-laundering Maintenance of Records Rules, 2005: A set of rules amended by a Gazette Notification G.S.R. 108E dated February 13, 2019, issued by the Government of India.
Aadhaar and other Laws amendment Ordinance, 2019: An Ordinance notified by the Government amending the Prevention of Money Laundering Act, 2002, among other laws.
Prevention of Money Laundering Act, 2002: An act amended by the Aadhaar and other Laws amendment Ordinance, 2019.
Aadhaar: A 12-digit individual identification number issued by the Unique Identification Authority of India.
Unique Identification Authority of India (UIDAI): The authority that issues Aadhaar numbers.
Aadhaar Targeted Delivery of Financial and Other subsidies, Benefits and Services Act, 2016: An act of the parliament of India, to provide for, inter alia, good governance, efficient, transparent, and targeted delivery of subsidies, benefits and services.
Master Direction on KYC: A document updated to reflect changes effected by amendments related to Aadhaar and Prevention of Money Laundering Act.
Non-Resident Indian (NRI): A citizen of India who resides outside of India.
RBI/2018-19/190
DBR.AML.BC.No.39/14.01.001/2018-19 May 29, 2019
The Chairpersons/ CEOs of all the Regulated Entities
Dear Sir/Madam,
Amendment to Master Direction (MD) on KYC
Government of India, vide Gazette Notification G.S.R. 108(E) dated February 13, 2019, has
notified amendments to the Prevention of Money-laundering (Maintenance of Records) Rules,
2005. Further, an Ordinance, “Aadhaar and other Laws (amendment) Ordinance, 2019”, has
been notified by the Government amending, inter alia, the Prevention of Money Laundering Act,
2002.
2. Important changes carried out in the Master Direction in accordance with the aforementioned
amendments are listed hereunder:
a) Banks have been allowed to carry out Aadhaar authentication/ offline-verification of an
individual who voluntarily uses his Aadhaar number for identification purpose. (Section
16 of the amended MD on KYC)
b) ‘Proof of possession of Aadhaar number’ has been added to the list of Officially Valid
Documents (OVD) with a proviso that where the customer submits ‘Proof of possession
of Aadhaar number’ as OVD, he may submit it in such form as are issued by the Unique
Identification Authority of India (UIDAI). (Section 3 of the amended MD)
c) For customer identification of “individuals”:
i. For individual desirous of receiving any benefit or subsidy under any scheme
notified under section 7 of the Aadhaar (Targeted Delivery of Financial and Other
subsidies, Benefits and Services) Act, 2016, the bank shall obtain the customers
Aadhaar and may carry out its e-KYC authentication based on his declaration
that he is desirous of receiving benefit/subsidy under the Aadhaar Act, 2016.
(Section 16 of the amended MD)
ii. For non-DBT beneficiary customers, the Regulated Entities (REs) shall obtain a
certified copy of any OVD containing details of his identity and address along with
one recent photograph. (Section 16 of the amended MD)
d) REs shall ensure that the customers (non-DBT beneficiaries) while submitting Aadhaar
for Customer Due Diligence, redact or blackout their Aadhaar number in terms of sub-
rule 16 of Rule 9 of the amended PML Rules.(Section 16 of the amended MD)
ब��कग प�रचालन और िवकास िवभाग, क��ीय कायार्लय, क��ीय कायार्लय भवन, 13व� मंिजल, शहीद भगत �सह मागर्, मुंबई – 400 001
फोन: 022-22701223, फैक् स: 022-22701239, ईमेल-: cgmicdbodco@rbi.org.in, वेबसाइट: www.rbi.org.in
Department of Banking Operations & Development, Central Office, Central Office Building, 13th Floor, Shahid Bhagat Singh Marg, Fort, Mumbai – 400 001
Phone : 022-22701223, Fax : 022-22701239, E-mail : cgmicdbodco@rbi.org.in, Website : www.rbi.org.in
"Caution: RBI never sends mails, SMSs or makes calls asking for personal information like bank account details, passwords, etc. It never keeps or offers funds to anyone. Please
do not respond in any manner to such offers."2
e) REs other than banks may identify a customer through offline verification under the
Aadhaar Act with his/her consent. (Section 16 of the amended MD)
f) In case OVD furnished by the client does not contain updated address, certain deemed
OVDs for the limited purpose of proof of address can be submitted provided that the
OVD updated with current address is submitted within 3 months. (Section 3(a) ix of the
amended MD)
g) For non-individual customers, PAN/Form No. 60 of the entity (for companies and
Partnership firms – only PAN) shall be obtained apart from other entity related
documents. The PAN/Form No. 60 of the authorised signatories shall also be
obtained.(Section 30-33)
h) For existing bank account holders, PAN or Form No. 60 is to be submitted within such
timelines as may be notified by the Government, failing which account shall be subject to
temporary ceasing till PAN or Form No. 60 is submitted. However, before temporarily
ceasing operations for an account RE shall give the customer an accessible notice and a
reasonable opportunity to be heard.(Section 39 of the amended MD)
4. Further, additional certifying authorities for certifying the OVDs of Non-Resident Indian (NRI)
and Person of Indian Origin (PIO) customers have been specified in section 3(a)(v) of the
Master Direction.
5. The Master Direction on KYC dated February 25, 2016, is hereby updated to reflect the
changes effected by the above amendments and shall come into force with immediate effect.
Yours faithfully,
(Dr. S. K. Kar)
Chief General Manager