RBI asks banks to seek only basic info under KYC norms
Updated: Sep 17, 2013 04:57:50pm
New Delhi, Sept 17 (KNN) The Reserve Bank of India has asked banks to seek only basic information under the 'Know Your Customer' norms and not insist on optional information such as date of wedding, number of relatives, as they have no relation with judging the risk perception of the clients.
The objective of KYC guidelines is to prevent banks from being used, intentionally or unintentionally, by criminal elements for money laundering activities. KYC procedures also enable banks to know/understand their customers and their financial dealings better which in turn help them manage their risks prudently.
Reserve Bank noticed that banks were seeking personal information/details like number of dependents, the names of sons and daughters, lifestyle, number of foreign visits undertaken during the last three years, details of family members/relatives settled abroad, assets and liabilities, name and date of birth of spouse, wedding date, investments, etc, from customers which are not mandatory and relevant to perceive risk of a prospective customer while complying with KYC/AML requirement during the process of opening an account or during periodic updation.
This has led to customer complaints that banks are going overboard in seeking information for KYC compliance and thereby invading into their privacy.
“It is, therefore, reiterated that ‘mandatory’ information required for KYC purpose which the customer is obliged to give while opening an account only should be obtained at the time of opening the account/during periodic updation,” said RBI.
Other ‘optional’ customer details/additional information, if required may be obtained separately after the account is opened only with the explicit consent of the customer.
“The customer has a right know what is the information required for KYC that she/he is obliged to give, and what is the additional information sought by the bank that is optional, said RBI.
Further, it is reiterated that banks should keep in mind that the information (both ‘mandatory’ – before opening the account as well as ‘optional’- after opening the account with the explicit consent of the customer) collected from the customer is to be treated as confidential and details thereof are not to be divulged for cross selling or any other like purposes. (KNN/SD)
The objective of KYC guidelines is to prevent banks from being used, intentionally or unintentionally, by criminal elements for money laundering activities. KYC procedures also enable banks to know/understand their customers and their financial dealings better which in turn help them manage their risks prudently.
Reserve Bank noticed that banks were seeking personal information/details like number of dependents, the names of sons and daughters, lifestyle, number of foreign visits undertaken during the last three years, details of family members/relatives settled abroad, assets and liabilities, name and date of birth of spouse, wedding date, investments, etc, from customers which are not mandatory and relevant to perceive risk of a prospective customer while complying with KYC/AML requirement during the process of opening an account or during periodic updation.
This has led to customer complaints that banks are going overboard in seeking information for KYC compliance and thereby invading into their privacy.
“It is, therefore, reiterated that ‘mandatory’ information required for KYC purpose which the customer is obliged to give while opening an account only should be obtained at the time of opening the account/during periodic updation,” said RBI.
Other ‘optional’ customer details/additional information, if required may be obtained separately after the account is opened only with the explicit consent of the customer.
“The customer has a right know what is the information required for KYC that she/he is obliged to give, and what is the additional information sought by the bank that is optional, said RBI.
Further, it is reiterated that banks should keep in mind that the information (both ‘mandatory’ – before opening the account as well as ‘optional’- after opening the account with the explicit consent of the customer) collected from the customer is to be treated as confidential and details thereof are not to be divulged for cross selling or any other like purposes. (KNN/SD)
Loading...
