1. KYC Norms & AML Standards Guidelines
Group Members:-
Sajala Maharjan
Aditya Shrestha
Ankur Goel
Gaurav Prasad Gaur
Ashish Bhatta

2. Introduction KYC : Know Your Customer
PURPOSE : To Identify the Clients
WHERE IT IS USED : Bank and other financial
institutions.
WHY IT IS USED : - Monitor the financial
transactions
- Risk Management
- Customer Identification

3. KYC Policy’s Key Elements
Customer Acceptance Policy
Customer Identification Procedure
Monitoring of Transaction
Risk Management

4. Customer Identification Policy
Every bank should develop a Customer identification policy laying down explicit criteria for acceptance of customer.
No account is opened in anonymous or factious / benami name
parameters are clearly defined in terms of nature of business
Documentation requirement and other information to collect in respect of
different customer depending of risk.
Circumstances in which customer is permitted to act on behalf of another
person should be clearly defined.
Banks should prepare profile for each new customer based on risk categorization profile may contain information relating to customer identity, social/financial status.

5. Risk categorization
EX :- salaried employees and people belonging to lower economic strata
Non resident customers
High net worth individuals
Trusts, charities , NGOS and organization receiving donation
Companies having close family , shareholding or beneficial relationship
Firms with sleeping partners
Politically exposed person of foreign origins
Non face to face customers
Those with dubious reputation as per public info available

6. Customer Identification Procedure
Legal name and any other name used
Correct permanent address
Accounts of individuals
Name of company
Principal place of business
Mailing address of company
Telephone , fax no
Accounts of company
Legal name
Address
Name of all partners and their address
Telephone no of firms and partners
Accounts of partnership firms

7. Customer Identification Requirement
Trustee/ nominee of fiduciary A/c
Accounts of companies and firms
Client A/c opened by professional intermediaries
Accounts of politically exposed person
Accounts of non face to face customers
Accounts of proprietary concerns
Accounts of salaried employees
Accounts for foreign students studying in India
Walk in customers
Accounts of foreign portfolio Investors

8. Monitoring of Transactions
Extend of monitoring will depend on risk sensitivity of account.
Risk involved in cash intensive business
High risk associated accounts or suspicious accounts
Updation of risk category
Risk Management
BOD must ensure appropriate procedure which cover proper management oversight, system and controls, segregation of duties and other related matters
Banks internal audit and compliance.
National Money laundering / financing of terror assessment committee

9. Money Laundering
Money laundering is the practice of engaging in financial transactions in order to conceal the identity, source, and/or destination of money, and is a main operation of the underground economy.
Another Definition
Money laundering is a process whereby the origin of funds generated by illegal means is concealed (drug trafficking, gun smuggling, corruption, etc.)

10. Typologies/ Techniques Employed
Deposit structuring
Connected Accounts
Payable Through Accounts
Investment Banking and the Securities Sector
Insurance and Personal Investment Products
Companies Trading and Business Activity
Correspondent Banking
Lawyers, Accountants & other Intermediaries
Misuse of Non-Profit Organizations.

11. Monitoring of Transactions
Ongoing monitoring is an essential element of effective KYC procedures
Bank should pay special attention to all complex transactions and unusual pattern
Large amount of inconsistent cash should attract the attention of the bank
Key indicators should be set by every bank for very high account turnover inconsistent with the size of balance
Categorization of customer should be carried out periodically not less than 6 months
High risk associated accounts should be taken into account by banks to identify and report in Suspicious Transaction Report

12. Closure of Account
All accounts should be subject to minimum KYC standard to establish the identity of the natural/ legal person and the beneficiary person.
When bank is not able to apply KYC measures due to no- furnishing of information by the customer, the account should be terminated after issuing the show cause notice to the customer

13. Introduction of New Technologies
Special attention to money laundering threats from new or developing technologies.
Banks engaged in issuing of electronic cards should fully comply with KYC/AML/CFT guidelines
Banks should ensure that appropriate KYC procedures are duly applied before issuing the cards to the customers.

14. Wire Transfer
Wire transfer is a transaction carried out on behalf of an originator person through the bank by electronic means to make amount available to a beneficiary person to the bank
Cross border transfer
Domestic wire transfer
Cross border transaction must contain name and address of the originator
Record should be maintained for cross border transactions above Rs 5 lakhs as per PML Rules
Domestic transfer of Rs fifty thousand and above must include all the information of the originator
Necessary information should be included in the making of payment through debit card or credit card
Inter bank transfer and settlement should be excluded from above.

15. Parties Involved in Wire Transfer
Ordering Bank
Intermediary Bank
Beneficiary Bank

16. Authorized Persons for KYC/AML
Principal Officer
Designated Director

17. Requirements for an Effective KYC Implementation
Maintenance of Records of Transaction
Information to be Maintained
Maintenance & Preservation of Records
Reporting to FIU-IND

18. Reporting Formats Cash Transaction Report (CTR)
Summary
Electronic File Transfer- CTR
Suspicious Transaction Report (STR)
Electronic File Transfer- STR
Counterfeit Currency Report (CCR)
Electronic File Transfer- CCR
Non-Profit Org. Transaction Report (NTR)

19. Role of Financial Institutions
Customer Education
Employee’s Training
Employees Hiring