Aml kyc short notes::: (Most imp points) ( Read everyone not only for exam useful for everyday banking Knowledge)
1. Beneficial Owners shall mean the natural person who ultimately owns or or controls a client
and/ or the person whose behalf a transaction is being conducted , and includes a person
who exercises ultimate effective control over a juridical person.
2. " controlling ownership interest " means ownership of or entitlement to more than 25 %
shares or capital for company , more than 15 % of capital or profits of the partner for
partnership firm, more than 15% of the property or capital or profits for unincorporated
association , 15 % or more in case of trust.
3. where the client or the owner of the controlling interest is a company listed on the stock
exchange , or it is a subsidiary of such company , it is not necessary to identify and verify the
identity of any shareholder or beneficial owner of such companies.
4. maintenance of record of prescribed transaction , furnishing of information of prescribed
transaction to the specified authority , verifying and maintaining records of the identity of its
clients , preserving records for 5 years : section 12 of pml act 2002.
5. According to Rule 2 (h) of PMLA rule " transaction " means a purchase , sale , loan , pledge ,
gift , transfer etc.
6. Non profit organisation ( npo ) no governmental organisation ( ngo ) promoted by united
nation (UN) or its agencies will be classified as low risk customers,
7. in case the address mentioned as per " proof of address " undergoes any change , a fresh
proof of address may be submitted to the branch within a period of six months.
8. in event of change in the address due to relocation or ant reason , customers should intimate
the new address for correspondence to the bank within two weeks of such change.
9. a large number of customers with transferrable jobs or those who migrate jobs are unable to
produce a document in their name as address proof immediately after relocating. in such
cases, bank may transfer existing accounts at transferor branch to the transferee branch
without insisting on fresh proof of address and on the basis of a self declaration from the
account holder about his/her current address , subject to submitting proof of address within
a period of six months.
10. letter issued by gazetted officer, with duly attested photograph of the person ; where low risk
customer expresses inability to complete the documentation requirements on account of any
reason that bank considers to be genuine , and where it is essential no to interrupt the
normal conduct of business , the branches may complete the verification of identity within a
period of six months from the date establishment of relationship.
11. utility bills such as electricity , water , and land line etc should not be older than two months.
12. bank shall ensure that branches open Non Resident Ordinary (NRO) bank account of a
foreign student on the basis of his/her passport ( with appropriate Visa & immigration
endorsement ) which contains the proof of identity and address in the home country along
with photograph and a letter offering admission from educational institution .
13. within a period of 30 days of opening of account of student shall submit proof of local
address. during 30days period , pending verification of address , the account shall be allowed
an inward foreign remittance of USD 1000 and a cap of Monthly withdrawal of Rs 50000.00/-
14. foreign portfolio investors (FPIs) who have been duly registered in accordance with SEBI
guidelines and have undergone the required KYC due diligence prescribed by SEBI through
custodian/ intermediary regulated by SEBI may approach Authorised Dealer (AD ) category-I
branches for opening a bank account for the purpose of investment under portfolio
investment scheme (PIS).
15. The PMLA came into effect from 1st July 2005. Necessary Notifications / Rules under the said
Act were published in the Gazette of India on 1st July, 2005 by the Department of Revenue,
Ministry of Finance, Government of India.
16. while opening small accounts , the customer shall be made aware that if at any point of time
, the balance exceeds Rs 50000.00 or the aggregate of all credits in a financial year exceedsRs 1,00,000/- in a year or the aggregate withdrawals and transfers in a month exceeds Rs
10,000/- , no further transactions will be permitted until full KYC is done.
17. in order not to inconvenience the customer , the branch shall notify the customer when
balance exceeds Rs 40,000/- or the total credit in a year reaches Rs 80,000/-.
18. while imposing ' partial freezing ' , branches have to ensure that the option of ' partial
freezing ' is exercised after giving due notice of three months initially to customers to comply
with KYC requirements to be followed by a reminder giving a further period of three months.
19. Branches may impose ' partial freezing ' by allowing all credits and disallowing all debits with
the freedom to close accounts.
20. if the accounts are still KYC non-compliant after six month of imposing initial ' partial freezing
' branches should disallow all debits and credits from/to the accounts therby rendering them
inoperative.
21. purchase of Foreign Exchange :
Purchase of foreign currency notes and /or travellers' cheques from customers any
amount less than USD $ 200/- or its equivalent , full details of identification must be
maintained.
Purchase of foreign currency notes and /or travellers' cheques from customers any
amount in excess of USD $ 200/- or its equivalent , bank shall obtain , verify and
retain a copy of the identification documents prescribed by bank.
Request for payment in cash in Indian rupees to Resident customers towards the
purchase of Foreign Currency Notes or travellers cheques from them may not exceed
USD $ 1000. or equivalent per transaction, but not exceeding equivalent of Rs
50,000/-
Request for payment in cash by foreign visitors / NRI may be acceded to the extent
of only USD $ 3000 or its equivalent , but not exceeding USD $ 1000 or equivalent on
any single day.
22. Sale of foreign Exchange :
Irrespective of the amount involved , for identification purpose , the passport of the
customer is obtained and sale of foreign exchange is made only on personal
application after verification of identification documents.
Payment in excess of Rs 50,000/- towards sale of foreign exchange shall be received
by only crossed cheque drawn on bank account of the applicant's firm / company etc.
All purchase made by a person within one month may be treated as single
transaction for the above purpose and also for reporting purposes.
23. In order to address the various issues arising out of money laundering , a Financial Action
Task force on money laundering (FATF) was established in 1989 by G-7 summit.
24. FATF compiles the list of Non Co operative Countries and Territories (NCCT).
25. Where the particulars of any Bank's customer match with the particulars of designated
individual/entities , The KYC Division shall immediately , not later than 24 hours from time of
finding out such customer, inform full particulars of funds , financial assets or economic
resources or related services held in the form of bank accounts.
26. All orders under section 51A of unlawful Activities ( prevention ) Acr, relating to the funds,
Finacial Assets or Economics Resources or Related services , would be communicated to all
banks through RBI.
27. Correspondent banking is the provision of banking services by one bank ( " correspondent
Bank") to another bank ( " The respondent Bank").
28. With amendments to PML rules , notified by the GOI qf in terms of amended rule 3 , every
respoting entity is required to maintain the record of all transaction including the record of
all cross bordrer wire transfers of more than Rs 5.00 lakh or its equivalent in foriegn currency
, where either origin or destination of the fund is in India.Bank shall ensure that the
information of all such transactions shall be furnished to director , FIU-IND by 15th ofsucceeding month. The infromation shall be furnished electronically in the FINnet moduke by
FIU-IND on the line of STR/CTR/NTR.
29. Information accompanyig all domestic wite transfer of Rs 50000.00( Rupees fifty thousand )
and abovd must include complete orignator information i.e. name, address and account
number etc ; unless full originator information can be made available by other means.
30. For both Cross-Border and domestc Wire Transfer , bank processing and intremediary
element of a chain of wire transfer is retained with tranferor. where technical limitations
prevent full orignator information accompanying a cross-Border wire transfer from
remianing with Domestic Wire Transfer , a record ( as Required under PML Act ,2002) must
be kept at least for 5 years by the Receiving intermediary bank of all information received
from the Ordering Bank.
31. Maintenance of records of transactions :
All cash transactions of the value of more than Rs 10.00 lacsor its equvalent in
foreign currency.
All Series of cash transactions integrally connected to each other which have been
individually valued below Rs 10.00 lacs or its equivalent in foreign currency where
such series of transaction have tacken plance within month and monthly aggregate
value of such transaction exceeds Rs 10.00 lacs or its equivalent in foreign currency.
All transactions involving receipts by Non-Profit Organsation (NPO) of value more
than Rs 10.00 lacs or its eqivalent in foriegn currency . NPO means any entity or
Organisation that is registered as a Trust or Society under the Socities Registration
Act , 1860 or any similar state legislation or a ccompany registered under section 25
of compaines act,1965.
32. Maintenance and preservation of records :
The bank shall maintain for atleast five years from the date of transaction between
the bank and the client , all necessary records of transactions both domestic or
international.
The bank shall ensure that records pertaining to identification of the customer and
his address obtained while opening the account and during the course of business
relationship , are properly preserved for at least 5 years after the business
relationship ended.
33. The bank shall ensure that customers are not to be informed ('tipped off') at any level that
the account is under monitoring for suspicious activities and a disclosure has been made to
the appropriate statutory authorities.
1. Beneficial Owners shall mean the natural person who ultimately owns or or controls a client
and/ or the person whose behalf a transaction is being conducted , and includes a person
who exercises ultimate effective control over a juridical person.
2. " controlling ownership interest " means ownership of or entitlement to more than 25 %
shares or capital for company , more than 15 % of capital or profits of the partner for
partnership firm, more than 15% of the property or capital or profits for unincorporated
association , 15 % or more in case of trust.
3. where the client or the owner of the controlling interest is a company listed on the stock
exchange , or it is a subsidiary of such company , it is not necessary to identify and verify the
identity of any shareholder or beneficial owner of such companies.
4. maintenance of record of prescribed transaction , furnishing of information of prescribed
transaction to the specified authority , verifying and maintaining records of the identity of its
clients , preserving records for 5 years : section 12 of pml act 2002.
5. According to Rule 2 (h) of PMLA rule " transaction " means a purchase , sale , loan , pledge ,
gift , transfer etc.
6. Non profit organisation ( npo ) no governmental organisation ( ngo ) promoted by united
nation (UN) or its agencies will be classified as low risk customers,
7. in case the address mentioned as per " proof of address " undergoes any change , a fresh
proof of address may be submitted to the branch within a period of six months.
8. in event of change in the address due to relocation or ant reason , customers should intimate
the new address for correspondence to the bank within two weeks of such change.
9. a large number of customers with transferrable jobs or those who migrate jobs are unable to
produce a document in their name as address proof immediately after relocating. in such
cases, bank may transfer existing accounts at transferor branch to the transferee branch
without insisting on fresh proof of address and on the basis of a self declaration from the
account holder about his/her current address , subject to submitting proof of address within
a period of six months.
10. letter issued by gazetted officer, with duly attested photograph of the person ; where low risk
customer expresses inability to complete the documentation requirements on account of any
reason that bank considers to be genuine , and where it is essential no to interrupt the
normal conduct of business , the branches may complete the verification of identity within a
period of six months from the date establishment of relationship.
11. utility bills such as electricity , water , and land line etc should not be older than two months.
12. bank shall ensure that branches open Non Resident Ordinary (NRO) bank account of a
foreign student on the basis of his/her passport ( with appropriate Visa & immigration
endorsement ) which contains the proof of identity and address in the home country along
with photograph and a letter offering admission from educational institution .
13. within a period of 30 days of opening of account of student shall submit proof of local
address. during 30days period , pending verification of address , the account shall be allowed
an inward foreign remittance of USD 1000 and a cap of Monthly withdrawal of Rs 50000.00/-
14. foreign portfolio investors (FPIs) who have been duly registered in accordance with SEBI
guidelines and have undergone the required KYC due diligence prescribed by SEBI through
custodian/ intermediary regulated by SEBI may approach Authorised Dealer (AD ) category-I
branches for opening a bank account for the purpose of investment under portfolio
investment scheme (PIS).
15. The PMLA came into effect from 1st July 2005. Necessary Notifications / Rules under the said
Act were published in the Gazette of India on 1st July, 2005 by the Department of Revenue,
Ministry of Finance, Government of India.
16. while opening small accounts , the customer shall be made aware that if at any point of time
, the balance exceeds Rs 50000.00 or the aggregate of all credits in a financial year exceedsRs 1,00,000/- in a year or the aggregate withdrawals and transfers in a month exceeds Rs
10,000/- , no further transactions will be permitted until full KYC is done.
17. in order not to inconvenience the customer , the branch shall notify the customer when
balance exceeds Rs 40,000/- or the total credit in a year reaches Rs 80,000/-.
18. while imposing ' partial freezing ' , branches have to ensure that the option of ' partial
freezing ' is exercised after giving due notice of three months initially to customers to comply
with KYC requirements to be followed by a reminder giving a further period of three months.
19. Branches may impose ' partial freezing ' by allowing all credits and disallowing all debits with
the freedom to close accounts.
20. if the accounts are still KYC non-compliant after six month of imposing initial ' partial freezing
' branches should disallow all debits and credits from/to the accounts therby rendering them
inoperative.
21. purchase of Foreign Exchange :
Purchase of foreign currency notes and /or travellers' cheques from customers any
amount less than USD $ 200/- or its equivalent , full details of identification must be
maintained.
Purchase of foreign currency notes and /or travellers' cheques from customers any
amount in excess of USD $ 200/- or its equivalent , bank shall obtain , verify and
retain a copy of the identification documents prescribed by bank.
Request for payment in cash in Indian rupees to Resident customers towards the
purchase of Foreign Currency Notes or travellers cheques from them may not exceed
USD $ 1000. or equivalent per transaction, but not exceeding equivalent of Rs
50,000/-
Request for payment in cash by foreign visitors / NRI may be acceded to the extent
of only USD $ 3000 or its equivalent , but not exceeding USD $ 1000 or equivalent on
any single day.
22. Sale of foreign Exchange :
Irrespective of the amount involved , for identification purpose , the passport of the
customer is obtained and sale of foreign exchange is made only on personal
application after verification of identification documents.
Payment in excess of Rs 50,000/- towards sale of foreign exchange shall be received
by only crossed cheque drawn on bank account of the applicant's firm / company etc.
All purchase made by a person within one month may be treated as single
transaction for the above purpose and also for reporting purposes.
23. In order to address the various issues arising out of money laundering , a Financial Action
Task force on money laundering (FATF) was established in 1989 by G-7 summit.
24. FATF compiles the list of Non Co operative Countries and Territories (NCCT).
25. Where the particulars of any Bank's customer match with the particulars of designated
individual/entities , The KYC Division shall immediately , not later than 24 hours from time of
finding out such customer, inform full particulars of funds , financial assets or economic
resources or related services held in the form of bank accounts.
26. All orders under section 51A of unlawful Activities ( prevention ) Acr, relating to the funds,
Finacial Assets or Economics Resources or Related services , would be communicated to all
banks through RBI.
27. Correspondent banking is the provision of banking services by one bank ( " correspondent
Bank") to another bank ( " The respondent Bank").
28. With amendments to PML rules , notified by the GOI qf in terms of amended rule 3 , every
respoting entity is required to maintain the record of all transaction including the record of
all cross bordrer wire transfers of more than Rs 5.00 lakh or its equivalent in foriegn currency
, where either origin or destination of the fund is in India.Bank shall ensure that the
information of all such transactions shall be furnished to director , FIU-IND by 15th ofsucceeding month. The infromation shall be furnished electronically in the FINnet moduke by
FIU-IND on the line of STR/CTR/NTR.
29. Information accompanyig all domestic wite transfer of Rs 50000.00( Rupees fifty thousand )
and abovd must include complete orignator information i.e. name, address and account
number etc ; unless full originator information can be made available by other means.
30. For both Cross-Border and domestc Wire Transfer , bank processing and intremediary
element of a chain of wire transfer is retained with tranferor. where technical limitations
prevent full orignator information accompanying a cross-Border wire transfer from
remianing with Domestic Wire Transfer , a record ( as Required under PML Act ,2002) must
be kept at least for 5 years by the Receiving intermediary bank of all information received
from the Ordering Bank.
31. Maintenance of records of transactions :
All cash transactions of the value of more than Rs 10.00 lacsor its equvalent in
foreign currency.
All Series of cash transactions integrally connected to each other which have been
individually valued below Rs 10.00 lacs or its equivalent in foreign currency where
such series of transaction have tacken plance within month and monthly aggregate
value of such transaction exceeds Rs 10.00 lacs or its equivalent in foreign currency.
All transactions involving receipts by Non-Profit Organsation (NPO) of value more
than Rs 10.00 lacs or its eqivalent in foriegn currency . NPO means any entity or
Organisation that is registered as a Trust or Society under the Socities Registration
Act , 1860 or any similar state legislation or a ccompany registered under section 25
of compaines act,1965.
32. Maintenance and preservation of records :
The bank shall maintain for atleast five years from the date of transaction between
the bank and the client , all necessary records of transactions both domestic or
international.
The bank shall ensure that records pertaining to identification of the customer and
his address obtained while opening the account and during the course of business
relationship , are properly preserved for at least 5 years after the business
relationship ended.
33. The bank shall ensure that customers are not to be informed ('tipped off') at any level that
the account is under monitoring for suspicious activities and a disclosure has been made to
the appropriate statutory authorities.
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