RBI New KYC Guidelines: Streamlining Financial Security 2024

The RBI has announced updates to its Know Your Customer (KYC) Master Directions, effective November 6, 2024. These changes align with Prevention of Money Laundering Rules and UAPA amendments, aiming to prevent illegal activities like money laundering and terrorism financing.

Understanding KYC and Recent Updates

Know Your Customer (KYC) is a verification process used by financial institutions
RBI announced updates to Master Directions on KYC, effective November 6, 2024
Changes align with Prevention of Money Laundering Rules and UAPA amendments
Primary goal: Prevent illegal activities like money laundering and terrorism financing
Essential process includes customer identification, document verification, and address proof

Key Amendments and Simplifications

Introduction of Unique Customer Identification Code (UCIC) for each customer

Risk-based periodic KYC updates:

- High-risk customers: Every 2 years
- Medium-risk customers: Every 8 years
- Low-risk customers: Every 10 years
No redundant KYC for existing customers within same institution
Mandatory upload of KYC data to Central KYC Records Registry (CKYCR)
Seven-day timeline for updating CKYCR with new customer information
Enhanced monitoring of high-risk accounts with frequent transactions
Change in UAPA central nodal officer designation from Additional Secretary to Joint Secretary

Domestic Money Transfer (DMT) Framework

New guidelines effective November 2024

Stricter verification requirements:

- Mandatory recording of beneficiary's name and address
- Verification of remitter's mobile number and documents
- Additional authentication factor for each transaction
Banks must comply with Income Tax Act provisions for cash deposits
Specific identifiers required for cash-based remittances
Implementation of IMPS and NEFT transaction messaging requirements

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