KYC compliance | Equitas Small Finance Bank (2024)

FAQs

What is KYC compliant in bank? ›

KYC means "Know Your Customer". It is a process by which banks obtain information about the identity and address of the customers. This process helps to ensure that banks' services are not misused. The KYC procedure is to be completed by the banks while opening accounts and also periodically update the same.

The address proof can be your Aadhaar Card, Voter ID, Passport or any other government document. Attach a passport-size photograph of yourself. Submit the duly-signed and attached form at the nearest branch of your bank. The bank will complete the physical verification of your documents and update your KYC.

KYC or 'know your customer' is a mandatory verification procedure carried out by financial institutions with the goal of minimising illegal activities. Since 2004, the Reserve Bank of India has prohibited individuals to open a bank account, trading account or demat account without fulfilling the KYC procedure for KYC.

A typical KYC identification process involves (i) gathering of identification information (e.g. full name, date of birth, sex, citizenship, address, contact details and specimen signatures or biometric information, and (ii) presentation/submission by the customers of original and clear copy of at least one (1) ...

KYC compliance process

Identify individual customers through their official identity documents. Verify corporate entities through corporation documents along with verification of beneficial owners. Maintain risk profiles of customers. Take AML compliance measures if required.

It involves offline or online verification by submitting necessary documents. Offline KYC requires visiting the bank branch while online verification can be done through the website or mobile app. Necessary documents include proof of identity and address like Aadhaar, PAN, utility bills, and a recent photograph.

In general, there are three key elements in KYC that create challenges for businesses in order to stay compliant: Customer identification and verification. Businesses must collect and verify customer identities using reliable, independent sources, typically government-issued identification documents.

Know Your Customer checks – often shortened to KYC checks – are a way for companies to assess and confirm a customer's identity, their financial activities, and the risk they pose. The goal is to prevent fraud, money laundering, and other financial crimes by ensuring that customers are who they claim to be.

Whether a bank needs KYC every year varies depending on how you look at it. Banks do need to go through the KYC process for every new customer who creates an account with them.

If an individual does not comply with KYC updation rules, then he/she stands at risk of restriction on transactions and even temporary suspension of their banking account. Simply put, their bank account will be unusable for carrying out certain financial or non-financial transactions.

How much does KYC cost? ›

Finance Minister Nirmala Sitharaman had said that Aadhaar has brought down the cost of KYC to ₹3 from as high as ₹700.

KYC process includes ID card verification, face verification, document verification such as utility bills as proof of address, and biometric verification. Banks must comply with KYC regulations and anti-money laundering regulations to limit fraud. KYC compliance responsibility rests with the banks.

Key Takeaways. Know Your Client (KYC) is a standard used in the investment and financial services industry to verify customers and know their risk and financial profiles. Three components of KYC include the customer identification program (CIP), customer due diligence (CDD), and enhanced due diligence (EDD).

KYC in banking is designed to establish the identity of a customer, assess the risks of doing business with them, then periodically re-verify their identity as needed. This significantly reduces fraudulent activity by: Stopping individuals from creating accounts with stolen or invented identities.