Quick Success Series – KYC & AML Guidelines

April 24, 2010

Promotional Exams for the Year

2010-11 are round the
corner. You may be going
through a number of Books,
Quick Success Series Guides, Periodicals, Bank’s
Circulars and Instructions to
acquire all the relevant
information on a Particular
Topic from the examination
point of view.

We at SBLC Deoghar have made

a sincere & honest effort to
present all information
spread over various books,
guides & circulars on a
particular topic at one place
through ‘Quick Success
Series’ for your benefit. It will
KYC & AML Guidelines also be quite helpful for your
last minute revisions of
various facts & figures learnt
during preparation.

We have taken all care to

provide correct, complete
though concise information
related to the topic. In case
any discrepancy is observed
please feel free to advise us
through Email or Mobile as
given below.

Please also give your honest

feedback and valuable
suggestion in this regard.

Wishing you all grand success

Chief Manager (Training)

State Bank Learning Centre
Deoghar- 814112

Phone- 06432-232895
 Fax- 06432-231810
Compiled By E-mail: agmstc.deoghar@sbi.co.in
Ravi Prakash
Manager Training, SBLC Deoghar
Mobile- 9472964793
Email-p.ravi@sbi.co.in

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 Quick Success Series – KYC & AML Guidelines
April 24, 2010

5 years (for low risk as they are not permitted to

 KYC guidelines are based on customers) and once in 2 operate in India.
the paper issued on Customer years (for high and medium  In case of cross –border wire
Due Diligence (CDD) for banks risk customers). transfer it should be
by the Basel Committee on  Those who are not in accompanied by name and
Banking Supervision. position to submit the address of the originator and
 Key elements of documents as per KYC norms where an account exists, the
KYC/AML/CFT Policy are : can also open their accounts if number of the account.
(1) Customer Acceptance the balance does not exceed  In domestic wire transfers all
(2) Customer Identification Rs 50000/ and credit transactions of Rs 50000/
(3) Monitoring of Transaction summation does not exceed must include complete
(4) Risk Management Rs 1 lakh in a year in all their originator information but
 PMLA stands for Prevention accounts. when both originator and
of Money Laundering Act , an  In HUF prescribed Joint beneficiary are banks or
Act formulated by RBI in 2002 Hindu Family letter is signed financial institutions, they
 AML stands for Anti Money by all the adult Co parceners. would be exempted from
Laundering.  In minor is less than 10 year above requirements.
 CFT stands for Combating old, ID proof of the person  Low Risk:-
Financial Terrorism. who will operate the account i) Salaried employee/
 FATF stands for Financial is to be obtained. pensioners whose
Action Task Force.  Non face to face Customers income structures are
 FIU-IND stands for Financial are those with whom Branch well defined.
Intelligence Unit – India. has not had direct interaction ii) People belonging to
 MLRO stands for Money at the time of opening of lower economic strata
Laundering Reporting Officer. account e.g. NRI customers of the society whose
 As per KYC policy definition who opened the account accounts show small
of customer includes without visiting the branch. balances and low
-A person or entity that In case of Non face to face turnover.
maintains an account and/or Customers documents iii) Other individuals with
has a business relationship for photo ID and proof debit or credit
with the bank (borrower, of residence to be summations below Rs
guarantor, Locker holders etc.) verified by 10 lacs p.a.
-One on whose behalf the - Banker iv) Small business
account is maintained - Notary Public enterprises and small
-Beneficiary of transactions - Indian Embassy public Ltd Cos with
conducted by professional - A person known to the debit or Credit
bodies such as CA/ Stock Bank whose signatures summation below Rs
Brokers etc. are verifiable from 10 lacs pa.
-Any person or entity Bank’s records. v) Government
connected with a financial - Branches may also departments and
transaction. accept verification of government owned
 Discretion for closure of a/c documents by officers Companies State and
due to non compliance of KYC of correspondent Central Regulators, F I
norms is vested with the banks whose s statutory bodies etc.
Branch Head if there is RM- signatures are  Medium Risk :-
PB/ RM-MM and in all other verifiable through an i) Individuals and persons
cases, the AGM (Admin) of the authorized forex engaged in Business.
respective A.O. branch of the Bank. ii) Firms in Private sector ,
 Periodicity of updating of  No correspondent Private Limited
customer identification data, relationship should be Companies, Public Ltd
including photographs- once in established with a shell Bank

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 Quick Success Series – KYC & AML Guidelines
April 24, 2010

Companies with debit  All transactions mentioned Rs. 10 lacs and suspicious
or credit summations below has to be recorded in transactions are required to
of Rs 10 lacs to Rs 1 separate register. be maintained for a period of
crores p.a. - Cash withdrawals and 10 years.
 High Risk:- deposits for Rs 10 lacs
i) Accounts of firms in and above..
Private Sector, Private - Its equivalent in foreign
Limited Company and Currency.
individuals with Debit - Where series of Cash
or Credit Summations transactions integrally
above Rs. 1 crore per connected to each
annum. other and within a
ii) Customers domiciled in month the aggregate
the some country value of cash
identified e.g. transactions exceed Rs
Myanmar, Nigeria etc . 10 Lakh.
iii) Trusts, charities, NGOs  CTR (Cash Transaction)
and organizations Report regarding transactions
receiving donations of Rs. 10 lac and above in an
from India and account are generated by CDC
abroad. Belapur itself and reported to
iv) Politically Exposed FIU-IND on monthly basis.
persons (PEP)s of  STR (Suspicious Transaction)
foreign origin. Report - Branches are required
v) Non face to face to record and report all
customers. transaction of suspicious
vi) Those with dubious nature to LHO through their
reputation. controller as it has to be
vii) Borrowal accounts reported by Corporate Centre
which are NPAs. to the Director, FIU-IND.
 Bank has set up a KYC AML  Counterfeit Currency
CELL at Jaipur. This cell will be Reports (CCRs): All instances
under the administrative of counterfeit currency and
control of the CGM (BOD) and forgery of valuable security
Principal Officer KYC/AML. It and documents are to be
will be analyzing the alerts on submitted to FIU-IND through
transactions handled across the the Principal Officer.
Bank with the help of  Scrutiny of unusual
AMLOCK software acquired transactions.
from M/s 3i-Infotech for - up to Rs. 1,00,000/-
eventual generation of
-
Suspicious Transactions
Passing officer
Reports (STRs),
it is required, to be - Rs. 1,00,000/- to Rs.
submitted to the 5,00, 000/- -
Financial Intelligence Manager of Division.
Unit-India (FIU-IND) - Above Rs. 5,00,000/-
by the Principal -
Officer (KYC/AML). Branch Manager.
 In terms of the PMLA
records of Cash transactions of

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