Are you a banker preparing for JAIIB or CAIIB exams? Or perhaps you work in the financial sector and want to ensure compliance with RBI’s KYC (Know Your Customer) and AML (Anti-Money Laundering) regulations? Either way, mastering KYC norms is crucial for secure banking operations.
KYC is a legal and regulatory requirement implemented by financial institutions to prevent illegal activities such as money laundering, terrorist financing, identity fraud, and financial crimes. These measures help banks ensure that they are dealing with legitimate customers and not facilitating illegal transactions.
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In this session, we dive deep into KYC operational aspects, covering customer verification, transaction monitoring, risk assessment, and compliance standards as per RBI guidelines.
📌 Don’t miss out on this essential learning!
Watch the video below for a complete breakdown and join the conversation in the comments!
Watch the Full Video:
Understanding KYC & AML: Key Concepts and Compliance
🔹 The Role of RBI in KYC Guidelines
- RBI governs KYC under the Banking Regulation Act (Section 35A)
- KYC norms align with Financial Action Task Force (FATF) standards
- Aim: Prevent money laundering, fraud, and terrorist financing
- In 2022, RBI emphasized stricter KYC norms for high-value transactions and enhanced monitoring of digital transactions.
🔹 Four Pillars of KYC Policy
- Customer Acceptance Policy (CAP) – Who can and cannot open an account?
- Customer Identification Procedures (CIP) – Verifying identity and address
- Risk Management – Classifying customers based on risk profile
- Transaction Monitoring – Keeping track of suspicious financial activities
🔹 Key Customer Due Diligence (CDD) Measures
- Proof of Identity (POI) & Proof of Address (POA) documents required
- Types of KYC:
- Full KYC – Face-to-face verification with documents
- E-KYC – Aadhaar OTP-based verification
- Video KYC – Live verification for extra security
🔹 High-Risk vs. Low-Risk Customers
Politically Exposed Persons (PEPs) → High risk
Salaried employees → Low risk
🔹 Consequences of Non-Compliance
- Account Freezing – If customers fail to submit KYC
- Regulatory Penalties – RBI imposes heavy fines for KYC violations
- Fraud Risks – Non-compliance may lead to money laundering risks
Conclusion: Why KYC & AML Compliance Matters
KYC is not just a regulatory requirement; it is a key safeguard against financial crime. By adhering to RBI’s guidelines, banks ensure secure banking, maintain public trust, and avoid hefty penalties.
🔹 Takeaways from this post:
- Always follow the four pillars of KYC.
- Perform risk-based due diligence for each customer.
- Submit mandatory regulatory reports to avoid penalties.
- Ensure compliance with periodic KYC updates.
📌 Now it’s your turn!
💬 Drop your thoughts in the comments below!
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📥 Download the PDF Guide on KYC & AML Compliance
For easy reference, download our comprehensive PDF guide that includes key points from this video and additional insights.
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