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The Reserve Bank of India (RBI) has modified the KYC rules for Banks. RBI has added a new guideline in the KYC Circular.
RBI had added this new guideline in KYC Circular
The RE that has last uploaded or updated the customer’s KYC records in the CKYCR shall be responsible for verifying the identity and / or address of the customer, as applicable. Accordingly, any bank downloading and relying on such records from the CKCYR shall not be required to re-verify the authenticity of the customer’s identity and / or address, provided the KYC records downloaded from CKYCR are current and compliant with the PML Act, 2002 / PML Rules, 2005. The bank downloading and relying on KYC records downloaded from the CKCYR shall remain responsible for all aspects of CDD procedure and provisions of these Directions, except verification of identity and / or address of the customer.”
What this means? Let’s Understand
When a customer’s KYC details are uploaded or updated in the Central KYC Records Registry (CKYCR), the responsibility for verifying the customer’s identity and address lies with the Regulated Entity (RE) that last uploaded or updated those records. This means that the bank or financial institution which most recently carried out the KYC process and uploaded the information into CKYCR is accountable for ensuring that the customer’s identity and address were properly verified as per regulatory requirements.
Once the KYC information is available in CKYCR, other banks or regulated entities can download and rely on these records for onboarding the same customer. In such cases, the bank downloading the KYC data is not required to re-verify the customer’s identity or address again, provided that the KYC information obtained from CKYCR is current, valid, and compliant with the provisions of the Prevention of Money Laundering Act, 2002 and the Prevention of Money Laundering Rules, 2005. This provision helps avoid duplication of KYC efforts and reduces inconvenience to customers.
However, it is important to note that the exemption is limited only to the verification of identity and address. The bank that downloads and relies on KYC records from CKYCR continues to remain fully responsible for all other aspects of Customer Due Diligence (CDD). This includes customer risk assessment, monitoring of transactions, ongoing due diligence, and compliance with all other requirements prescribed under RBI’s KYC Directions.
In other words, while the bank can rely on CKYCR data for identity and address verification, it cannot transfer or escape responsibility for anti-money laundering compliance. The bank must independently ensure that the customer’s transactions are monitored, risks are assessed, and any suspicious activity is reported as required.
Thus, CKYCR enables KYC reuse and simplifies onboarding, but overall accountability for customer due diligence and AML compliance always remains with the bank currently dealing with the customer, except for the limited aspect of identity and address verification already completed by the last uploading regulated entity.
Click here to download RBI updated KYC Circular
