KYC and AML Policy

Policy Name

Know Your Customer and Anti Money Laundering Policy

Issue and Effective date

April 19, 2011

Date of last review

May 05, 2016

Date of current review

September 18, 2017

Date of next review

On or before September 18, 2018

Periodicity of review

Annual

Owner / Contact

Compliance Department

Approver

Board of Directors

Annexures

- Indicative list for risk categorization of customers as

Annexure-A

List of KYC documents for different type of customers as

Annexure-B

Training Module on KYC and AML for employees as

Annexure-c

 

S.no.

Particulars

1

Preamble

2

Purpose

 

3

Definitions

4

Key Elements

 

a.

Customer Acceptance Policy(“CAP”)

 

b.

Risk management

 

c.

Customer Identification Procedures(“CIP”)

 

d.

Monitoring of Transactions

5

Designated Director

6

Principal Officer

7

Compliance of KYC Policy

8

Customer Due Diligence Procedures(“CDD”)

9

Record Management

10

Reporting Requirements to Financial Intelligence Unit - India

11

Requirements/ obligations under International Agreements Communications from

 

International Agencies

12

Other Instructions

Preamble

The Board of Directors (the “Board”) of DMI Finance Private Limited (the “Company” or“DMI”), has adopted the following policy regarding salient features of Know Your Customer (‘KYC’) / Anti-Money Laundering (‘‘AML’’) norms for DMI Finance Private Limited as prescribed by Reserve Bank of India (“RBI”).

Purpose

The policy has been framed in accordance with Reserve Bank of India (Know Your Customer (KYC) Directions, 2016 issued vide circular no. RBI/DBR/2015-16/18 dated Feb 25, 2016 and revised vide circular no. RBI/2016-17/183 DBR.AML.BC.48/14.01.01/2016-17 dated December 15, 2016.

As per the above referred master circular, DMI is required to adopt the guidelines contained therein with suitable modifications in accordance with the Company’s business activity and ensure that a proper policy framework on KYC and AML measures are formulated and put in place with the approval of the Board.

In terms of the provisions of Prevention of Money-Laundering Act, 2002 and the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005, DMI is required to follow certain customer identification procedures while undertaking a transaction either by establishing an account based relationship or otherwise and monitor their transactions.

This policy document envisages the establishment and adoption of measures and procedures relating to KYC, AML and CFT for DMI in accordance with the requirements prescribed by RBI and modified from time to time.

Definitions

“Act” and “Rules” means the Prevention of Money-Laundering Act, 2002 and the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005, respectively and amendments thereto.

Beneficial Owner (BO):

Where the customer is a Company, the beneficial owner is the natural person(s), who, whether acting alone or together, or through one or more juridical person, has/have a controlling ownership interest or who exercise control through other means.

Explanation-

“Controlling ownership interest” means ownership of/entitlement to more than 25 per cent of the shares or capital or profits of the Company.

“Control” shall include the right to appoint majority of the directors or to control the management or policy decisions including by their shareholding or management rights or shareholder’s agreements or voting agreements.

Where the customer is a partnership firm, the beneficial owner is the natural person(s), who, whether acting alone or together, or through one or more juridical person, has/have ownership of/entitlement to more than 15 per cent of capital or profits of the partnership.

Where the customer is an unincorporated association or body of individuals, the beneficial owner is the natural person(s), who, whether acting alone or together, or through one or more juridical person, has/have ownership of/entitlement to more than 15 per cent of the property or capital or profits of the unincorporated association or body of individuals.

Explanation:

Term ‘body of individuals’ includes societies. Where no natural person is identified under (a), (b) or (c) above, the beneficial owner is the relevant natural person who holds the position of senior managing official.

Where the customer is a trust, the identification of beneficial owner(s) shall include identification of the author of the trust, the trustee, the beneficiaries with 15% or more interest in the trust and any other natural person exercising ultimate effective control over the trust through a chain of control or ownership.

Explanation:

Term ‘body of individuals’ includes societies.

“Board” means Board of Directors of the Company.

“Company” means DMI Finance Private Limited

"Directors” mean individual Director or Directors on the Board of the Company.

“Central KYC Records Registry” (CKYCR) means an entity defined under Rule 2(1)(aa) of the Prevention of Money Laundering Rules, to receive, store, safeguard and retrieve the KYC records in digital form of a customer.

“Designated Director" means Managing Director or a whole-time Director, duly authorized by the Board of Directors of the Company to ensure overall compliance with the obligations imposed under chapter IV of the Prevention of Money Laundering Act and the Rules.

Explanation. –

For the purpose of this clause, the terms "Managing Director" and "Whole-time Director" shall have the meaning assigned to them in the Companies Act, 2013.

Non-profit organizations”(NPO) means any entity or organization that is registered as a trust or a society under the Societies Registration Act, 1860 or any similar State legislation or a Company registered under Section 25 of the Companies Act, 1956 or applicable Section 8 of Companies Act, 2013.

“Officially valid document” (OVD) means the following:

Passport,

Driving license,

Permanent Account Number (PAN) Card,

Voter's Identity Card issued by the Election Commission of India,

Job card issued by NREGA duly signed by an officer of the State Government,

Letter issued by the Unique Identification Authority of India containing details of name, address and Aadhaar number.

Explanation:

Customers, at their option, shall submit one of the six OVDs for proof of identity and proof of address.

Provided that where ‘simplified measures’ are applied for verifying the identity of the customers the following documents shall be deemed to be OVD:

Identity card with applicant’s photograph issued by Central/ State Government Departments, Statutory/ Regulatory Authorities, Public Sector Undertakings, Scheduled Commercial Banks, and Public Financial Institutions;

Letter issued by a Gazetted officer, with a duly attested photograph of the person.

Provided further that where ‘simplified measures’ are applied for verifying, for the limited purpose of, proof of address the following additional documents are deemed to be OVDs:

Utility bill, which is not more than two months old, of any service provider (electricity, telephone, post-paid mobile phone, piped gas, water bill);

Property or Municipal Tax receipt;

Bank account or Post Office savings bank account statement;

Pension or family Pension Payment Orders (PPOs) issued to retired employees by Government Departments or Public Sector Undertakings, if they contain the address;

Letter of allotment of accommodation from employer issued by State or Central Government departments, statutory or regulatory bodies, public sector undertakings, scheduled commercial banks, financial institutions and listed companies. Similarly, leave and license agreements with such employers allotting official accommodation; and

Documents issued by Government departments of foreign jurisdictions or letter issued by Foreign Embassy or Mission in India.

“Person” has the same meaning assigned in the Act and includes:

an individual,

a Hindu undivided family,

a Company,

a firm,

an association of persons or a body of individuals, whether incorporated or not,

every artificial juridical person, not falling within any one of the above persons

any agency, office or branch owned or controlled by any of the above persons

“Principal Officer” means an officer nominated by DMI, responsible for furnishing information as per rule 8 of the Rules.

“Suspicious transaction” means a “transaction” as defined below, including an attempted transaction, whether or not made in cash, which, to a person acting in good faith:

gives rise to a reasonable ground of suspicion that it may involve proceeds of an offence specified in the Schedule to the Act, regardless of the value involved; or

appears to be made in circumstances of unusual or unjustified complexity; or

appears to not have economic rationale or bona-fide purpose; or

gives rise to a reasonable ground of suspicion that it may involve financing of the activities relating to terrorism.

Explanation:

Transaction involving financing of the activities relating to terrorism includes transaction involving funds suspected to be linked or related to, or to be used for terrorism, terrorist acts or by a terrorist, terrorist organization or those who finance or are attempting to finance terrorism.

A ‘Small Account' means a savings account in which:

the aggregate of all credits in a financial year does not exceed rupees one lakh;

the aggregate of all withdrawals and transfers in a month does not exceed rupees ten thousand; and

the balance at any point of time does not exceed rupees fifty thousand.

“Transaction” means a purchase, sale, loan, pledge, gift, transfer, delivery or the arrangement thereof and includes:

opening of an account;

deposit, withdrawal, exchange or transfer of funds in whatever currency, whether in cash or by cheque, payment order or other instruments or by electronic or other non-physical means;

the use of a safety deposit box or any other form of safe deposit;

entering into any fiduciary relationship;

any payment made or received, in whole or in part, for any contractual or other legal obligation; or

establishing or creating a legal person or legal arrangement.

Terms bearing meaning assigned above, unless the context otherwise requires, shall bear the meanings assigned to them below:

“Common Reporting Standards” (CRS) means reporting standards set for implementation of multilateral agreement signed to automatically exchange information based on Article 6 of the Convention on Mutual Administrative Assistance in Tax Matters.

“Customer” means a person who is engaged in a financial transaction or activity with a Regulated Entity (RE) and includes a person on whose behalf the person who is engaged in the transaction or activity, is acting.

iii) “Walk-in Customer” means a person who does not have an account based relationship with the RE, but undertakes transactions with the Company.

“Customer Due Diligence (CDD)” means identifying and verifying the customer and the beneficial owner using ‘Officially Valid Documents’ as a ‘proof of identity’ and a ‘proof of address’.

“Customer identification” means undertaking the process of CDD.

“FATCA” means Foreign Account Tax Compliance Act of the United States of America (USA) which, inter alia, requires foreign financial institutions to report about financial accounts held by U.S. taxpayers or foreign entities in which U.S. taxpayers hold a substantial ownership interest.

“IGA” means Inter Governmental Agreement between the Governments of India and the USA to improve international tax compliance and to implement FATCA of the USA.

“KYC Templates” means templates prepared to facilitate collating and reporting the KYC data to the CKYCR, for individuals and legal entities.

“Non-face-to-face customers” means customers who open accounts without visiting the branch/offices of the Company or meeting the officials of the Company.

“On-going Due Diligence” means regular monitoring of transactions in accounts to ensure that they are consistent with the customers’ profile and source of funds.

“Periodic Updation” means steps taken to ensure that documents, data or information collected under the CDD process is kept up-to-date and relevant by undertaking reviews of existing records at periodicity prescribed by the Reserve Bank.

“Politically Exposed Persons” (PEPs) are individuals who are or have been entrusted with prominent public functions in a foreign country, e.g., Heads of States/Governments, senior politicians, senior government/judicial/military officers, senior executives of state-owned corporations, important political party officials, etc.

“Regulated Entities” (REs) means:

all Scheduled Commercial Banks (SCBs)/ Regional Rural Banks (RRBs)/ Local Area Banks (LABs)/ All Primary (Urban) Co-operative Banks (UCBs)/State and Central Co-operative Banks (St CBs / CCBs) and any other entity which has been licenced under Section 22 of Banking Regulation Act, 1949, which as a group shall be referred as ‘banks’

All India Financial Institutions (AIFIs)

All Non-Banking Finance Companies (NBFC)s, Miscellaneous Non-Banking Companies (MNBCs) and Residuary Non-Banking Companies (RNBCs).

All Payment System Providers (PSPs)/ System Participants (SPs) and Prepaid Payment Instrument Issuers (PPI Issuers)

All authorized persons (APs) including those who are agents of Money Transfer Service Scheme (MTSS), regulated by the Regulator.

“Simplified procedure” means the procedure for undertaking customer due diligence in respect of customers, who are rated as low risk by the RE and who do not possess any of the six officially valid documents, with the alternate documents prescribed under the two provisos of Section 3(a)(vi) of this Directions.

“Shell bank” means a bank which is incorporated in a country where it has no physical presence and is unaffiliated to any regulated financial group.

“Wire transfer” means a transaction carried out, directly or through a chain of transfers, on behalf of an originator person (both natural and legal) through a bank by electronic means with a view to making an amount of money available to a beneficiary person at a bank.

xvii) “Domesticand cross-border wiretransfer”: When the originator bank and the beneficiary bank is the same person or different person located in the same country, such a transaction is a domestic wire transfer, and if the ‘originator bank’ or ‘beneficiary bank’ is located in different countries such a transaction is cross-border wire transfer.

All other expressions unless defined herein shall have the same meaning as have been assigned to them under the Banking Regulation Act or the Reserve Bank of India Act, or the Prevention of Money Laundering Act and Prevention of Money Laundering (Maintenance of Records) Rules, any statutory modification or re- enactment thereto or as used in commercial parlance, as the case may be.

Key Elements

The objective

The objective of KYC guidelines is to prevent DMI from being used, intentionally or unintentionally, by criminal elements for money laundering activities. KYC procedures also enable the Company to know/understand its customers and their financial dealings better which in turn help them manage the risks prudently. DMI has framed its KYC policy incorporating the following four key elements: -

Customer Acceptance Policy;

Customer Identification Procedures;

Monitoring of Transactions; and

Risk management.

For the purpose of the KYC policy, a ‘Customer' is defined as per Clause 3 i.e. Definitions. a) Customer Acceptance Policy(CAP)

DMI shall, develop a clear Customer Acceptance Policy laying down explicit criteria for acceptance of customers. The Customer Acceptance Policy must ensure that explicit guidelines are in place on the following aspects of customer relationship in DMI.

No account is opened in anonymous or fictitious/ benami name(s);

Parameters of risk perception are clearly defined in terms of the nature of business activity, location of customer and his clients, mode of payments, volume of turnover, social and financial status etc. to enable categorization of customers into low, medium and high risk (banks may choose any suitable nomenclature viz. level I, level II and level III ); customers requiring very high level of monitoring, e.g. Politically Exposed Persons may, if considered necessary, be categorised even higher;

DMI will take care of the documentation requirements and other information to be collected in respect of different categories of customers depending on perceived risk and keeping in mind the requirements of PML Act, 2002 and guidelines issued by Reserve Bank from time to time;

DMI will not open an account or close an existing account where the bank is unable to apply appropriate customer due diligence measures i.e. it is unable to verify the identity and /or obtain documents required as per the risk categorization due to non-cooperation of the customer or non-reliability of the data/information furnished to DMI. It may, however, be necessary to have suitable built in safeguards to avoid harassment of the customer. For example, decision to close an account may be taken at a reasonably high level after giving due notice to the customer explaining the reasons for such a decision;. For example, decision to close an account may be taken at a reasonably high level (Principal Officer / Director) after giving due notice to the customer explaining the reasons for such a decision;

Circumstances, in which a customer is permitted to act on behalf of another person/entity, will be clearly spelt out in conformity with the established law and practices, as there could be occasions when an account is operated by a mandate holder or where an account may be opened by an intermediary in a fiduciary capacity, and

Necessary checks before opening a new account to ensure that the identity of the customer does not match with any person with known criminal background or with banned entities such as individual terrorists or terrorist organizations, UN Security Council List of Prohibited clients. Further DMI will ensure that the name of the proposed clients is not appearing in the consolidated list of individual and entities circulated by RBI for such purposes and also available at below link http://www.un.org/sc/committees/1267/pdf/AQList.pdf

Risk Categorization

Type of low risk customers- individuals (other than High Net Worth) and entities whose identities and sources of wealth can be easily identified and transactions in whose accounts by and large conform to the known profile, may be categorized as low risk. Illustrative examples of low risk customers may include government departments and government owned companies, regulators and statutory bodies, etc.

In such cases, the policy requires only the basic requirements of verifying the identity and location of the customer.

Type of medium or high risk customers- Customers that are likely to pose a higher than average risk to DMI may be categorized as medium or high risk depending on the customer's background, nature and location of activity, country of origin, sources of funds and his client profile, etc. DMI will apply enhanced due diligence measures based on the risk assessment, thereby requiring intensive ‘due diligence' for higher risk customers, especially those for whom the sources of funds are not clear. Examples of customers requiring higher due diligence may include:

Trusts, charities, NGOs and organizations receiving donations,

Companies having close family shareholding or beneficial ownership,

Firms with 'sleeping partners',

Politically exposed persons (PEPs) of foreign origin,

Non-face to face customers, and

Those with dubious reputation as per public information available, etc.

DMI has formulated an indicative list of customers and their respective risk categories. Please find attached as Annexure-A.

b) Customer Identification Procedure (‘CIP’)

Set out below is DMI’s adopted Customer Identification Procedure that shall be carried out at different stages, i.e. while establishing a relationship; carrying out a financial transaction or when DMI has a doubt about the authenticity/veracity or the adequacy of the previously obtained customer identification data.

Customer identification means identifying the customer and verifying his/ her identity by using reliable, independent source documents, data or information. DMI will obtain information stated below necessary to establish, to its satisfaction, the identity of each new customer, whether regular or occasional and the purpose of the intended nature of relationship. Being satisfied means that DMI must be able to satisfy the competent authorities like RBI that due diligence was observed based on the risk profile of the customer in compliance with the extant guidelines in place. Besides risk perception, the nature of information/documents required would also depend on the type of customer. For customers that are legal persons or entities, DMI will:

verify the legal status of the legal person/ entity through charter documents and Tax registration etc.

verify that any person purporting to act on behalf of the legal person/entity is so authorized and identify and verify the identity of that person through authentic documents and

Understand the ownership and control structure of the customer and determine who are the natural persons who ultimately control the legal person.

Customer identification requirements in respect of a few typical cases, especially, legal persons requiring an extra element of caution are given in Annexure-A.

According to the regulatory norms, DMI should take reasonable measures to identify the beneficial owner(s) and verify his/her/their identity in a manner so that it is satisfied that it knows’ who the beneficial owner(s) is/are.

DMI should ensure that the identity of the customer, including beneficial owner is done based on disclosures by the customers themselves.

An indicative list of the nature and type of documents/information that may be relied upon for customer identification are provided as Annexure-B

c) Monitoring of Transactions

Ongoing monitoring is an essential element of effective KYC procedures. DMI can effectively control and reduce its risk only if it has an understanding of the normal and reasonable activity of the customer so that it can identify transactions that fall outside the regular pattern of activity. However, the extent of monitoring will depend on the risk sensitivity of the account. Since DMI may not have any deposit accounts, this situation will not arise, but DMI shall pay special attention to depleting financial ratios, adequacy of collaterals etc. DMI will put in place a system of half-yearly review of risk categorization of all outstanding accounts and the need for applying enhanced due diligence measures.

DMI will ensure that record of transactions in the accounts is preserved and maintained as required in terms of section 12 of the PML Act, 2002 (Refer Point 8 for maintenance ofrecords and Point 9 for preservation of records under the PML act) in a separate register at the registered office of DMI in physical or electronic form and make it available to the regulatory and investigating authorities. It will also ensure that transactions of suspicious nature and/or any other type of transaction notified under section 12 of the PML Act, 2002, is reported to the appropriate law enforcement authority.

d) Risk Management

The Board of Directors of DMI has ensured that an effective KYC program is in place and has established appropriate procedures and is overseeing its effective implementation. The program covers proper management oversight, systems and controls, segregation of duties, training and other related matters. Responsibility has been explicitly allocated within DMI to ensure that DMI’s policies and procedures are implemented effectively. The Board of DMI has devised procedures for creating Risk Profiles of new customers and will apply various Anti Money Laundering measures keeping in view the risks involved in a transaction, account or business relationship.

DMI's internal control and compliance functions have an important role in evaluating and ensuring adherence to the KYC policies and procedures. The compliance function will provide an independent evaluation of DMI’s policies and procedures, including legal and regulatory requirements. DMI will ensure that its internal control systems and machinery is staffed adequately with individuals who are well-versed in such policies and procedures or hire the services of a reputed Company engaged in providing quality services in the said field. They will specifically check and verify the application of KYC procedures and comment on the lapses observed in this regard. The compliance in this regard will be put up before the Audit Committee of the Board at quarterly intervals.

DMI will have an ongoing (at regular intervals) employee training program so that members of the staff are adequately trained in KYC procedures. Training requirements will have different focuses for frontline staff, compliance staff and staff dealing with new customers.

For Risk Management, DMI will have a risk based approach which includes the following.

Customers shall be categorized as low, medium and high risk category, based on the assessment and risk perception of DMI.

Risk categorization shall be undertaken based on parameters such as customer’s identity, social/financial status, nature of business activity, and information about the clients’ business and their location etc. Provided that various other information collected from different categories of customers relating to the perceived risk, is non-intrusive and the same is specified in the KYC policy.

Explanation: FATF Public Statement, the reports and guidance notes on KYC/AML issued by the Indian Banks Association (IBA), guidance note circulated to all cooperative banks by the RBI etc., may also be used in risk assessment.

Designated Director

The Board of directors in their meeting held on July 25, 2014 has appointed the following person as the “Designated Director” and the same has been duly communicated to FIU:

Name

Shivashish Chatterjee /Yuvraja Chanakya Singh

Designation

Jt. Managing Director

Address

Express Building, 3rd Floor, 9-10, Bahadur Shah Zafar

 

Marg, New Delhi-110002

Contact details

011-41204444

 

shiv@dmifinance.in/yuvraj@dmifinance.in

  1. Principal Officer

The Board in its meeting held on September 18, 2017 has duly appointed the following “Principal Officer”, who shall be responsible for ensuring compliance, monitoring transactions, and sharing and reporting information as required under the law/regulations:

Name

Sahib Pahwa

Designation

Company Secretary & Compliance Officer

Address

Express Building, 3rd Floor, 9-10, Bahadur Shah Zafar

 

Marg, New Delhi-110002

Contact details

011-41204444

 

sahib.pahwa@dmifinance.in

Compliance of KYC Policy

Senior Management for KYC compliance-

Shivashish Chatterjee, Jt. Managing Director- responsible for overviewing the KYC compliance

Rakesh Kumar, Head- Operations- responsible for obtaining and maintaining all KYC records from the borrowers

Sahib Pahwa, Company Secretary & Compliance Officer- responsible for ensuring that the KYC compliance is being met as per regulations prescribed

Yuvraja Chanakya Singh, Jt. Managing Director- responsible for overviewing the KYC compliance and suggesting any changes.

The Audit Committee shall be reported in the form of a note on a quarterly basis about the status of KYC compliance of all the borrowers of the Company in accordance with this policy.

The internal auditors need to provide a quarterly update to the Audit committee on KYC compliance and the procedures to be followed.

Customer Due Diligence Procedures(“CDD”)

Part I - CDD Procedure in case of Individuals

DMI shall obtain the following documents from an individual while establishing an account based relationship:

one certified copy of an OVD as mentioned at Section 3(a)(vi) of Chapter I, containing details of identity and address;

one recent photograph; and

such other documents pertaining to the nature of business or financial status specified in this policy.

Provided that information collected from customers for the purpose of opening of account shall be treated as confidential and details thereof shall not be divulged for the purpose of cross selling, or for any other purpose without the express permission of the customer.

Explanation:

Customers, at their option, shall submit one of the six OVDs for proof of identity and proof of address.

DMI shall accept e-KYC service of Unique Identification Authority of India (UIDAI) as a valid process for KYC verification under the PML Rules, as

the information containing demographic details and photographs made available from UIDAI because of e-KYC process is treated as an ‘Officially Valid Document’, and

transfer of KYC data, electronically to the RE from UIDAI, is accepted as valid process for KYC verification. Provided DMI shall obtain authorization from the individual user authorizing UIDAI by way of explicit consent to release his/her identity/address through biometric authentication to DMI

DMI shall print/download directly, the prospective customer’s e-Aadhaar letter from the UIDAI portal or e-KYC procedure as mentioned above shall be adopted, if such a customer knows only his/her Aadhaar number or if the customer carries only a copy of the e-Aadhaar downloaded from a place/source elsewhere.

A copy of the marriage certificate issued by the State Government or Gazette notification indicating change in name together with a certified copy of the ‘officially valid document’ in the existing name of the person shall be obtained for proof of address and identity, while establishing an account based relationship or while undertaking periodic updation exercise in cases of persons who change their names on account of marriage or otherwise.

In case the person who proposes to open an account does not have an OVD as ‘proof of address’, such person shall provide OVD of the relative as provided at sub-section 77 of Section 2 of the Companies Act, 2013, read with Rule 4 of Companies (Specification of definitions details) Rules, 2014, with whom the person is staying, as the ‘proof of address’.

Explanation:

A declaration from the relative that the said person is a relative and is staying with him/her shall be obtained

In cases where a customer categorized as ‘low risk’, expresses inability to complete the documentation requirements on account of any reason that DMI consider to be genuine, and where it is essential not to interrupt the normal conduct of business, REs shall, at their option, complete the verification of identity of the customer within a period of six months from the date of establishment of the relationship.

In respect of customers who are categorized as ‘low risk’ and are not able to produce any of the OVDs mentioned in this policy and where ‘simplified procedure’ is applied, DMI shall, accept any one document from each of the two additional sets of documents listed in this policy

Explanation:

During the periodic review, if the ‘low risk’ category customer for whom simplified procedure is applied, is re-categorized as ‘moderate or ‘’high’ risk category, then DMI shall obtain one of the six OVDs listed in this policy for proof of identity and proof of address immediately. In the event such a customer fails to submit such an OVD, DMI shall initiate action as envisaged in this policy.

DMI not being a bank is not liable to open a small account as specified in the directions

Simplified procedure for opening accounts:

In case a person who desires to open an account is not able to produce documents mentioned in this policy, DMI may at its own discretion open accounts subject to the following conditions:

Introduction from another account holder who has been subjected to full KYC procedure shall be obtained.

The introducer’s account with DMI shall be at least six-month-old and shows satisfactory transactions.

Photograph of the customer who proposes to open the account and his address shall be certified by the introducer, or any other evidence as to the identity and address of the customer to the satisfaction of DMI shall be obtained.

balances in all their accounts taken together shall not exceed rupees fifty thousand at any point of time

the total credit in all the accounts taken together shall not exceed rupees one lakh in a year.

The customer shall be made aware that no further transactions will be permitted until the full KYC procedure is completed in case Directions (iv) and (v) are breached by him.

The customer shall be notified when the balance reaches rupees forty thousand or the total credit in a year reaches rupees eighty thousand that appropriate documents for conducting the KYC must be submitted otherwise the operations in the account shall be stopped when the total balance in all the accounts taken together exceeds the limits prescribed in direction (d) and (e) above.

If an existing KYC compliant customer of DMI desires to open another account with, there shall be no need for a fresh CDD exercise

KYC verification once done by one branch/office of DMI shall be valid for transfer of the account to any other branch/office of DMI, provided full KYC verification has already been done for the concerned account and the same is not due for periodic updation and a self-declaration from the account holder about his/her current address is obtained in such cases.

Part II - CDD Measures for Sole Proprietary Firms

For opening an account in the name of a sole proprietary firm, a certified copy of an OVD as mentioned in this policy, containing details of identity and address of the individual (proprietor) shall be obtained.

In addition to the above, any two of the following documents as a proof of business/ activity in the name of the proprietary firm shall also be obtained:

Registration certificate

Certificate/license issued by the municipal authorities under Shop and Establishment Act.

Sales and income tax returns.

CST/VAT certificate.

Certificate/registration document issued by Sales Tax/Service Tax/Professional Tax authorities.

Licence/certificate of practice issued in the name of the proprietary concern by any professional body incorporated under a statute.

Complete Income Tax Return (not just the acknowledgement) in the name of the

sole proprietor where the firm's income is reflected, duly authenticated/acknowledged by the Income Tax authorities.

Utility bills such as electricity, water, and landline telephone bills

In cases where DMI is satisfied that it is not possible to furnish two such documents, DMI may, at their discretion, accept only one of those documents as proof of business/activity. Provided DMI undertakes contact point verification and collect such other information and clarification as would be required to establish the existence of

such firm, and shall confirm and satisfy itself that the business activity has been verified from the address of the proprietary concern.

Part III- CDD Measures for Legal Entities

For opening an account of a company, one certified copy of each of the following documents shall be obtained:

Certificate of incorporation.

Memorandum and Articles of Association.

A resolution from the Board of Directors and power of attorney granted to its managers, officers, or employees to transact on its behalf.

Officially valid documents in respect of managers, officers or employees holding an attorney to transact on its behalf

For opening an account of a partnership firm, one certified copy of each of the following documents shall be obtained:

Registration certificate

Partnership deed.

Officially valid documents in respect of the person holding an attorney to transact on its behalf.

For opening an account of a trust, one certified copy of each of the following documents shall be obtained:

Registration certificate.

Trust deed.

Officially valid documents in respect of the person holding a power of attorney to transact on its behalf.

For opening an account of an unincorporated association or a body of individuals, one certified copy of each of the following documents shall be obtained:

resolution of the managing body of such association or body of individuals;

power of attorney granted to transact on its behalf;

Officially valid documents in respect of the person holding an attorney to transact on its behalf and

such information as may be required by DMI to collectively establish the legal existence of such an association or body of individuals.

Explanation:

Unregistered trusts/partnership firms shall be included under the term ‘unincorporated association’.

Part IV - Identification of Beneficial Owner

For opening an account of a Legal Person who is not a natural person, the beneficial owner(s) shall be identified and all reasonable steps in terms of Rule 9(3) of the Rules to verify his/her identity shall be undertaken keeping in view the following:

Where the customer or the owner of the controlling interest is a Company listed on a stock exchange, or is a subsidiary of such a Company, it is not necessary to identify and verify the identity of any shareholder or beneficial owner of such companies.

In cases of trust/nominee or fiduciary accounts whether the customer is acting on behalf of another person as trustee/nominee or any other intermediary is determined. In such cases, satisfactory evidence of the identity of the intermediaries and of the persons on whose behalf they are acting, as also details of the nature of the trust or other arrangements in place shall be obtained.

Part V - On-going Due Diligence

DMI shall undertake on-going due diligence of customers to ensure that their transactions are consistent with their knowledge about the customers, customers’ business and risk profile; and the source of funds.

Without prejudice to the generality of factors that call for close monitoring following types of transactions shall necessarily be monitored:

Large and complex transactions and those with unusual patterns, inconsistent with the normal and expected activity of the customer, which have no apparent economic rationale or legitimate purpose.

Transactions which exceed the thresholds prescribed for specific categories of accounts.

High account turnover inconsistent with the size of the balance maintained.

Deposit of third party cheques, drafts, etc. in the existing and newly opened accounts followed by cash withdrawals for large amounts.

The extent of monitoring shall be aligned with the risk category of the customer as defined below:

High risk accounts have to be subjected to more intensified monitoring.

A system of periodic review of risk categorisation of accounts, with such periodicity being at least once in six months, and the need for applying enhanced due diligence measures shall be done.

The transactions in accounts of marketing firms, especially accounts of Multi-level Marketing (MLM) Companies shall be closely monitored.

Explanation:

Cases where a large number of cheque books are sought by the Company and/or multiple small deposits (generally in cash) across the country in one bank account and/or where a large number of cheques are issued bearing similar amounts/dates, shall be immediately reported to Reserve Bank of India and other appropriate authorities such as FIU-IND.

Periodic Updation

Periodic updation of KYC documents needs to be done for following type of customers:

High risk- at least once in every two years

Medium risk- once in every eight years

Low risk- once in every ten years subject to the following conditions:

Fresh proofs of identity and address shall not be sought at the time of periodic updation from customers who are categorised as ‘low risk’, when there is no change in status with respect to their identities and addresses and a self-certification to that effect is obtained.

A certified copy of the proof of address forwarded by ‘low risk’ customers through mail/ post, etc., in case of change of address shall be acceptable.

Physical presence of low risk customer at the time of periodic updation shall not be insisted upon.

The time limits prescribed above would apply from the date of opening of the account/ last verification of KYC.

Fresh photographs shall be obtained from customer for whom account was opened when they were minor, on their becoming a major.

E-KYC process using OTP based authentication for periodic updation is allowed provided while onboarding, the customer was subjected to proper KYC process.

Closure of accounts

Where DMI is unable to comply with the CDD requirements mentioned at Part I to V above, they shall not open accounts, commence business relations or perform transactions. In case of existing business relationship which is not KYC compliant, banks shall ordinarily take step to terminate the existing business relationship after giving due notice.

Part VI - Enhanced and Simplified Due Diligence Procedure

Enhanced Due Diligence

Accounts of non-face-to-face customers: DMI shall include additional procedures i.e., certification of all the documents presented, calling for additional documents and the first payment to be effected through the customer's KYC complied account with another RE, for enhanced due diligence of non-face to face customers.

Accounts of Politically Exposed Persons (PEPs)

DMI generally does not establish any relationship with PEPs but it shall have the option of establishing a relationship with PEPs provided that:

sufficient information including information about the sources of funds accounts of family members and close relatives is gathered on the PEP;

the identity of the person shall have been verified before accepting the PEP as a customer;

the decision to open an account for a PEP is taken at a senior level in accordance with DMI’s Customer Acceptance Policy;

all such accounts are subjected to enhanced monitoring on an on-going basis;

in the event of an existing customer or the beneficial owner of an existing account subsequently becoming a PEP, senior management’s approval is obtained to continue the business relationship;

the CDD measures as applicable to PEPs including enhanced monitoring on an on-going basis are applicable

These instructions shall also be applicable to accounts where a PEP is the beneficial owner:

Client accounts opened by professional intermediaries:

DMI shall ensure while opening client accounts through professional intermediaries, that:

Clients shall be identified when client account is opened by a professional intermediary on behalf of a single client.

DMI shall have option to hold 'pooled' accounts managed by professional intermediaries on behalf of entities like mutual funds, pension funds or other types of funds.

DMI shall not open accounts of such professional intermediaries who are bound by any client confidentiality that prohibits disclosure of the client details to DMI.

All the beneficial owners shall be identified where funds held by the intermediaries are not co-mingled at the level of the Company, and there are 'subaccounts', each of them attributable to a beneficial owner, or where such funds are co-mingled at the level of DMI, the Company shall look for the beneficial owners.

DMI shall, at its discretion, rely on the 'customer due diligence' (CDD) done by an intermediary, provided that the intermediary is a regulated and supervised entity and has adequate systems in place to comply with the KYC requirements of the customers.

The ultimate responsibility for knowing the customer lies with the DMI.

Simplified Due Diligence

Simplified norms for Self Help Groups (SHGs):

KYC verification of all the members of SHG shall not be required while opening the account of SHG

KYC verification of all the office bearers shall suffice.

No separate KYC verification of the members or office bearers shall be necessary at the time of credit linking of SHGs.

Simplified KYC norms for Foreign Portfolio Investors (FPIs) Accounts of FPIs which are eligible/ registered as per SEBI guidelines, for the purpose of investment under Portfolio Investment Scheme (PIS), shall be opened by accepting KYC documents as detailed in Annex II, subject to Income Tax (FATCA/CRS) Rules. Provided that banks shall obtain undertaking from FPIs or the Global Custodian acting on behalf of the FPI that as and when required, the exempted documents as detailed in Annexure B will be submitted.

Record Management

The following steps shall be taken regarding maintenance, preservation and reporting of customer account information, with reference to provisions of PML Act and Rules.

DMI shall,

maintain all necessary records of transactions between DMI and the customer, both domestic and international, for at least five years from the date of transaction;

preserve the records pertaining to the identification of the customers and their addresses obtained while opening the account and during business relationship, for at least five years after the business relationship is ended;

make available the identification records and transaction data to the competent authorities upon request;

introduce a system of maintaining proper record of transactions prescribed under Rule 3 of Prevention of Money Laundering (Maintenance of Records) Rules, 2005 (PML Rules, 2005);

maintain all necessary information in respect of transactions prescribed under PML Rule 3 so as to permit reconstruction of individual transaction, including the following:

the nature of the transactions;

the amount of the transaction and the currency in which it was denominated;

the date on which the transaction was conducted; and

the parties to the transaction.

evolve a system for proper maintenance and preservation of account information in a manner that allows data to be retrieved easily and quickly whenever required or when requested by the competent authorities;

maintain records of the identity and address of their customer, and records in respect of transactions referred to in Rule 3 in hard or soft format.

Reporting Requirements to Financial Intelligence Unit - India

DMI shall furnish to the Director, Financial Intelligence Unit-India (FIU-IND), information referred to in Rule 3 of the PML (Maintenance of Records) Rules, 2005 in terms of Rule 7 thereof.

Explanation:

In terms of Third Amendment Rules notified September 22, 2015 regarding amendment to sub rule 3 and 4 of rule 7, Director, FIU-IND shall have powers to issue guidelines to the REs for detecting transactions referred to in various clauses of sub-rule (1) of rule 3, to direct them about the form of furnishing information and to specify the procedure and the manner of furnishing information.

The reporting formats and comprehensive reporting format guide, prescribed/ released by FIU-IND and Report Generation Utility and Report Validation Utility developed to assist reporting entities in the preparation of prescribed reports shall be taken note of. The editable electronic utilities to file electronic Cash Transaction Reports (CTR) / Suspicious Transaction Reports (STR) which FIU-IND has placed on its website shall be made use of by REs which are yet to install/adopt suitable technological tools for extracting CTR/STR from their live transaction data. The Principal Officers of DMI, whose all branches are not fully computerized, shall have suitable arrangement to cull out the transaction details from branches which are not yet computerized and to feed the

data into an electronic file with the help of the editable electronic utilities of CTR/STR as have been made available by FIU-IND on its website http://fiuindia.gov.in.

While furnishing information to the Director, FIU-IND, delay of each day in not reporting a transaction or delay of each day in rectifying a misrepresented transaction beyond the time limit as specified in the Rule shall be constituted as a separate violation. DMI shall not put any restriction on operations in the accounts where an STR has been filed. DMI shall keep the fact of furnishing of STR strictly confidential. It shall be ensured that there is no tipping off to the customer at any level

Requirements/obligations under International Agreements Communications from International Agencies

The details of the two lists are as under:

Sanctions List is available at https://www.un.org/sc/suborg/sites/www.un.org.sc.suborg/files/1267.pdf

not or insufficiently apply the FATF Recommendations and jurisdictions included in FATF Statements. Explanation: The process referred to in Section 55 a & b do not preclude REs from having legitimate trade and business transactions with the countries and jurisdictions mentioned in the FATF statement. (c) The background and purpose of transactions with persons (including legal persons and other financial institutions) from jurisdictions included in FATF Statements and countries that do not or insufficiently apply the FATF Recommendations shall be examined, and written findings together with all documents shall be retained and shall be made available to Reserve Bank/other relevant authorities, on request.

DMI shall capture the KYC information for sharing with the CKYCR in the manner mentioned in the Rules, as required by the revised KYC templates prepared for ‘individuals’ and ‘Legal Entities’ as the case may be. Government of India has authorised the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI), to act as, and to perform the functions of the CKYCR vide Gazette Notification No. S.O. 3183(E) dated November 26, 2015. The ‘live run’ of the CKYCR has started with effect from July 15, 2016 in phased manner beginning with new ‘individual accounts’.

DMI Shall take all steps required to comply with the implementation of CKYC with the respective authority.

Under FATCA and CRS, DMI being a a Reporting Financial Institution as defined in Income Tax Rule 114F and if so, shall take following steps for complying with the reporting requirements:

Payment of cheques /drafts/pay orders/ banker’s cheques, if they are presented beyond the period of three months from the date of such instruments, shall not be made.

Account payee cheques for any person other than the payee constituent shall not be collected. Banks shall, at their option, collect account payee cheques drawn for an amount not exceeding rupees fifty thousand to the account of their customers who are co-operative credit societies, provided the payees of such cheques are the constituents of such co-operative credit societies.

.(a) A Unique Customer Identification Code (UCIC) shall be allotted while entering into new relationships with individual customers as also the existing customers by DMI.

Adequate attention shall be paid by DMI to any money-laundering and financing of terrorism threats that may arise from new or developing technologies and it shall be ensured that appropriate KYC procedures issued from time to time are duly applied before introducing new products/services/technologies

Any remittance of funds by way of demand draft, mail/telegraphic transfer/NEFT/IMPS or any other mode and issue of travellers’ cheques for value of rupees fifty thousand and above shall be effected by debit to the customer’s account or against cheques and not against cash payment.

Permanent account number (PAN) of customers shall be obtained and verified while undertaking transactions as per the provisions of Income Tax Rule 114B applicable to banks, as amended from time to time. Form 60 shall be obtained from persons who do not have PAN.

DMI does not sell any third party products but if it does then it shall follow the extent guidelines

Adherence to Know Your Customer (KYC) guidelines by NBFCs/RNBCs and persons authorised by NBFCs/RNBCs including brokers/agents etc.

Annexure-A

Indicative list for risk categorization

High Risk Customers

Medium Risk Customers

Low Risk Customers-

All other customers (other than High and Medium Risk category) whose identities and sources of wealth can be easily identified and by and large conform to the known customer profile, may be categorized as low risk. In such cases, only the basic requirements of verifying the identity and location of the customer are to be met.

Features

Accounts of individuals

Accounts of companies

Accounts of partnership firms

Annexure-B

Documents

For Address

Accounts of trusts & foundations

- Names of trustees, settlers, (i) Certificate of registration, if registered

beneficiaries and signatories (ii) Power of Attorney granted to transact business on its behalf

     

KYC and AML Policy

-

Names and addresses of the

(iii)

Any officially valid document to identify the trustees, settlers,

 

founder, the managers /

beneficiaries and those holding Power of Attorney, founders / managers /

 

directors and the beneficiaries

directors and their addresses

-

Telephone / fax numbers

(iv)

Resolution of the managing body of the foundation / association

Accounts of Proprietary Concerns

-Name, Address and Activity of the Proprietary Concern.

Proof of the name, address and activity of the concern, like registration

certificate (in the case of a registered concern), certificate/license issued

by the Municipal authorities under Shop & Establishment Act, sales and

income tax returns, CST / VAT certificate, certificate/ registration

document issued by Sales Tax / Service Tax / Professional Tax

authorities, License issued by the Registering authority like Certificate of

Practice issued by Institute of Chartered Accountants of India, Institute of

Cost Accountants of India, Institute of Company Secretaries of India,

Indian Medical Council, Food and Drug Control Authorities, etc.

Any registration / licensing document issued in the name of the

proprietary concern by the Central Government or State Government

Authority / Department. NBFCs/RNBCs may also accept IEC (Importer

Exporter Code) issued to the proprietary concern by the office of DGFT

as an identity document for opening of account.

The complete Income Tax return (not just the acknowledgement) in the

name of the sole proprietor where the firm's income is reflected, duly

authenticated/ acknowledged by the Income Tax Authorities

Utility bills such as electricity, water, and landline telephone bills in the

name of the proprietary concern

Any two of the above documents would suffice. These documents should

be in the name of the proprietary concern.

*Permanent Account Number (PAN) allotment is issued by the Tax Department – Government of India. The allotment letter entails an authorization for the tax payer to pay tax or have monetary transactions anywhere in India, under the Income Tax act.

DMI may require additional information about investor for the purposes of satisfying obligations under the PMLA and hence, may take actions that it believes is necessary to comply with PMLA laws which include delaying or refusing any request to establish a relationship or process any transaction.

As per Rule 9(IA) of the Prevention of Money Laundering Rules, 2005 shall follow the below mentioned procedure specified for determination of Beneficial Ownership:

exerts control through ownership interests, the identity of the natural person exercising control over the juridical person through other means

KYC documents for eligible FPIs under PIS

             

FPI Type

       
                   

Document Type

   

Category I

   

Category II

 

Category III

                   
 

Constitutive

   

Mandatory

   

Mandatory

 

Mandatory

 

Documents

                   
 

(Memorandum

                 
 

and Articles of

                 
 

Association,

                   
 

Certificate

of

                 
 

Incorporation

                 
 

etc.)

                   
             
 

Proof

of

Mandatory (Power

Mandatory (Power

Mandatory

 
 

Address

 

of

Attorney

of

Attorney

other

than

Entity Level

   

{PoA} mentioning

mentioning

the

Power

of

   

the

address

is

address

is

Attorney

 
     

acceptable

as

acceptable

as

     
     

address proof)

 

address proof)

       
               
 

PAN Card

 

Mandatory

 

Mandatory

 

Mandatory

             
 

Financial Data

Exempted *

 

Exempted *

 

Mandatory

               
 

SEBI

 

Mandatory

 

Mandatory

 

Mandatory

 

Registration

                   
 

Certificate

                   
               
 

Board

 

Exempted *

 

Mandatory

 

Mandatory

 

Resolution

                   
 

@@

                   
 

List

 

Mandatory

 

Mandatory

 

Mandatory

             
 

Proof of Identity

Exempted *

 

Exempted *

 

Entity declares*

Senior

               

on

letter

head

               

full

name,

Manageme nt

               
               

nationality,

date

(Whole

               
               

of

birth

or

Time

               
               

submits photo

Directors/

               
               

identity proof

Partners/

               
                     

Trustees/

Proof

of

Exempted *

 

Exempted *

 

Declaration

on

etc.)

Address

             

Letter Head *

 

Photographs

Exempted

 

Exempted

 

Exempted *

                       
 

List

and

Mandatory – list of

Mandatory - list of

Mandatory

 
 

Signatures

 

Global

Custodian

Global

Custodian

   
     

signatories

can

be

signatories

can

be

   
     

given

in

case

of

given

in

case

of

   
     

PoA to Global

PoA to Global

   

Authorized

   

Custodian

   

Custodian

       
                       

Proof of Identity

Exempted *

 

Exempted *

 

Mandatory

 

Signatories

     
                       
                 
 

Proof

of

Exempted *

 

Exempted *

 

Declaration

on

 

Address

                 

Letter Head *

 
                 
 

Photographs

 

Exempted

 

Exempted

 

Exempted *

 
                 
 

List

 

Exempted *

 

Mandatory

(can

Mandatory

 
             

declare

“no UBO

   
             

over 25%”)

       

Ultimate

Proof of Identity

Exempted *

 

Exempted *

 

Mandatory

 

Beneficial

                       

Proof

of

Exempted *

 

Exempted *

 

Declaration

on

Owner

   

Address

                 

Letter Head *

 

(UBO)

                   

Photographs

 

Exempted

 

Exempted

 

Exempted *

 
         
                         

Custodian/Local Custodian in lieu of Board Resolution’

Category

Eligible Foreign Investors

   

I.

Government and Government related foreign investors such as Foreign

 

Central Banks, Governmental Agencies, Sovereign Wealth

 

Funds, International/ Multilateral Organizations/ Agencies.

   

II.

- Appropriately regulated broad based funds such as Mutual

 

Funds, Investment Trusts, Insurance

 

- /Reinsurance Companies, Other Broad Based Funds etc.

 

- Appropriately regulated entities such as Banks, Asset

 

Management Companies, Investment Managers/ Advisors,

 

Portfolio Managers etc.

 

- Broad based funds whose investment manager is appropriately

 

regulated.

 

- University Funds and Pension Funds.

 

- University related Endowments already registered with SEBI as

 

FII/Sub Account.

Robust software, throwing alerts when the transactions are inconsistent with risk categorization and updated profile of the customers shall be put in to use as a part of effective identification and reporting of suspicious transactions

DMI shall ensure that in terms of Section 51A of the Unlawful Activities (Prevention) (UAPA) Act, 1967, they do not have any account in the name of individuals/entities appearing in the lists of individuals and entities, suspected of having terrorist links, which are approved by and periodically circulated by the United Nations Security Council (UNSC).

The “ISIL (Da’esh) & Al-Qaida Sanctions List”, which includes names of individuals and entities associated with the Al-Qaida. The updated ISIL & Al Qaida

The “1988 Sanctions List”, consisting of individuals (Section A of the consolidated list) and entities (Section B) associated with the Taliban which is available at http://www.un.org/sc/committees/ 1988/list.shtml.

Details of accounts resembling any of the individuals/entities in the lists shall be reported to FIU-IND apart from advising Ministry of Home Affairs as required under UAPA notification dated August 27, 2009

In addition to the above, other UNSCRs circulated by the Reserve Bank in respect of any other jurisdictions/ entities from time to time shall also be taken note of

Freezing of Assets under Section 51A of Unlawful Activities (Prevention) Act, 1967 The procedure laid down in the UAPA Order dated August 27, 2009 (Annex I of this Master Direction shall be strictly followed and meticulous compliance with the Order issued by the Government shall be ensured.

Jurisdictions that do not or insufficiently apply the FATF Recommendations

FATF Statements circulated by Reserve Bank of India from time to time, and publicly available information, for identifying countries, which do not or insufficiently apply the FATF Recommendations, shall be considered. Risks arising from the deficiencies in AML/CFT regime of the jurisdictions included in the FATF Statement shall be taken into account. (b) Special attention shall be given to business relationships and transactions with persons (including legal persons and other financial institutions) from or in countries that do

Other Instructions

Secrecy Obligations and Sharing of Information:

DMI shall maintain secrecy regarding the customer information which arises out of the contractual relationship between the banker and customer.

While considering the requests for data/information from Government and other agencies, banks shall satisfy themselves that the information being sought is not of such a nature as will violate the provisions of the laws relating to secrecy in the banking transactions.

The exceptions to the said rule shall be as under:

Where disclosure is under compulsion of law,

Where there is a duty to the public to disclose,

the interest of the company requires disclosure and

Where the disclosure is made with the express or implied consent of the customer.

DMI shall maintain confidentiality of information as provided in Section 45NB of RBI Act 1934.

CDD Procedure and sharing KYC information with Central KYC Records Registry (CKYCR)

Reporting requirement under Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standards (CRS)

Register on the related e-filling portal of Income Tax Department as Reporting Financial Institutions at the link https://incometaxindiaefiling.gov.in/ post login - -> My Account --> Register as Reporting Financial Institution,

Submit online reports by using the digital signature of the ‘Designated Director’ by either uploading the Form 61B or ‘NIL’ report, for which, the schema prepared by Central Board of Direct Taxes (CBDT) shall be referred to.

Develop Information Technology (IT) framework for carrying out due diligence procedure and for recording and maintaining the same, as provided in Rule 114H.

Develop a system of audit for the IT framework and compliance with Rules 114F, 114G and 114H of Income Tax Rules.

Period for presenting payment instruments

Collection of Account Payee Cheques

DMI shall, at their option, not issue UCIC to all walkin/occasional customers such as buyers of pre-paid instruments/purchasers of third party products provided it is ensured that there is adequate mechanism to identify such walk-in customers who have frequent transactions with them and ensure that they are allotted UCIC.

Introduction of New Technologies

Issue and Payment of Demand Drafts, etc.,

Quoting of PAN

Selling Third party products

Hiring of Employees and Employee training

Adequate screening mechanism as an integral part of their personnel recruitment/hiring process shall be put in place.

On-going employee training programme shall be put in place so that the members of staff are adequately trained in AML/CFT policy. The focus of the training shall be different for frontline staff, compliance staff and staff dealing with new customers. The front desk staff shall be specially trained to handle issues arising from lack of customer education. Proper staffing of the audit function with persons adequately trained and well-versed in AML/CFT policies of the RE, regulation and related issues shall be ensured. Please find attached training manual to be implemented by the company for KYC and AML training as Annexure-C

Persons authorised by NBFCs/ RNBCs for collecting the deposits and their brokers/agents or the like, shall be fully compliant with the KYC guidelines applicable to NBFCs/RNBCs. (b) All information shall be made available to the Reserve Bank of India to verify the compliance with the KYC guidelines and accept full consequences of any violation by the persons authorised by NBFCs/RNBCs including brokers/agents etc. who are operating on their behalf. (c) The books of accounts of persons authorised by NBFCs/RNBCs including brokers/agents or the like, so far as they relate to brokerage functions of the Company, shall be made available for audit and inspection whenever required.

Individuals and entities in various United Nations' Security Council Resolutions (UNSCRs) such as UN 1267 etc.;

Individuals or entities listed in the schedule to the order under section 51A of the Unlawful Activities (Prevention) Act, 1967 relating to the purposes of prevention of, and for coping with terrorist activities;

Individuals and entities in watch lists issued by Interpol and other similar international organizations;

Customers with dubious reputation as per public information available or commercially available watch lists;

Individuals and entities specifically identified by regulators, FIU and other competent authorities as high-risk;

Customers conducting their business relationship or transactions in unusual circumstances, such as significant and unexplained geographic distance between the institution and the location of the customer, frequent and unexplained movement of accounts to different institutions, etc.;

Politically exposed persons (PEPs), customers who are close relatives of PEPs and accounts of which a PEP is the ultimate beneficial owner;

Non-face-to-face customers;

High net worth individuals;

Firms with 'sleeping partners';

Companies having close family shareholding or beneficial ownership;

Complex business ownership structures, which can make it easier to conceal underlying beneficiaries, where there is no legitimate commercial rationale;

Shell companies which have no physical presence in branch locations. The existence simply of a local agent or low-level staff does not constitute physical presence;

Accounts for "gatekeepers" such as accountants, lawyers, or other professionals for their clients where the identity of the underlying client is not disclosed to the Company;

Client Accounts managed by professional service providers such as law firms, accountants, agents, brokers, fund managers, trustees, custodians etc.;

Trusts, charities, NGOs/ unregulated clubs and organizations receiving donations;

Gambling/gaming including “Junket Operators” arranging gambling tours;

Jewelers and Bullion Dealers;

Dealers in high value or precious goods (e.g. gem and precious metals dealers, art and antique dealers and auction houses, estate agents and real estate brokers);

Customers engaged in a business which is associated with higher levels of corruption (e.g., arms manufacturers, dealers and intermediaries;

Customers engaged in industries that might relate to nuclear proliferation activities or explosives;

Customers that may appear to be Multi-level marketing companies etc.

Stock brokerage;

Import / Export;

Gas Station;

Car / Boat / Plane Dealership;

Electronics (wholesale);

Travel agency;

Telemarketers;

Providers of telecommunications service, internet café, International direct dialing (IDD) call service

Legal name and any other names used

Correct permanent address

Name of the Company

Principal place of business

Mailing address of the Company

Telephone/Fax Number

Passport

PAN card

Voter’s Identity Card

Driving licence

*Job card issued by NREGA duly signed by an officer of the State Government

*The letter issued by UIDAI containing details of name, address and Aadhaar number

Identity card (subject to the bank’s satisfaction)

Letter from a recognized public authority or public servant verifying the identity and residence of the customer to the satisfaction of bank.

Telephone bill

Bank account statement

Letter from any recognized public authority

Electricity bill

Ration card

Letter from employer (subject to satisfaction of the bank) (any one document which provides customer information to the satisfaction of the bank will suffice )

Certificate of incorporation and Memorandum & Articles of Association

Resolution of the Board of Directors to open an account and identification of those who have authority to operate the account

Power of Attorney granted to its managers, officers or employees to transact business on its behalf

Copy of PAN* allotment letter

Copy of the telephone bill (optional)

Legal name

Address

Names of all partners and their addresses

Telephone numbers of the firm and partners

Registration certificate, if registered

Partnership deed

Power of Attorney granted to a partner or an employee of the firm to transact business on its behalf

Any officially valid document identifying the partners and the persons holding the Power of Attorney and their addresses

Telephone bill in the name of firm / partners (optional)

Telephone bill (optional)

Where the client is a person other than an individual or trust, DMI shall identify the beneficial owners of the client and take reasonable measures to verify the identity of such persons, through the following information:

The identity of the natural person, who, whether acting alone or together, or through one or more juridical person, exercises control through ownership or who ultimately has a controlling ownership interest.

In cases where there exists doubt under (i) as to whether the person with the controlling ownership interest is the beneficial owner or where no natural person

Where no natural person is identified under (i) or (ii) above, the identity of the relevant natural person who holds the position of senior managing official

Where the client is a trust, DMI shall identify the beneficial owners of the client and take reasonable measures to verify the identity of such persons, through the identity of the settler of the trust, the trustee, the protector, the beneficiaries with 15% or more interest in the trust and any other natural person exercising ultimate effective control over the trust through a chain of control or ownership.

Where the client or the owner of the controlling interest is a Company listed on a stock exchange, or is a majority-owned subsidiary of such a Company, it is not necessary to identify and verify the identity of any shareholder or beneficial owner of such companies.

Not required while opening the account. However, FPIs concerned may submit an undertaking that upon demand by Regulators/Law Enforcement Agencies the relative document/s would be submitted to the bank.

FPIs from certain jurisdictions where the practice of passing Board Resolution for the purpose of opening bank accounts etc. is not in vogue, may submit ‘Power of Attorney granted to Global

All other eligible foreign investors investing in India under PIS route not eligible under Category I and II such as Endowments, Charitable Societies/Trust, Foundations, Corporate Bodies, Trusts, Individuals, Family Offices, etc.