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Client Due Diligence.

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..... ectively managed and where this is essential not to interrupt the normal conduct of business, the Regulator may permit the reporting entity to complete the verification as soon as reasonably practicable following the establishment of the relationship: Provided further that where a client is subscribing or dealing with depositary receipts or equity shares, issued or listed in jurisdictions notified by the Central Government, of a company incorporated in India, and it is acting on behalf of a beneficial owner who is a resident of such jurisdiction, the determination, identification and verification of such beneficial owner, shall be as per the norms of such jurisdiction and nothing in sub-rule (3) to sub-rule (9) shall be applicable for due-diligence of such beneficial owner. Explanation .- For the purposes of this proviso, the expression equity shares means a share in the equity share capital of a company and equity share capital shall have the same meaning as assigned to it in the Explanation to section 43 of the Companies Act, 2013 (18 of 2013). ] 2 [(1A) Subject to the provisions of sub-rule (1), every reporting entity shall within 13 [ ten days ] after the .....

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..... the purpose of clause (a) of sub-rule (1), a reporting entity may rely on a third party subject to the conditions that- 73 [ (a) the reporting entity immediately obtains from the third party or from the Central KYC Records Registry, the record or the information of such client due diligence carried out by the third party; ] (b) the reporting entity takes adequate steps to satisfy itself that copies of identification data and other relevant documentation relating to the client due diligence requirements will be made available from the third party upon request without delay; (c) the reporting entity is satisfied that such third party is regulated, supervised or monitored for, and has measures in place for compliance with client due diligence and record-keeping requirements in line with the requirements and obligations under the Act; (d) the third party is not based in a country or jurisdiction assessed as high risk; (e) the reporting entity is ultimately responsible for client due diligence and undertaking enhanced due diligence measures, as applicable; and (f) where a reporting entity relies on a third party that is part of the same financial group, t .....

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..... tity resident in jurisdictions notified by the Central Government and listed on stock exchanges in such jurisdictions notified by the Central Government, or it is a subsidiary of such listed entities, it is not necessary to identify and verify the identity of any shareholder or beneficial owner of such entities. ] 34 [ (4) Where the client is an individual, he shall for the purpose of sub-rule (1) submit to the reporting entity,- (a) the Aadhaar number where, (i) he is desirous of receiving any benefit or subsidy under any scheme notified under section 7 of the Aadhaar (Targeted Delivery of Financial and Other subsidies, Benefits and Services) Act, 2016 (18 of 2016); or (ii) he decides to submit his Aadhaar number voluntarily to a banking company or any reporting entity notified under first proviso to sub-section (1) of section 11A of the Act; or (aa) the proof of possession of Aadhaar number where offline verification can be carried out; or (ab) the proof of possession of Aadhaar number where offline verification cannot be carried out or any officially valid document or the equivalent e-document thereof containing the details of his identity and add .....

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..... r periods as may be notified by the Central Government. ] (iv) the small account shall be monitored and when there is suspicion of money laundering or financing of terrorism or other high risk scenarios, the identity of client shall be established 36 [ as per the provisions of sub-rule (4) ] ; 21 [*********] 37 [ (v) the foreign remittance shall not be allowed to be credited into the small account unless the identity of the client is fully established as per provision of sub-rule (4): ] Provided that if the client is not eligible to be enrolled for the Aadhaar number, the identity of client shall be established through the production of an officially valid document. 22 [ (6) Where the client is a company, it shall for the purposes of sub-rule (1), submit to the reporting entity the certified copies of the following documents 38 [ or the equivalent e-documents thereof ] , namely:- (i) certificate of incorporation; (ii) Memorandum and Articles of Association; (iii) Permanent Account Number of the company; (iv) a resolution from the Board of Directors and power of attorney granted to its managers, officers or employees, as the case may be, t .....

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..... naging body of such association or body of individuals; (ii) Permanent account number or Form No.60 of the unincorporated association or a body of individuals; (iii) power of attorney granted to him to transact on its behalf; 46 [ and ] 47 [ (iv) such documents as are required for an individual under sub-rule (4) relating to beneficial owner, managers, officers or employees, as the case may be, holding an attorney to transact on its behalf; ] (v) such information as may be required by the reporting entity to collectively establish the existence of such association or body of individuals. ]] 64 [ (9A) Every Banking Company or Financial Institution or intermediary, as the case may be, shall register the details of a client, in case of client being a non-profit organisation, on the DARPAN Portal of NITI Aayog, if not already registered, and maintain such registration records for a period of five years after the business relationship between a client and a reporting entity has ended or the account has been closed, whichever is later. (9B) Where the client has submitted any documents for the purpose of sub-rule (1), it shall submit to the reporting entity any u .....

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..... lients, countries or geographic areas, and products, services, transactions or delivery channels that is consistent with any national risk assessment conducted by a body or authority duly notified by the Central Government. (ii) The risk assessment mentioned in clause (i) shall- (a) be documented; (b) consider all the relevant risk factors before determining the level of overall risk and the appropriate level and type of mitigation to be applied; (c) be kept up to date; and (d) be available to competent authorities and self-regulating bodies. (14) (i) The regulator shall issue guidelines incorporating the requirements of 10 [sub-rules (1) to (13) 26 [ sub-rule (15) and sub-rule (17) ] ] and may prescribe enhanced or simplified measures to verify the client's identity taking into consideration the type of client, business relationship, nature and value of transactions based on the overall money laundering and terrorist financing risks involved. Explanation .-For the purpose of this clause, simplified measures are not acceptable whenever there is a suspicion of money laundering or terrorist financing, or where specific higher-risk .....

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..... (4) where offline verification can be carried out, the reporting entity shall carry out offline verification; (c) an equivalent e-document of any officially valid document, the reporting entity shall verify the digital signature as per the provisions of the Information Technology Act, 2000 (21 of 2000) and any rules issues thereunder and take a live photo as specified under Annexure 1. (d) any officially valid document or proof of possession of Aadhaar number under clause (ab) of sub-rule (4) where offline verification cannot be carried out, the reporting entity shall carry out verification through digital KYC as specified under Annexure 1: Provided that for a period not beyond such date as may be notified for a class of reporting entity, instead of carrying out digital KYC, the reporting entity pertaining to such class may obtain a certified copy of the proof of possession of Aadhaar number or the officially valid document and a recent photograph where an equivalent e-document is not submitted. Explanation.- Obtaining a certified copy by the reporting entity shall mean comparing the copy of the proof of possession of Aadhaar number where offline verification cannot be .....

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..... roperty or Municipal tax receipt; (c) pension or family pension payment orders (PPOs) issued to retired employees by Government Departments or Public Sector Undertakings, if they contain the address; (d) letter of allotment of accommodation from employer issued by State Government or Central Government Departments, statutory or regulatory bodies, public sector undertakings, scheduled commercial banks, financial institutions and listed companies and leave and licence agreements with such employers allotting official accommodation: Provided that the client shall submit updated officially valid document 56 [ or their equivalent e-documents thereof ] with current address within a period of three months of submitting the above documents. ] 59 [ (19) Where a client has provided his Aadhaar number for identification under clause (a) of sub-rule (4) and wants to provide a current address, different from the address as per the identity information available in the Central Identities Data Repository, he may give a self-declaration to that effect to the reporting entity. ] *********** Notes: 1. Substituted Vide Prevention of Money-laundering (M .....

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..... xceeding rupees fifty thousand, whether conducted as a single transaction or several transactions that appear to be connected, or (ii) any international money transfer operations. (1A) Every banking company, financial institution and intermediary, as the case may be, shall determine whether a client is acting on behalf of a beneficial owner, identify the beneficial owner and take all reasonable steps to verify his identity. Explanation .-For the purposes of this sub-rule beneficial owner shall mean the natural person who ultimately owns or controls a client and/or the person on whose behalf a transaction is being conducted, and includes a person who exercise ultimate effective control over a juridical person. (1B) Every banking company, financial institution and intermediary, as the case may be, shall exercise ongoing due diligence with respect to the business relationship with every client and closely examine the transactions in order to ensure that they are consistent with their knowledge of the client, his business and risk profile and where necessary, the source of funds. (1C) No banking company, financial institution or intermediary, as the case may be, .....

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..... riod of twelve months if the holder of such an account provides evidence before the banking company of having applied for any of the officially valid documents within twelve months of the opening of the said account, with the entire relaxation provisions to be reviewed in respect of the said account after twenty four months; (iv) a small account shall be monitored and when there is suspicion of money-laundering or financing of terrorism or other high risk scenarios, the identity of client shall be established through the production of officially valid documents, as referred to in sub-rule (2) of rule 9; and (v) foreign remittance shall not be allowed to be credited into a small account unless the identity of the client is fully established through the production of officially valid documents, as referred to in sub-rule (2) of rule 9. (3) Where the client is a company, it shall for the purposes of sub-rule (1) submit to the banking company or financial institution or intermediary, as the case may be, one certified copy of the following documents: (i) Certificate of incorporation; (ii) Memorandum and Articles of Association; (iii) a resolution from the Boa .....

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..... ent Identification Programme to determine the true identity of its clients, incorporating requirements of sub-rules (1) to (6A) and guidelines issued under clause (i) above. 2. Inserted Vide Prevention of Money-laundering (Maintenance of Records) Amendment Rules, 2015, w.e.f. 7-7-2015. 3. Substituted Vide Prevention of Money-laundering (Maintenance of Records) Amendment Rules, 2015, w.e.f. 7-7-2015. Before it was read as: (a) the reporting entity immediately obtains necessary information of such client due diligence carried out by the third party; 4. Substituted vide Not. 2/2017 - Dated 1-6-2017 before it was read as, (4) Where the client is an individual, he shall for the purpose of sub-rule (1), submit to the reporting entity, one certified copy of an 'officially valid document' containing details of his identity and address, one recent photograph and such other documents including in respect of the nature of business and financial status of the client as may be required by the reporting entity: Provided that photograph need not be submitted by a client falling under clause (b) of sub-rule (1). (5) Notwithstanding anything contained in s .....

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..... attorney to transact on its behalf. (7) Where the client is a partnership firm, it shall for the purposes of sub-rule (1) submit to the reporting entity one certified copy of the following documents:- (i) registration certificate; (ii) partnership deed; and (iii) an officially valid document in respect of the person holding an attorney to transact on its behalf. (8) Where the client is a trust, it shall, for the purposes of sub-rule (1) submit to the reporting entity one certified copy of the following documents:- (i) registration certificate; (ii) trust deed; and (iii) an officially valid document in respect of the person holding an attorney to transact on its behalf. (9) Where the client is an unincorporated association or a body of individuals, it shall submit to the reporting entity one certified copy of the following documents:- (i) resolution of the managing body of such association or body of individuals; (ii) power of attorney granted to him to transact on its behalf; (iii) an officially valid document in respect of the person holding an attorney to transact on its behalf; and (iv) such information as may be require .....

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..... enrolled for an Aadhaar number, he shall for the purpose of sub-rule (1), submit to the reporting entity, the Permanent Account Number or Form No.60 as defined in the Income-tax Rules, 1962 : Provided that if the client does not submit the Permanent Account Number, he shall submit one certified copy of an officially valid document' containing details of his identity and address, one recent photograph and such other documents including in respect of the nature or business and financial status of the client as may be required by the reporting entity. 18. Omitted vide NOTIFICATION No. G.S.R. 108(E) dated 13-02-2019 before it was read as and (4A) 19. Substituted vide NOTIFICATION No. G.S.R. 108(E) dated 13-02-2019 before it was read as thump 20. Substituted vide NOTIFICATION No. G.S.R. 108(E) dated 13-02-2019 before it was read as the Aadhaar number of the client or where an Aadhaar number has not been assigned to the client, through the production of proof of application towards enrolment for Aadhaar along with an officially valid document 21. Omitted vide NOTIFICATION No. G.S.R. 108(E) dated 13-02-2019 before it was read as Provided further .....

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..... ent shall be submitted. 24. Substituted vide NOTIFICATION No. G.S.R. 108(E) dated 13-02-2019 before it was read as (8) Where the client is a trust, it shall, for the purposes of sub-rule (1) submit to the reporting entity the certified copies of the following documents:- (i) registration certificate; (ii) trust deed; and (iii) (a) Aadhaar number; and (b) Permanent Account Number or Form 60 as defined in the Income-tax Rules, 1962 , issued to the person holding an attorney to transact on its behalf or where Aadhaar number has not been assigned, proof of application towards enrolment for Aadhaar and in case Permanent Account Number is not submitted an officially valid document shall be submitted: Provided that for the purpose of this clause if the person holding an attorney to transact on the company's behalf is not eligible to be enrolled for Aadhaar number and does not submit the Permanent Account Number, certified copy of an officially valid document shall be submitted. 25. Substituted vide NOTIFICATION No. G.S.R. 108(E) dated 13-02-2019 before it was read as (9) Where the client is an unincorporated association or a body of individuals .....

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..... hmir, Assam or Maghalaya and does not submit the Permanent Account Number, the client shall submit to the reporting entity one certified copy of officially valid document containing details of his identity and address, one recent photograph and such other document including in respect of the nature of business and financial status of the client as may be required by the reporting entity. 31. Substituted vide NOTIFICATION No. G.S.R. 108(E) dated 13-02-2019 before it was read as (17) (a) In case the client, eligible to be enrolled for Aadhaar and obtain a Permanent Account Number, referred to in sub-rules (4) to (9) of rule 9 does not submit the Aadhaar number or the Permanent Account Number at the time of commencement of an account based relationship with a reporting entity, the client shall submit the same within a period of six months from the date of the commencement of the account based relationship: Provided that the clients, eligible to be enrolled for Aadhaar and obtain the Permanent Account Number, already having an account based relationship with reporting entities prior to date of this notification, the client shall 8 [submit the Aadhaar number, and Permane .....

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..... yment orders (PPOs) issued to retired employees by Government Departments or Public Sector Undertakings, if they contain the address; (d) letter of allotment of accommodation from employer issued by State Government or Central Government Departments, statutory or regulatory bodies, public sector undertakings, scheduled commercial banks, financial institutions and listed companies and leave and licence agreements with such employers allotting official accommodation; Provided further that the client shall submit updated officially valid document with current address within a period of three months of submitting the above documents.] 33. Inserted vide NOTIFICATION No. G.S.R. 381(E) dated 28-05-2019 34. Substituted vide NOTIFICATION No. [F. No. P.12011/24/2017-ES Cell-DoR] dated 19-08-2019 before it was read as 4 [(4) Where the client is an individual, 14 [*********] he shall for the purpose of sub-rule (1) submit to the reporting entity,- 15 [ (a) the Aadhaar number where he is desirous of receiving any benefit or subsidy under any scheme notified under section 7 of the Aadhaar (Targeted Delivery of Financial and Other subsidies, Benefits and Services .....

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..... de NOTIFICATION No. [F. No. P.12011/24/2017-ES Cell-DoR] dated 19-08-2019 42. Substituted vide NOTIFICATION No. [F. No. P.12011/24/2017-ES Cell-DoR] dated 19-08-2019 before it was read as (iv) one copy of an officially valid document containing details of identity and address, one recent photograph and Permanent Account Number or Form No.60 of the person holding an attorney to transact on its behalf.; 43. Inserted vide NOTIFICATION No. [F. No. P.12011/24/2017-ES Cell-DoR] dated 19-08-2019 44. Substituted vide NOTIFICATION No. [F. No. P.12011/24/2017-ES Cell-DoR] dated 19-08-2019 before it was read as (iv) one copy of an officially valid document containing details of identity and address, one recent photograph and Permanent Account Number or Form No.60 of the person holding an attorney to transact on its behalf.; 45. Inserted vide NOTIFICATION No. [F. No. P.12011/24/2017-ES Cell-DoR] dated 19-08-2019 46. Inserted vide NOTIFICATION No. [F. No. P.12011/24/2017-ES Cell-DoR] dated 19-08-2019 47. Substituted vide NOTIFICATION No. [F. No. P.12011/24/2017-ES Cell-DoR] dated 19-08-2019 before it was read as (iv) one copy of an officially valid d .....

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..... shareholder or beneficial owner of such companies. 59. Inserted vide Notification No. G.S.R. 840(E) dated 13-11-2019 60. Inserted vide NOTIFICATION No. G.S.R. 228(E) dated 31-03-2020 61. Substituted vide Notification No. S.O. 1074(E)., dated 07-03-2023. , before it was read as, twenty-five , 62. Substituted vide Notification No. S.O. 1074(E)., dated 07-03-2023. , before it was read as, fifteen , 63. Omitted vide Notification No. S.O. 1074(E)., dated 07-03-2023. , before it was read as, 39 [and] 64. Inserted vide Notification No. S.O. 1074(E)., dated 07-03-2023. , 65. Omitted vide Notification No. S.O. 1074(E)., dated 07-03-2023. , before it was read as, [and] 66. Substituted vide Notification No. S.O. 1074(E)., dated 07-03-2023. , before it was read as, on its behalf: 67. Substituted vide Notification No. S.O. 1074(E)., dated 07-03-2023. , before it was read as, is a juridicial person . 68. Substituted vide Notification No. G.S.R. 652(E) dated 04-09-2023 before it was read as, fifteen 69. Inserted vide Notification No. G.S.R. 652(E) dated 04-09-2023 70. Inserted vide Notification No. G.S.R. 652(E) dated 04-09-20 .....

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