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Client Due Diligence.

Rule 9 - Rules - Rules - Money Laundering - Rule 9 - 1[ 9. (1) Every reporting entity shall- (a) at the time of commencement of an account-based relationship- (i) identify its clients, verify their identity, obtain information on the purpose and intended nature of the business relationship; and (ii) determine whether a client is acting on behalf of a beneficial owner, and identify the beneficial owner and take all steps to verify the identity of the beneficial owner: Provided that where the Regu .....

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transaction or several transactions that appear to be connected, or (ii) any international money transfer operations. 2[(1A) Subject to the provisions of sub-rule (1), every reporting entity shall within three days after the commencement of an account-based relationship with a client, file the electronic copy of the client's KYC records with the Central KYC Records Registry; (1B) The Central KYC Records Registry shall process the KYC records received from a reporting entity for de-duplicatin .....

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ion documents or details, unless - (i) there is a change in the information of the client as existing in the records of Central KYC Records Registry; (ii) the current address of the client is required to be verified; (iii) the reporting entity considers it necessary in order to verify the identity or address of the client, or to perform enhanced due diligence or to build an appropriate risk profile of the client. (1D) A reporting entity after obtaining additional or updated information from a cl .....

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responsible for verifying the authenticity of the identity or address of the client. (1F) A reporting entity shall not use the KYC records of a client obtained from the Central KYC Records Registry for purposes other than verifying the identity or address of the client and shall not transfer KYC records or any information contained therein to any third party unless authorised to do so by the client or by the Regulator or by the Director; (1G) The regulator shall issue guidelines to ensure that .....

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tion 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 a .....

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l person(s), who, whether acting alone or together, or through one or more juridical person, has a controlling ownership interest or who exercises control through other means. Explanation.-For the purpose of this sub-clause- 1. "Controlling ownership interest" means ownership of or entitlement to more than twenty-five per cent of shares or capital or profits of the company; 2. "Control" shall include the right to appoint majority of the directors or to control the management .....

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er is the natural person(s), who, whether acting alone or together, or through one or more juridical person, has ownership of or entitlement to more than fifteen per cent of the property or capital or profits of such association or body of individuals; (d) where no natural person is identified under (a) or (b) or (c) above, the beneficial owner is the relevant natural person who holds the position of senior managing official; (e) where the client is a trust, the identification of beneficial owne .....

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l owner of such companies. 4[(4) Where the client is an individual, who is eligible to be enrolled for an Aadhaar number, he shall for the purpose of sub-rule (1) submit to the reporting entity,- (a) the Aadhaar number issued by the Unique Identification Authority of India; and (b) the Permanent Account Number or Form No.60 as defined in Income-tax Rules, 1962, and such other documents including in respect of the nature of business and financial status of the client as may be required by the rep .....

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of officially valid document so produced by the client with the original and recording the same on the copy by the authorised officer of the reporting entity in a manner prescribed by the regulator. ] (4A) Where the client is an individual, who is not eligible to be 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 subm .....

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t on production of a self-attested photograph and affixation of signature or thumb print, as the case may be, on the form for opening the account: Provided that- (i) the designated officer of the banking company, while opening the small account, certifies under his signature that the person opening the account has affixed his signature or thump print, as the case may be, in his presence; (ii) the small account shall be opened only at Core Banking Solution linked banking company branches or in a .....

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nking 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) 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 through the production of officially valid documents, as referred to .....

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ll account unless the identity of the client is fully established through the production of officially valid documents, as referred to in sub rule (4) and 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: Provided that if the client is not eligible to be enrolled for the Aadhaar number, the identity of client shall be established thr .....

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m 60 as defined in the Income-tax Rules, 1962, issued to managers, officers or employees holding an attorney to transact on the company s behalf or where an 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 managers, officers or employees holding an attorney to transact on the company's behalf are not .....

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ued to the person holding an attorney to transact on its behalf or where an 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 co .....

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plication 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. (9) Where the client is an unincorporated association or a body of indi .....

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rds enrolment for Aadhaar and in case the Permanent Account Number is not submitted an officially valid document shall be submitted; and (iv) such information as may be required by the reporting entity to collectively establish the legal existence of such an association or body of individuals: 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 Accoun .....

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reporting entity 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. (ii) When there are suspicions of money laundering or financing of the activities relating to terrorism or where there are doubts about the adequacy or veracity of previously obtained client identi .....

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to account whether and when client due diligence measures have previously been undertaken and the adequacy of data obtained. (13) (i) Every reporting entity shall carry out risk assessment to identify, assess and take effective measures to mitigate its money laundering and terrorist financing risk for clients, 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 .....

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d 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 scenarios apply or where the risk identified is not consistent with the national risk .....

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reporting entity, at the time of receipt of the Aadhaar number under provisions of this rule, shall carry out authentication using either e-KYC authentication facility or Yes/No authentication facility provided by Unique Identification Authority of India. (16) In case the client referred to in sub-rules (4) to (9) of rule 9 is not a resident or is a resident in the States of Jammu and Kashmir, Assam or Maghalaya and does not submit the Permanent Account Number, the client shall submit to the re .....

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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 submit the Aadhaar number and Permanent Account Number b .....

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rule, who does not possess the Aadhaar number or has not yet enrolled for Aadhaar, may also visit such special Aadhaar enrolment camps for Aadhaar enrolment or any of the Aadhaar enrolment centres in the vicinity with existing registrars of UIDAI. (c) In case the client fails to submit the Aadhaar number and Permanent Account Number within the aforesaid six months period, the said account shall cease to be operational till the time the Aadhaar number and Permanent Account Number is submitted by .....

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to in sub-rules (4) to (9) of rule 9 does not have current address of the client, the client shall submit an officially valid document to the reporting entity.] 7[Provided that in case of officially valid document furnished by the client does not contain updated address, the following documents shall be deemed to be officially valid documents for the limited purpose of proof of address:- (a) utility bill which is not more than two months old of any service provider (electricity, telephone, post .....

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d 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.] - Notes: 1. Substituted Vide Prevention of Money-laundering (Maintenance of Records) Amendment Rules, 2013, w.e.f. 27-8-2013. Before Substituted Amended vide Prevention of Money-Laundering (Maintenance of Records of the Nature and Value of Transa .....

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of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Amendment Rules, 2009, w.e.f. 12-11-2009, Prevention of Money-Laundering (Maintenance of Records of the Nature and Value of Transactions, the Procedure and Manner of Maintaining and Time for Furnishing Information and Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Amendment Rules, 2010, w.e.f. 12-2-2010, Prevention of Mo .....

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Furnishing Information and Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Third Amendment Rules, 2010, w.e.f. 16-12-2010, before it was read as: 9. Verification of the records of the identity of clients.-(1) Every banking company, financial institution and intermediary, as the case may be, shall,- (a) at the time of commencement of an account-based relationship, identify its clients, verify their identit .....

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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 .....

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r persons whose identity has not been disclosed or cannot be verified. (1D) When there are suspicions of money-laundering or financing of the activities relating to terrorism or where there are doubts about the adequacy or veracity of previously obtained customer identification data, every banking company, financial institution and intermediary shall review the due diligence measures including verifying again the identity of the client and obtaining information on the purpose and intended nature .....

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ny or the financial institution or the intermediary, as the case may be : Provided that photograph need not be submitted by a client falling under clause (b) of sub-rule (1). (2A) Notwithstanding anything contained in sub-rule (2), an individual who desires to open a small account in a banking company may be allowed to open such an account on production of a self-attested photograph and affixation of signature or thumb print, as the case may be, on the form for opening the account: Provided that .....

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and annual aggregate of transactions and balance in such accounts are not breached, before a transaction is allowed to take place; (iii) a small account shall remain operational initially for a period of twelve months, and thereafter for a further period 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 provis .....

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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 Board of Directors and power of attorney granted to its managers, officers or emp .....

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ing an attorney to transact on its behalf. (5) Where the client is a trust, it shall, for the purposes of sub-rule (1) submit to the banking company, or the financial institution, or the intermediary 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. (6) Where the client is an unincorporated association or a body of individuals, it shall submit .....

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ively establish the legal existence of such an association or body of individuals. (6A) Where the client is a juridical person, the banking company, financial institution and intermediary, as the case may be, shall verify that any person purporting to act on behalf of such client is so authorised and verify the identity of that person. (7) (i) The regulator shall issue guidelines incorporating the requirements of sub-rules (1) to (6A) above and may prescribe enhanced measures to verify the clien .....

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es, 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 .....

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ompany may be allowed to open such an account on production of a self-attested photograph and affixation of signature or thumb print, as the case may be, on the form for opening the account: Provided that- (i) the designated officer of the banking company, while opening the small account, certifies under his signature that the person opening the account has affixed his signature or thumb print, as the case may be, in his presence; (ii) a small account shall be opened only at Core Banking Solutio .....

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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 offic .....

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