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Client Due Diligence.

Rule 9 - Rules - Other Direct Tax Provisions - 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 R .....

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le 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-duplica .....

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cation 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 .....

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be 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 th .....

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ication 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 assesse .....

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ural 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 manageme .....

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owner 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 o .....

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cial owner of such companies. (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 cl .....

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t 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 Solution linked banking company branches or in a branch where it is possible to manually monitor and ensure that foreign remittances are not credited to a small account and that the stipulated limits on monthly and annual aggregate of transactions and balance in such accounts are not breached, before a transaction is allowed to take place; (iii) a small accou .....

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ney 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 (4) 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 (4) of rule 9. (6) Where the client is a company, it shall for the pu .....

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t 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 o .....

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t on its behalf; 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. (10) Where the client is a juridical person, the reporting entity shall verify that any person purporting to act on behalf of such client is so authorized and verify the identity of that person. (11) No reporting entity shall allow the opening of or keep any anonymous account or account in fictitious names or account on .....

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rrorism or where there are doubts about the adequacy or veracity of previously obtained client identification data, the reporting entity shall review the due diligence measures including verifying again the identity of the client and obtaining information on the purpose and intended nature of the business relationship, as the case may be. (iii) The reporting entity shall apply client due diligence measures also to existing clients on the basis of materiality and risk, and conduct due diligence o .....

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s 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 .....

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fic higher-risk scenarios apply or where the risk identified is not consistent with the national risk assessment. (ii) Every reporting entity shall formulate and implement a Client Due Diligence Programme, incorporating the requirements of sub-rules (1) to (13) and guidelines issued under clause (i) above. (iii) The Client Due Diligence Programme shall include policies, controls and procedures, approved by the senior management, to enable the reporting entity to manage and mitigate the risk that .....

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he Banking Companies, Financial Institutions and Intermediaries) Amendment Rules, 2007, w.e.f. 24-5-2007, 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, 2009, w.e.f. 12-11-2009, Prevention of Money-Laundering (Main .....

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ification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Second Amendment Rules, 2010, w.e.f. 16-6-2010 and 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 Intermediari .....

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action of an amount equal to or exceeding 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 s .....

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ure 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, shall allow the opening of or keep any anonymous account or account in fictitious names or account on behalf of other 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 t .....

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financial institution and intermediary, as the case may be, 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 banking company 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 su .....

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his signature or thumb print, as the case may be, in his presence; (ii) a small account shall be opened only at Core Banking Solution linked banking company branches or in a branch where it is possible to manually monitor and ensure that foreign remittances are not credited to a small account and that the stipulated limits on monthly 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 rema .....

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g 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 .....

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. (4) Where the client is a partnership firm, 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) partnership deed; and (iii) an officially valid document in respect of the person holding 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 financ .....

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