What Is KYC – Know Your Customer?
Know your customer (KYC) policy is a mandatory, regulatory and legal requirement for the identification and verification of the customer’s details, by using independent and reliable information or documents.
The KYC policy incorporates key elements as per the Reserve Bank of India’s directive in 2004. The elements include customer identification procedures, customer acceptance policy, monitoring of transactions and risk management.
Why Is KYC Important For You?
The objective of the KYC is to identity theft, prevent terrorist financing, money laundering and financial fraud. KYC allows us to understand the customer better and manage risks prudently. KYC collects and verifies basic details of the customers like:
- Name and authorized signatures
- Legal status of the legal entity or a person
- Identity of the beneficial controllers and owners of the account
Regulatory: In terms of the guidelines issued by the Reserve Bank of India (RBI) on 29th November 2004 on Know Your Customer [KYC] Standards – Anti Money Laundering [AML] Measures, all banks are required to put in place a comprehensive policy framework covering KYC Standards and AML Measures.
Legal: The Prevention of Money Laundering Act, 2002 (PMLA) which came into force from 1st July, 2005 (after “rules” under the Act were formulated and published in the Official Gazette) also requires Banks, Financial Institutions and Intermediaries to ensure that they follow certain minimum standards of KYC and AML as laid down in the Act and the “rules” framed there under.
Why We Follow KYC Policy?
Every financial institute, including mutual fund distributors, have to follow KYC when dealing with customers. You will have to adhere by the policy when:
- Seeking financial planning through a registered board
- Investing in mutual funds
- Opening some subsequent account
- Opening a bank account
- Applying for a loan or credit card
- In case of lack of enough documents with banks or financial institutes
- Changes in beneficial owners, signatories, etc.
- For some additional information
When you get registered with Arthayantra, we help you get your KYC registration done for free.
Documents Required For KYC Include:
- Legal name and any other name change (as per identity proof)
- Correct permanent address (as per identity proof)
- Identity proof (PAN card)
- Address proof (utility bill, bank account statement, voter ID card, passport)
Note: As per SEBI rules, PAN is mandatory for registration with any SEBI-registered financial board.
Thus, KYC registration is a must to avail advice from from a financial planner. If you do not want to share required documents for KYC, we will not be able to get you registered, open account and process your transaction. Hence, KYC should be the first step towards securing your financial future.