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Mahesh Kumar Sarva, Lovely Professional University Unit 7: KYC Norms and Anti Money Laundering

Unit 7: KYC Norms and Anti Money Laundering Notes

CONTENTS
Objectives
Introduction

7.1 Policy on Know Your Customer Standards/Anti-Money Laundering Measures
7.2 Obligations under Prevention of Money Laundering Act 2002
7.3 Monitoring of Transactions

7.4 Principal Officer (Money Laundering Reporting Officer)
7.5 Retail Lending
7.6 Introduction of Foreign Exchange Management Act (FEMA)
7.7 Residential Status
7.8 Summary

7.9 Keywords
7.10 Review Questions
7.11 Further Readings

Objectives

After studying this unit, you should be able to:
Know RBI's Policy on Know Your Customers
Know Objectives and Key elements of the policy

Understand Concept of Money Laundering
Understand Obligations of the banking institutions under Prevention of Money Laundering
Act 2002

Introduction

Know Your Customer (KYC) refers to both:
The activities of customer due diligence that financial institutions and other regulated
companies must perform to identify their clients and ascertain relevant information
pertinent to doing financial business with them
And the bank regulation which governs those activities
In the USA, KYC is typically a policy and process implemented to conform to a customer
identification program (CIP) mandated under the Bank Secrecy Act and USA PATRIOT Act.
Know your customer policies are becoming increasingly important globally to prevent identity
theft, financial fraud, money laundering and terrorist financing.

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