*This is not some thing new, now it is a must for any invetment amount. Till now, many used to avoid by investing Rs.49000 under one account number. Now is a must irrespective of amount of investment, from 01 Jan 2011. Further, one has to fill this KYC for the existing investments too.*
** *One may take these rules very lightly as Govt. doesn't enforce. For example one can see some automobile vehicles run with old number plates with state abriviations (MSL, KLV, etc etc). I feel with numerous scams, financial ir-regulations etc this new rule will be enforced.* * * *What is this KY? * ** *Know your customer** (KYC) is the due diligence and bank regulation that financial institutions and other regulated companies must perform to identify their clients and ascertain relevant information pertinent to doing financial business with them. In the USA, KYC is typically a policy implemented to conform to a customer identification program mandated under the Bank Secrecy Act and USA PATRIOT Act. Know your customer policies are becoming increasingly important globally to prevent identity theft fraud, money laundering and terrorist financing. In a simple form these rules may equate to answering twelve questions, but this is the tip of the iceberg and regulators now expect much more.* * * *One aspect of KYC checking is to verify that the customer is not on any list of known fraudsters, terrorists or money launderers, such as the Office of Foreign Assets Control's Specially Designated Nationals list. This list contains thousands of entries and is updated at least monthly. As well as sanctions lists there are lists of third party vendors that track links between persons regarded as high-risk owing to negative reports in the media about them or in public records.* *Beyond name matching, a key aspect of KYC controls is to monitor transactions of a customer against their recorded profile, history on the customer’s account(s) and with peers.* * * *Banks doing KYC monitoring for anti-money laundering (AML) and checks relating to combating the financing of terrorism (CFT) increasingly use specialised transaction monitoring software, particularly names analysis software and trend monitoring software. The generated alerts identify unusual activity which is then subject to due diligence or enhanced due diligence (EDD) processes that use internal and external sources of information on the subject, including the internet. This helps to determine whether a transaction or activity is suspicious and requires reporting to the authorities. In the US, it would require Suspicious Activity Reporting (SAR) filing to Financial Crimes Enforcement Network (FinCEN). In the UK, it would require a report to Serious Organised Crime Agency (SOCA). In Canada KYC is monitored and managed by the Financial Transactions and Reports Analysis Centre of Canada also known as FINTRAC. KYC has different connotations and the definition above is from an AML/CFT perspective.* * * *Know Your Customer processes are also employed by regular companies of all sizes, for the purpose of ensuring their proposed agents', consultants' or distributors' anti-bribery compliance. Banks, insurers and export credit agencies are increasingly demanding that customers provide detailed anti-corruption due diligence information, to verify their probity and integrity.* ** *Many retired persons invested their savings in Mutual Funds etc should do the needful, so that they will not face problem while disposing them.* ** *I wish persons who are well versed in this may enlighten on this issue in the larger interest of genuine investers.* ** *One file attached for your reference. * ** *K.Raman * * * * *
Know Your Client - KYC.pdf
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