Amendments to KYC Norms will Create a Robust, Inclusive Digital Payment Ecosystem

MUMBAI:
The Fintech Convergence Council (FCC), which functions under the aegis of the Internet and Mobile Association of India (IAMAI), welcomes the recent amendments to the Master Directions on Know Your Customer (KYC) Directions, 2016, by the Reserve Bank of India (RBI).

Srinivas Jain, Co-Chair, FCC, and Executive Director and Head of Strategy, SBI Mutual Fund, said, “The amendments to the KYC norms are aligned with the recent amendments in the Prevention of Money Laundering Act (PMLA) Rules. While some of the changes further clarify provisions, others are enablers, leading to mixed reactions from the industry. The immediate applicability of the amendments has left the industry grappling with the impact and implementation of the changes. However, the changes affirm the regulator’s efforts to strike a fair balance between simplifying the KYC process for regulated entities to a certain extent and enhancing their ability to access financial products through innovative technologies such as AI and ML.”

The amendments bring several changes to the KYC process for REs (Regulated Entities), including the revision of the threshold of ‘Beneficial Ownership’ for registered ‘Company’ and ‘Trust’ to 10% from the earlier 25% and 15%, respectively. The amendments also add or amend the definition of terms such as ‘Group,’ ‘Non-Profit Organisation,’ ‘PEP,’ and ‘Correspondent Banking,’ among others. Furthermore, REs must have a group-wide KYC policy for discharging obligations such as retaining transaction and customer KYC data. Amendments related to Video-based Customer Identification Process (V-CIP) include the requirement to get V-CIP infrastructure tested by CERT-IN empanelled auditors, among other changes.