Amendment to Master Direction on KYC

Author: thinkinglegal | February 29, 2020 - 10:43 | Tags: Regulatory Advisory

On January 9, 2020, RBI amended the Master Direction on KYC dated February 25, 2016 (“Master Direction”) to include video based KYC and digital KYC.

Digital KYC: In terms of this amendment, the customer due diligence can be completed through Digital KYC for the purpose of establishing an account-based relationship. Digital KYC means capturing the live video and photo of the customer and officially valid documents and proof of Aadhar, where offline verification cannot be carried out, along with the latitude and longitude of the location where such live photo is being taken by an authorised officer of the Reporting Entity (RE). The customer has to either go to the RE’s representative or vice-versa.

Video based KYC: The Amendment has further introduced Video based Customer Identification Process (“V-CIP”) by Banks and other Regulated Entities. This move will help the REs on board customers remotely. The customers who are present in remote locations can get the KYC done through this V-CIP. It is a consent based real time live video of the customer providing their details by answering the questions of the RE’s. In the process, the live location of the customer (Geotagging) shall be captured to ensure that customer is physically present in India. The official of the RE has to ensure that photograph of the customer in the Aadhaar/PAN details matches with the customer undertaking the V-CIP and the identification details in Aadhaar/PAN shall match with the details provided by the customer. The REs have to further ensure that the video recording is stored in a safe and secure manner and bears the date and time stamp. They further have to ensure that the sequence and/or type of questions during video interactions are varied in order to establish that the interactions are real-time and not pre-recorded. All accounts opened through V-CIP shall be made operational only after being subject to concurrent audit, to ensure the integrity of process.

This post has been contributed by Ms. Vaneesa Agrawal and Ms. Aditi Sanghi.

[DISCLAIMER:  This article is for academic purpose and is solely to provide readers with general information regarding developments in Indian law. The information contained herein does not constitute legal or a professional advice.]