Operational aspect of KYC
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What does KYC stand for and what is its primary purpose in banking?
KYC stands for Know Your Customer, and its primary purpose is to verify the identity of customers to prevent money laundering, terrorist financing, and other financial crimes.
What is the Customer Identification Procedure (CIP) in KYC operations?
Process of verifying customer identity before opening any account.
Which regulatory body issues KYC guidelines for banks in India?
The Reserve Bank of India (RBI) issues KYC guidelines for banks in India under the Prevention of Money Laundering Act (PMLA), 2002.
Which form must banks use to collect KYC information from individual customers?
KYC form prescribed by RBI or bank's own approved form.
What are the four key elements of a KYC policy as prescribed by RBI?
The four key elements are Customer Acceptance Policy (CAP), Customer Identification Procedures (CIP), Monitoring of Transactions, and Risk Management.
What is the meaning of 'Low-Risk Customer' under RBI's KYC risk categorisation?
Customers with identifiable income and low transaction volumes.
What is Customer Due Diligence (CDD) in the context of KYC?
Customer Due Diligence is the process of verifying the identity of customers, understanding the nature of their business, and assessing the risks associated with the customer relationship.
What is the KYC re-verification interval for medium-risk customers?
Every eight years.
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