Quick Success Series KYC & AML Guidelines April 24, 2010

Quick Success Series

Promotional Exams for the Year 2010-11 are round the corner. You may be going through a number of Books, Guides, Periodicals, Banks Circulars and Instructions to acquire all the relevant information on a Particular Topic from the examination point of view. We at SBLC Deoghar have made a sincere & honest effort to present all information spread over various books, guides & circulars on a particular topic at one place through Quick Success Series for your benefit. It will also be quite helpful for your last minute revisions of various facts & figures learnt during preparation. We have taken all care to provide correct, complete though concise information related to the topic. In case any discrepancy is observed please feel free to advise us through Email or Mobile as given below. Please also give your honest feedback and valuable suggestion in this regard. Wishing you all grand success Chief Manager (Training) State Bank Learning Centre Deoghar- 814112

KYC & AML Guidelines

Compiled By Ravi Prakash Manager Training, SBLC Deoghar Mobile- 9472964793 Email-p.ravi@sbi.co.in [Type text] Page 1

Phone- 06432-232895 Fax- 06432-231810 E-mail: agmstc.deoghar@sbi.co.in

Quick Success Series KYC & AML Guidelines April 24, 2010 5 years (for low risk customers) and once in 2 years (for high and medium risk customers). Those who are not in position to submit the documents as per KYC norms can also open their accounts if the balance does not exceed Rs 50000/ and credit summation does not exceed Rs 1 lakh in a year in all their accounts. In HUF prescribed Joint Hindu Family letter is signed by all the adult Co parceners. In minor is less than 10 year old, ID proof of the person who will operate the account is to be obtained. Non face to face Customers are those with whom Branch has not had direct interaction at the time of opening of account e.g. NRI customers who opened the account without visiting the branch. In case of Non face to face Customers documents for photo ID and proof of residence to be verified by - Banker - Notary Public - Indian Embassy - A person known to the Bank whose signatures are verifiable from Banks records. - Branches may also accept verification of documents by officers of correspondent banks whose signatures are verifiable through an authorized forex branch of the Bank. No correspondent relationship should be established with a shell Bank as they are not permitted to operate in India. In case of cross border wire transfer it should be accompanied by name and address of the originator and where an account exists, the number of the account. In domestic wire transfers all transactions of Rs 50000/ must include complete originator information but when both originator and beneficiary are banks or financial institutions, they would be exempted from above requirements. Low Risk:i) Salaried employee/ pensioners whose income structures are well defined. ii) People belonging to lower economic strata of the society whose accounts show small balances and low turnover. iii) Other individuals with debit or credit summations below Rs 10 lacs p.a. iv) Small business enterprises and small public Ltd Cos with debit or Credit summation below Rs 10 lacs pa. v) Government departments and government owned Companies State and Central Regulators, F I s statutory bodies etc. Medium Risk :i) Individuals and persons engaged in Business. ii) Firms in Private sector , Private Limited Companies, Public Ltd

KYC guidelines are based on the paper issued on Customer Due Diligence (CDD) for banks by the Basel Committee on Banking Supervision. Key elements of KYC/AML/CFT Policy are : (1) Customer Acceptance (2) Customer Identification (3) Monitoring of Transaction (4) Risk Management PMLA stands for Prevention of Money Laundering Act , an Act formulated by RBI in 2002 AML stands for Anti Money Laundering. CFT stands for Combating Financial Terrorism. FATF stands for Financial Action Task Force. FIU-IND stands for Financial Intelligence Unit India. MLRO stands for Money Laundering Reporting Officer. As per KYC policy definition of customer includes -A person or entity that maintains an account and/or has a business relationship with the bank (borrower, guarantor, Locker holders etc.) -One on whose behalf the account is maintained -Beneficiary of transactions conducted by professional bodies such as CA/ Stock Brokers etc. -Any person or entity connected with a financial transaction. Discretion for closure of a/c due to non compliance of KYC norms is vested with the Branch Head if there is RMPB/ RM-MM and in all other cases, the AGM (Admin) of the respective A.O. Periodicity of updating of customer identification data, including photographs- once in

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Quick Success Series KYC & AML Guidelines April 24, 2010 Companies with debit or credit summations of Rs 10 lacs to Rs 1 crores p.a. High Risk:i) Accounts of firms in Private Sector, Private Limited Company and individuals with Debit or Credit Summations above Rs. 1 crore per annum. ii) Customers domiciled in the some country identified e.g. Myanmar, Nigeria etc . iii) Trusts, charities, NGOs and organizations receiving donations from India and abroad. iv) Politically Exposed persons (PEP)s of foreign origin. v) Non face to face customers. vi) Those with dubious reputation. vii) Borrowal accounts which are NPAs. Bank has set up a KYC AML CELL at Jaipur. This cell will be under the administrative control of the CGM (BOD) and Principal Officer KYC/AML. It will be analyzing the alerts on transactions handled across the Bank with the help of AMLOCK software acquired from M/s 3i-Infotech for eventual generation of Suspicious Transactions Reports (STRs), it is required, to be submitted to the Financial Intelligence Unit-India (FIU-IND) by the Principal Officer (KYC/AML). All transactions mentioned below has to be recorded in separate register. - Cash withdrawals and deposits for Rs 10 lacs and above.. - Its equivalent in foreign Currency. - Where series of Cash transactions integrally connected to each other and within a month the aggregate value of cash transactions exceed Rs 10 Lakh. CTR (Cash Transaction) Report regarding transactions of Rs. 10 lac and above in an account are generated by CDC Belapur itself and reported to FIU-IND on monthly basis. STR (Suspicious Transaction) Report - Branches are required to record and report all transaction of suspicious nature to LHO through their controller as it has to be reported by Corporate Centre to the Director, FIU-IND. Counterfeit Currency Reports (CCRs): All instances of counterfeit currency and forgery of valuable security and documents are to be submitted to FIU-IND through the Principal Officer. Scrutiny of unusual transactions. - up to Rs. 1,00,000/Passing officer - Rs. 1,00,000/- to Rs. 5,00, 000/Manager of Division. - Above Rs. 5,00,000/Branch Manager. In terms of the PMLA records of Cash transactions of Rs. 10 lacs and suspicious transactions are required to be maintained for a period of 10 years.

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