Know Your Customer is the process of verifying the identity of customer. The objective of KYC guidelines is to prevent banks from being used, by criminal elements for money laundering activities. It also enables banks to

Know Your Customer is the process of verifying the identity of customer. The objective of KYC guidelines is to prevent banks from being used, by criminal elements for money laundering activities. It also enables banks to understand its customers and their financial dealings to serve them better and manage its risks prudently. KYC is the means of identifying and verifying the identity of the customer through independent and reliable source of documents, data or information. For the purpose of verifying the identity of: Individual customers, bank will obtain the customer's identity information, address and recent photograph. Similar information will also have to be provided for joint holders and mandate holders. Non-individual customers-banks will obtain identification data to verify the legal status of the entity, operating address, the authorized signatories and beneficial owners. Information is also required on the nature of employment/business that the customer does or expects to undertake and the purpose of opening of the account with the bank. The KYC guidelines have been put in place by the Reserve Bank of India in the context of the recommendations made by the Financial Action Task Force (FATF) on Anti Money Laundering (AML) standards and on Combating Financing of Terrorism (CFT). The Prevention of Money Laundering Act requires banks, financial institutions and intermediaries to ensure that they follow certain minimum standards of KYC and AML. KYC is to be provided at the time of opening a new account as well as at periodicity defined by the Reserve Bank of India. It may be necessary to obtain additional information from existing customers based on the conduct of the account, where there are changes to the account or at fixed periodic updation cycles based on the risk categorization of the customer. Similarly, an existing customer will be required to provide fresh KYC for new account opening to adhere to the latest applicable KYC standards. Banks are entitled to refuse to open an account or discontinue an existing relationship if there is failure to meet the minimum KYC requirements. However, there is flexibility provided to certain categories of customer who are unable to provide the necessary document at the time of account opening. On the basis of the above facts, answer the following questions: Describe the steps taken by the Bank in case they suspect a customer's involvement in money laundering activities.