Comments on the following: Know Your Customer (KYC)

Answer 2(a)(i) Know your Customer (KYC) KYC establishes the identity and residential address of the customers by specified documentary evidences. One of the main objectives of KYC procedure is to prevent misuse of the banking system for money laundering and financing of terrorist activities. The 'KYC' guidelines also reinforce the existing practices of some banks and make them compulsory, to be adhered to by all the banks with regard to all their customers who maintain domestic or non-resident rupee or foreign currency accounts with them. All religious trust accounts and non-religious trust accounts are also subject to KYC procedure. RBI had advised banks that: No account is opened in anonymous or fictitious/benami name(s). Bank will not open an account or close an existing account if the bank is unable to verify the identity or obtain documents required by it due to non cooperation of the borrower.