Podcast
Questions and Answers
What action should be taken if there are doubts about the adequacy of previously obtained Customer Identification Data?
What action should be taken if there are doubts about the adequacy of previously obtained Customer Identification Data?
- Continue with existing customer data without changes
- Review due diligence measures and verify the client’s identity again (correct)
- Terminate the business relationship immediately
- Request additional funds from the client for verification
Which risk category customer requires their information to be updated at least once every two years?
Which risk category customer requires their information to be updated at least once every two years?
- Low-Risk Category
- Medium-Risk Category
- High-Risk Category (correct)
- No specific risk category applies
What is essential for the Bank to obtain regarding the customer's business relationship?
What is essential for the Bank to obtain regarding the customer's business relationship?
- The customer's personal history and background information
- A detailed plan for the customer's future investments
- Only the financial gains expected from the relationship
- Information on the purpose and intended nature of the business relationship (correct)
What should be the approach of the Bank regarding customer information?
What should be the approach of the Bank regarding customer information?
When must reasonable steps be taken by the Bank to keep customer information up to date?
When must reasonable steps be taken by the Bank to keep customer information up to date?
Which of the following indicates a potential requirement for additional verification measures?
Which of the following indicates a potential requirement for additional verification measures?
What is the primary purpose of customer due diligence in relation to knowing your customer?
What is the primary purpose of customer due diligence in relation to knowing your customer?
Which of the following is NOT a condition under which banks may rely on third-party customer due diligence?
Which of the following is NOT a condition under which banks may rely on third-party customer due diligence?
What must a bank satisfy to ensure the credibility of a third party in customer due diligence?
What must a bank satisfy to ensure the credibility of a third party in customer due diligence?
What role does the bank retain concerning customer due diligence when using a third party?
What role does the bank retain concerning customer due diligence when using a third party?
When does the identification requirement become particularly important for a bank?
When does the identification requirement become particularly important for a bank?
Which factor does NOT influence the customer identification process?
Which factor does NOT influence the customer identification process?
What must be assessed about a third party when used for customer due diligence?
What must be assessed about a third party when used for customer due diligence?
What is required from the documentation when conducting customer due diligence?
What is required from the documentation when conducting customer due diligence?
Which of the following scenarios requires customer identification?
Which of the following scenarios requires customer identification?
What should be done if there is doubt about customer identification data?
What should be done if there is doubt about customer identification data?
In what situation could a bank suspect money laundering activities?
In what situation could a bank suspect money laundering activities?
What is the threshold amount for requiring customer identification for non-account holders conducting transactions?
What is the threshold amount for requiring customer identification for non-account holders conducting transactions?
Why should banks take special care when an applicant refuses to provide identification?
Why should banks take special care when an applicant refuses to provide identification?
What action should a bank take if it suspects intentional structuring of transactions?
What action should a bank take if it suspects intentional structuring of transactions?
Which of the following activities does not require customer identification?
Which of the following activities does not require customer identification?
What is the primary purpose of customer identification procedures?
What is the primary purpose of customer identification procedures?
Study Notes
Duty to Obtain Identification
- Essential for Anti-Money Laundering (AML) to ensure customers are who they claim to be.
- Distinction between one-off transactions and ongoing business relationships affects identification requirements.
Verification via Third Parties
- Banks may rely on customer due diligence from third parties if specific conditions are met:
- Immediate access to records or information from third party or Central KYC Records Registry.
- Availability of identification data and relevant documentation upon request.
- Third party must be regulated and compliant with client due diligence and record-keeping standards under the PML Act.
- Third party should not be located in high-risk jurisdictions.
- Ultimate responsibility for client due diligence lies with the bank, including enhanced due diligence measures as needed.
Customer Identification Process
- In cases of suspicion related to money laundering or terrorism financing, banks must:
- Review due diligence measures.
- Re-verify client identity and gather details on the business purpose and intended relationship.
Customer Identification Procedures
- Sufficient information must be collected on the nature of the customer's expected business and transaction patterns.
- A risk-based approach determines necessary additional information while respecting applicant privacy.
- Information must be kept updated regularly:
- Low-Risk: Update at least once every 10 years.
- High-Risk: Update at least once every 2 years.
- Medium Risk: Update at least once every 8 years.
Circumstances for Customer Identification
- Identification required when:
- Starting an account-based relationship.
- Performing international money transfers for non-account holders.
- Authenticity of previously obtained identification data is in doubt.
- Selling products for transactions above ₹50,000.
- Conducting transactions for non-account-based customers totaling ₹50,000 or more.
- Suspected intentional structuring of transactions below ₹50,000.
- Introduction should not be sought during account openings.
- Lack of satisfactory identification evidence may lead to suspicion of money laundering and necessitate a suspicious activity report to the principal officer.
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Description
Test your knowledge on the essential practices of Anti-Money Laundering (AML), focusing on customer identification and due diligence. Learn about the requirements for verifying customer identities and the reliance on third parties within the AML framework.
