Banking Regulations and KYC Perspectives

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Questions and Answers

What form is required to cancel the nomination in a PPF account?

Form-N

Form-E

Form-D

Form-F (correct)

How many nominees can be added to a PPF account?

Up to three

One or more (correct)

Two only

Only one

What is the KYC policy's element that deals with the verification of customer identity?

Monitoring of Transactions

Customer Acceptance Policy

Customer Identification Procedures (correct)

Risk Management

Who is considered a beneficial owner in the context of a company?

An individual with control over 10% or more of shares Signup and view all the answers

What percentage of shares or capital defines controlling ownership interest in a company?

25% Signup and view all the answers

How many witnesses are needed for registering a nominee in a PPF account if the nominee is illiterate?

Two Signup and view all the answers

In the context of a partnership firm, who qualifies as a beneficial owner?

The natural person with more than 15% of capital or profits Signup and view all the answers

What percentage of ownership qualifies a natural person as a beneficial owner in an unincorporated association?

More than 15% Signup and view all the answers

What right must a beneficial owner possess to control a company?

The right to appoint a majority of directors Signup and view all the answers

How is control defined in the context of corporate governance?

Ability to appoint majority of directors or control management Signup and view all the answers

Which KYC policy element focuses on the ongoing review of customer transactions?

Monitoring of Transactions Signup and view all the answers

What is the maximum aggregate credit allowed in a small account within a financial year?

Rupees one lakh Signup and view all the answers

Which document is NOT considered an Officially Valid Document (OVD)?

Pan Card Signup and view all the answers

What is the maximum balance allowed in a small account at any given time?

Rupees fifty thousand Signup and view all the answers

Which of the following entities is considered a 'body of individuals'?

An unincorporated association Signup and view all the answers

In the context of a trust, who is included in identifying the beneficial owner?

The author of the trust and beneficiaries with 15% or more interest Signup and view all the answers

What document is considered an Officially Valid Document (OVD) if it reflects a name change after marriage?

Marriage certificate issued by the State Government Signup and view all the answers

What should individuals provide if their OVD does not have an updated address?

Deemed OVDs for proof of address Signup and view all the answers

What must be done within three months if an individual submits an OVD without an updated address?

Submit an OVD updated with the current address Signup and view all the answers

What is required if a foreign national submits an OVD without an address?

Documents from foreign government departments or a letter from the Foreign Embassy Signup and view all the answers

What type of document can also be accepted as proof of address for customers?

Pension payment orders containing the address Signup and view all the answers

What is necessary for Aadhaar authentication when an individual provides a new current address?

A self-declaration from the individual Signup and view all the answers

Which of the following does NOT constitute an alternative Virtual Identity Number (VIN) under the Aadhaar Act?

A foreign passport number Signup and view all the answers

What role does a certified copy play in the documentation process?

It compares a copy of the OVD with the original and records the comparison Signup and view all the answers

What is the maximum validity period for the Aadhaar XML file or Aadhaar Secure QR Code before the video process must be undertaken?

Three working days Signup and view all the answers

Which procedure is followed before establishing account-based relationships with Politically Exposed Persons (PEPs)?

Enhanced Due Diligence (EDD) Signup and view all the answers

What happens to mixed lot applications sent to the LCPC?

They will be returned without acceptance Signup and view all the answers

What level of approval is required to continue a business relationship if an existing customer becomes a PEP?

Senior management's approval Signup and view all the answers

What is the consequence of sending KYC documents in a mixed lot to the LCPC?

They will not be processed and returned Signup and view all the answers

In the Video-based Customer Identification Process (V-CIP), which of the following must happen?

Concurrent auditing must take place Signup and view all the answers

Which document is generated and advised to the customer after processing their KYC?

C-KYC number Signup and view all the answers

What critical information must be gathered before accepting a PEP as a customer?

Sources of funds and family member accounts Signup and view all the answers

What is a common irregularity regarding the KYC documents that can be encountered?

Mandatory fields are left blank. Signup and view all the answers

Which of the following conditions must be met for joint accounts concerning KYC?

Part-I of AOF for all account holders is required. Signup and view all the answers

What is required concerning nomination forms in KYC processes?

Forms must be completely filled, including witness details. Signup and view all the answers

What might happen if the documents uploaded do not match the selected code?

The mismatch can lead to rejection of the KYC application. Signup and view all the answers

Which statement is true regarding the validity of KYC documents matching?

Name in AOF and ID proof must match. Signup and view all the answers

Regarding the CIF creation before the CKYC rollout date, what is an exception?

No documents related to CKYC need to be uploaded. Signup and view all the answers

What error occurs when documents are not verified against a bank official's details?

The documents may be deemed invalid. Signup and view all the answers

What is crucial when uploading Proof of Address (POA) and Proof of Identity (POI) documents?

The complete document along with verifying official’s signature should be legible. Signup and view all the answers

What is required in case of nomination made by an illiterate customer?

Witnesses must provide their signature and full address Signup and view all the answers

In which circumstance is the distribution percentage of nominees required?

When there are multiple nominees Signup and view all the answers

What should be obtained when a nominee is a minor?

Details of the guardian Signup and view all the answers

What is a common issue regarding permanent addresses in nominations?

Different permanent address than the OVD is often not addressed Signup and view all the answers

What documentation is typically required for non-individual accounts according to KYC guidelines?

Other documents as specified but often not obtained Signup and view all the answers

When should branches ensure signatures are in capital letters?

In all cases, to avoid discrepancies Signup and view all the answers

What issue arises if CIFs are not linked to accounts within a specified time frame?

The CIF becomes inactive and requires a new one Signup and view all the answers

What happens if an authorized official does not affix their SS number?

The form will be returned for correction Signup and view all the answers

Study Notes

Document Requirements for Account Opening

Firms must provide a partnership deed and letter, and the PAN of all partners and the firm.
A resolution from the firm for opening the account is also required.
A company's PAN, certificate of incorporation, and registered MOA and AOA documents are necessary for opening a limited company account. If a company does not have a PAN, Form 60 is used.
Discrepant or incomplete images can be rejected by marking appropriate reasons from the available drop-down menu in the LCPC workflow or CBS system.

Money Laundering Offences

The offence of money laundering is defined in Section 3 of the Prevention of Money Laundering Act (PMLA, 2002).

Account Opening for Hindu Undivided Families (HUFs)

The Karta, and all adult coparceners of the HUF, are required to sign the COS 38 form during account opening.

Customer Risk Classification

Customers can be classified based on different risk categories as per the KYC/AML/CFT policy (e.g., low risk, medium risk, high risk).

Smishing and phishing are social engineering attacks. These attacks trick people into revealing personal information, such as login credentials or credit card numbers.

Customer KYC Number

After successfully completing the CKYC process, the customer's CKYC number will be sent via SMS to their registered mobile number, most commonly by GITC Belapur or CERSAI.

Non-Mandatory Fields in CIF Creation

The landline number isn't a mandatory field when creating a new CIF.

Beneficial Owners in Trusts

The author of the trust, the trustee, beneficiaries with an interest of 10% or more, and anyone exercising control over the trust are considered beneficial owners.

Reporting Entity and KYC Records

Within 3 days of an account opening, the reporting entity (e.g., a bank) is required to file an electronic copy of the customer's KYC records with the Central KYC Records Registry as per GOI instructions.

Updating OVDs

Customers can update their OVD details (e.g., OVDs with current address) within 1 month after submitting a deemed OVD.

KYC Policy Guidelines

Customer Acceptance Policy (CAP), Risk Management, Customer Identification Procedures (CIP), and Transaction Monitoring are elements of KYC policy guidelines.

FATCA

FATCA (Foreign Account Tax Compliance Act) aims to counter tax evasion in the USA.

Other Information

Details for opening a proprietorship concern, limited company and partnership firm accounts are provided.
Various documents and procedures are mentioned for account opening and different types of accounts.
Information on the KYC policy, the types of accounts, and the rules and regulations are also provided.

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Description

This quiz covers the essential aspects of banking regulations, specifically focusing on the Public Provident Fund (PPF) account, KYC policies, and beneficial ownership in various contexts. Test your knowledge on nomination processes, ownership interests, and corporate governance definitions.