Company Law Quiz: Certification & Requirements

An organization that acts as a representative for others, facilitating transactions or managing assets.

A process to verify the identity and legitimacy of clients to prevent financial crime.

A group of individuals that pool their resources and work together for mutual benefits.

An account held in the name of a trustee for the benefit of another person or entity.

A legal entity with a specific purpose and governing documents.

Individuals who benefit from a trust or foundation.

Individuals responsible for managing a trust or foundation.

The ultimate obligation of a bank to properly identify and understand its clients during the account opening process.

A document that lists all the beneficial owners of a company and their shareholding, controlling interest, or stake. It's signed by an authorized representative of the company.

A document issued by the Registrar of Companies that confirms a public limited company is legally allowed to start operating.

A unique identification number assigned to each company in India. It's used for various official purposes and helps track company information.

Proof that shows the company's current registered address. This can be a utility bill, rent agreement, or other supporting document.

A document provided by the Registrar of Joint Stock Companies certifying that the company is authorized to conduct business. It's needed when the company is a public company, registered after 1913, and inviting public investment.

A formal written resolution passed by the company's board of directors that outlines how the company's bank account will be managed and operated.

An individual who is authorized to sign documents on behalf of the company, such as cheques or other financial instruments.

A formal record of the decisions made by the board of directors of a company. It's a permanent record of actions and resolutions.

Individuals holding prominent public positions in a foreign country, including heads of state, senior politicians, military officers, and executives of state-owned corporations.

Banks must implement enhanced monitoring procedures for accounts associated with PEPs to mitigate potential risks.

When an existing customer becomes a PEP, branches need approval to continue the business relationship.

Enhanced due diligence (CDD) measures, including ongoing monitoring, are applied to PEP accounts.

Banks need specific procedures to verify and monitor non-face-to-face customers, especially if they are high-risk.

The first payment for non-face-to-face customers should go through a KYC-compliant account in another bank.

Banks need to identify clients when a professional intermediary opens an account on their behalf.

Banks may have options to hold pooled accounts managed by intermediaries for entities like mutual funds and pension funds.

A unique identification number assigned by the RE to an employee responsible for data capturing.

A digital image with a timestamp incorporating the CAF number, GPS coordinates, authorized official's name, unique employee code, and the date and time of capture.

The process of verifying the authenticity of a customer's identity by comparing the captured image of their Aadhaar card with their actual physical presence. This verification is conducted in person by the RE.

A document used for capturing customer details and applications for various services.

A QR code embedded within the physical or electronic Aadhaar card that contains information about the individual. When scanned, this code can automatically populate fields within the CAF, such as name, gender, date of birth, and address.

A one-time password sent to the customer's mobile number to validate the information filled in the CAF.

The act of the customer confirming the accuracy of the information filled in the CAF by using their mobile number to receive and validate an OTP.

The act of using the mobile number of a family member, relative, or known individual to receive and validate an OTP when the customer does not have their own mobile number. This is a valid alternative for customer signature on the CAF.

Politically Exposed Persons (PEPs) are individuals who hold or have held important public positions in a foreign country, such as heads of state, senior politicians, or military officials.

Banks must take extra precautions when dealing with PEPs because they are considered high-risk customers. This involves enhanced due diligence and monitoring of their accounts.

Banks should always obtain a declaration from customers about their PEP status. This includes confirming if they are a PEP or a relative of a PEP.

Banks should gather sufficient information about PEP customers without putting them through unnecessary inconvenience or denying them banking services.

The decision to open an account for a PEP should be made at a senior level in accordance with the Bank's Customer Acceptance Policy.

All accounts of PEPs should be subject to enhanced monitoring on an ongoing basis. This includes reviewing transactions and activities for any suspicious patterns.

If an existing customer later becomes a PEP, senior management's approval is needed to continue the business relationship. This ensures that the bank is aware of the potential risks.

All PEP accounts must follow standard Customer Due Diligence (CDD) measures, including enhanced monitoring. This ensures that the bank is compliant with regulations and reduces risks.

Maintaining records of all transactions for five years (or 10 years based on FATCA guidelines) from the date of each transaction.

Preserving customer identification and address records for at least five years after the end of the business relationship (or eight years as per FATCA).

Providing access to customer identification records and transaction data to competent authorities upon request.

Implementing a system to maintain proper transaction records as per the Prevention of Money Laundering (Maintenance of Records) Rules, 2005.

Maintaining detailed information about transactions to allow reconstruction of individual transactions, including the nature of the transaction, the amount, the currency, the date, and the parties involved.

Developing a system to store and access account information efficiently, allowing quick retrieval whenever needed.

Banks have the right to rely on the due diligence conducted by a regulated intermediary if they have adequate systems for KYC compliance.

Ultimately, banks are responsible for knowing their customers, regardless of relying on intermediaries.