KYC Guidelines and Account Opening Process
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Questions and Answers

What is the main purpose of the KYC guidelines in account opening?

  • To prevent money laundering and fraud (correct)
  • To simplify compliance with tax regulations
  • To streamline the account opening process
  • To increase customer satisfaction

Which chapter provides guidelines on non-personalized welcome kits?

  • Chapter 1
  • Chapter 5
  • Chapter 3
  • Chapter 4 (correct)

What common irregularities are observed during the KYC process?

  • Incorrect account details (correct)
  • Improper handling of financial documents (correct)
  • Lack of customer engagement
  • Insufficient advertising of bank services

What does the acronym CKYC stand for?

<p>Centralized Know Your Customer (D)</p> Signup and view all the answers

What is an aspect of the Foreign Accounts Tax Compliance Act (FATCA)?

<p>It implicates penalties for non-compliance (D)</p> Signup and view all the answers

Which chapter addresses operational due diligence when onboarding new accounts?

<p>Chapter 5 (A)</p> Signup and view all the answers

What should be monitored in the CKYC Dashboard?

<p>Irregularities in account maintenance (A)</p> Signup and view all the answers

What is one of the roles of a Relationship Manager in account opening?

<p>Ensuring compliance with KYC and AML guidelines (C)</p> Signup and view all the answers

What document must be obtained for the Karta of an HUF during the customer due diligence process?

<p>Officially Valid Document (OVD) (C)</p> Signup and view all the answers

Which of the following limits apply to a SMALL ACCOUNT under PML Rules, 2005?

<p>All withdrawals and transfers in a month do not exceed Rs. 10,000 (D)</p> Signup and view all the answers

What happens if the Karta of HUF already maintains an individual account?

<p>The CIF of Karta will be linked with the HUF CIF (C)</p> Signup and view all the answers

In terms of financial activities, which of the following is considered a transaction?

<p>Opening a savings account (C)</p> Signup and view all the answers

What is required for the CIF of Karta during a new HUF account opening?

<p>Information from the Customer Information sheet (C)</p> Signup and view all the answers

Which of these statements reflects a limitation of Small Accounts?

<p>Aggregate of all credits does not exceed Rs. 1 lakh in a financial year (D)</p> Signup and view all the answers

What is considered part of a transaction in a financial context?

<p>Making a deposit using electronic means (A)</p> Signup and view all the answers

Which of the following is NOT a requirement for HUF customer documentation?

<p>Annexure II or IV submission (A)</p> Signup and view all the answers

What is required when adding a new account holder to a joint account?

<p>Existing account holders must attest to the new holder's signature (C)</p> Signup and view all the answers

What must be obtained before any changes are made to operational instructions in deposit accounts?

<p>All necessary documents and appropriate authority approval (B)</p> Signup and view all the answers

Which document is NOT required for customer identification of a Trust/Foundation?

<p>Bank statement of the Trust (A)</p> Signup and view all the answers

For nomination purposes, what needs to be marked in CBS when an account holder does not desire nomination?

<p>N (A)</p> Signup and view all the answers

What must be documented when an account holder opts out of the nomination facility?

<p>A specific intent document (B)</p> Signup and view all the answers

Which action is required for the nomination details to be captured in CBS?

<p>Filling out the DA1/DA2/DA3 forms (B)</p> Signup and view all the answers

What is crucial to maintain as a fraud detection measure when modifying account details?

<p>Proper records of modifications made (D)</p> Signup and view all the answers

What is a required document for KYC verification of the office bearers of the SHG?

<p>Proof of Identification (A)</p> Signup and view all the answers

What is required for existing customers to keep their accounts operational?

<p>Submit a Permanent Account Number (PAN) or equivalent documents (B)</p> Signup and view all the answers

What happens if a customer fails to submit the required KYC documents by the notified date?

<p>The account will temporarily cease to be operational (B)</p> Signup and view all the answers

What does 'temporary ceasing of operations' in an account mean?

<p>Suspension of all transactions until compliance (B)</p> Signup and view all the answers

What should be done if a customer indicates they do not want to submit the required KYC documents?

<p>The account will be closed and obligations settled (D)</p> Signup and view all the answers

Which document is NOT typically required from a Proprietary Concern as part of the KYC process?

<p>Certificate of Incorporation (D)</p> Signup and view all the answers

What must a Proprietorship provide along with the required KYC documents?

<p>PAN or Form 60 of the proprietor (D)</p> Signup and view all the answers

What is the purpose of uploading KYC data to CKYCR?

<p>To maintain a centralized database of customer KYC information (C)</p> Signup and view all the answers

What is an example of an OVD that a Proprietary Concern might submit?

<p>Business registration certificate (C)</p> Signup and view all the answers

Which document must be obtained to authorize managers to transact on behalf of a company?

<p>Board Resolution (A)</p> Signup and view all the answers

What category must a customer be assigned during account opening?

<p>High, Medium, or Low Risk (B)</p> Signup and view all the answers

What action should be taken if a new negative list is received?

<p>Scan all existing accounts (D)</p> Signup and view all the answers

How often should KYC updates be performed for customers categorized as high risk?

<p>Every 2 years (B)</p> Signup and view all the answers

What is required from current account opening customers regarding their existing bankers?

<p>NOC or declaration of no credit facilities (C)</p> Signup and view all the answers

Which of the following is NOT a required document for verification?

<p>KYC report of all employees (A)</p> Signup and view all the answers

What type of customers require enhanced due diligence during account opening?

<p>Trusts, charities, and NGOs (C)</p> Signup and view all the answers

What is the purpose of verifying documents through online sources?

<p>To ensure authenticity of public records (A)</p> Signup and view all the answers

What is one online resource to verify a Tax Deducted at Source (TDS) certificate?

<p><a href="https://contents.tdscpc.gov.in/">https://contents.tdscpc.gov.in/</a> (B)</p> Signup and view all the answers

Which of the following is a common irregularity pointed out during audits concerning documents?

<p>Multiple Customer Identification Files (CIF) have not been merged. (C)</p> Signup and view all the answers

Where can a customer check their Income Tax Return (ITR-V) receipt status?

<p><a href="https://incometaxindiaefiling.gov.in/">https://incometaxindiaefiling.gov.in/</a> (B)</p> Signup and view all the answers

Which option correctly describes the process to search for a Chartered Accountant's membership number?

<p><a href="http://www.icai.org">www.icai.org</a> &gt;&gt; members &gt;&gt; Chartered Accountant Directory &gt;&gt; Search (A)</p> Signup and view all the answers

What method is specified for verifying Aadhaar possession?

<p>Digital KYC and offline verification (D)</p> Signup and view all the answers

What can be used to obtain a Tax Identification Number (TIN) of a customer?

<p>Dealer/Form search on TINXsys website (D)</p> Signup and view all the answers

Which document is required to perform an electoral search for a Voter ID?

<p>Electoral photo ID card number (C)</p> Signup and view all the answers

What does the absence of full particulars of ID documents in the CBS signify?

<p>Potential irregularity during account opening. (A)</p> Signup and view all the answers

Flashcards

Know Your Customer (KYC)

The process of verifying the identity of a customer and assessing their risks before opening an account.

Anti-Money Laundering (AML)

Regulations that aim to prevent money laundering and terrorist financing by requiring financial institutions to identify and verify their customers.

Enhanced Due Diligence (EDD)

A detailed process to gather information about a customer's identity, background, and financial activity, especially for higher-risk customers.

KYC/AML Guidelines

Guidelines and procedures that banks must follow to ensure compliance with KYC and AML regulations.

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Central KYC (CKYC)

The process of verifying the identity and address of a customer using electronic means, typically through a government-issued database.

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Account Opening Form (AOF)

A document or record that confirms the customer's application for an account is genuine and accurate.

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Account Opening Process

The process of reviewing and approving customer applications for new accounts, ensuring compliance with KYC, AML, and other bank policies.

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Relationship Manager Roles and Responsibilities

A document that outlines the key responsibilities and actions expected from a bank's Relationship Manager when interacting with customers.

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Small Account

A savings account with a maximum annual deposit limit of one lakh rupees, a monthly withdrawal limit of ten thousand rupees, and a maximum balance of 50 thousand rupees.

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Hindu Undivided Family (HUF)

A legal entity comprising a family, where the head of the family (Karta) acts as the representative.

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Customer Due Diligence (CDD)

The process of verifying the identity and financial standing of a customer to prevent money laundering and other financial crimes.

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Customer Identification Number (CIF)

A unique identification number assigned to a customer by a financial institution.

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Officially Valid Document (OVD)

A legally valid document like a passport or driver's license that verifies a person's identity.

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Transaction

Any activity involving the exchange of funds, goods, or services. Includes transactions like opening accounts, deposits, withdrawals, transfers, and payments.

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HUF Deed

A document that confirms the identity and authority of the Karta to act on behalf of the HUF.

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What is required of existing customers?

Customers with existing accounts must submit their Permanent Account Number (PAN) or equivalent documents or Form 60 by the specified date.

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What happens if customers don't submit PAN/equivalent documents?

If a customer fails to submit the required PAN or equivalent documents, their account will be temporarily suspended.

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Before account suspension, what does the bank need to do?

The bank must provide notice and a reasonable chance for the customer to rectify the situation before the account is temporarily suspended.

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What does 'temporary ceasing of operations' mean?

Temporary suspension means the account is inactive, with no transactions allowed.

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What happens to loan accounts during suspension?

For loan accounts, only credit payments are allowed while the account is temporarily suspended.

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What happens if a customer refuses to submit PAN/equivalent documents?

If a customer refuses to provide PAN or equivalent documents, their account will be closed, and all obligations are settled after verification.

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What KYC documents are needed for a Proprietary Concern?

A proprietary concern needs at least two documents from a list, including the proprietor's PAN or Form 60.

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What are some examples of KYC documents for a Proprietary Concern?

The documents required for a Proprietary Concern include a registration certificate, municipal license, and sales tax or VAT certificates.

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Attesting New Account Holder Signatures

The signature of the new account holder must be attested, confirming their identity and right to access the account.

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Scanning and Uploading Signatures

Signatures scanned for accounts need to be uploaded to the branch for verification, ensuring accuracy and security.

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Account Modification Procedures

All documents required for account modifications (adding/deleting names, signature changes, etc.) must be obtained and approved before changes are made.

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New AOF Signature

A new signature is requested on the AOF (Account Opening Form) when there's an addition or change in account holders.

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Linking CIFs

When a new account holder is included, their new CIF (Customer Information File) must be linked to the existing bank account, ensuring data consistency.

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Maintaining Modification Records

Records of account modifications and letters to existing account holders must be kept for fraud detection and verification.

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Identification Documents for Trusts

Certified copies of identification documents, such as trust deeds and proof of address, are required to verify the identity of individuals representing a trust or foundation.

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Documentation for Joint Hindu Family Accounts

For a joint Hindu family account, documents like the Karta's declaration, identification and the COS 38 form signed by co-parceners are necessary.

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Customer Risk Categorization

Ensuring that a customer's risk profile is assessed correctly and categorized as high, medium or low risk, based on factors like their background and financial activities.

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Document Verification

This involves verifying customer documents, like a company's Certificate of Incorporation, using online sources like government websites, ensuring the information matches the original document.

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Negative List Check

A process where banks must verify that new accounts are not linked to individuals or entities on a list of sanctioned or suspicious individuals or organizations.

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Beneficial Owner Identification

This is the process of collecting information about a company's ownership structure and the individuals who ultimately control it, especially for legal entities.

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KYC Updating Exercise

Banks are required to update customer KYC (Know Your Customer) information periodically to maintain accurate records and ensure compliance with regulations.

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High Risk Customer Categories

Businesses like jewelers and bullion dealers, NRIs, HNIs, and certain non-profit organizations are considered 'high risk' due to potential financial crime risks.

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Company Document Requirements

This involves obtaining necessary documents from companies, such as a copy of their Certificate of Incorporation and a resolution authorizing their representatives to transact on the company's behalf.

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Proof of Company Address

Banks need to collect proof of the company's current address to ensure its legitimacy and for internal records

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Document Collection for Account Opening

The process of obtaining and verifying customer documents like proof of identity, proof of address, and photographs for account opening.

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Accurate Data Entry in CBS

Ensuring that all customer details, including document particulars, are accurately entered and maintained in the bank's core banking system.

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Customer Account Deduplication/Merging

The process of identifying and merging multiple customer accounts that belong to the same person, avoiding duplicate records.

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What is a TAN?

A code assigned to a customer by tax authorities, used to identify them for tax purposes.

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What is a TIN?

A code assigned to a taxpayer by tax authorities, used to identify their tax liability.

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What is an Assessee Code?

A code assigned to a business by tax authorities, used for identification in tax records.

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What is Form 16?

A document issued by an employer to an employee, indicating the amount of tax deducted from their salary.

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What is a Challan?

A document confirming that tax payments have been made to the government.

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Study Notes

SBI LCPC Training Manual

  • This is a manual for training staff at the Liability Central Processing Centre (LCPC) of the State Bank of India (SBI).
  • It was updated on March 31, 2024.
  • The manual is for internal circulation only.

Foreword

  • Role-Based Certifications (RBCs) were introduced in 2018 to equip staff with the knowledge and skills to handle increasing banking industry challenges.
  • RBCs have been well received and are helpful for focused understanding of different roles and proficiencies.
  • The number of RBCs has increased to meet growing demands.
  • Training materials, manuals, and evaluation methods have been updated to include SharePoint, videos, presentations, and interactive learning tools like quizzes and booklets.

Index

  • The manual includes chapters on various topics related to savings bank and current account opening, C-KYC introduction, non-personalized welcome kits (NPWKs).
  • Additionally, it covers Foreign Account Tax Compliance Act (FATCA), Common Reporting Standards (CRS), and cyber fraud prevention.

Chapter 1: Savings Bank/Current Account Opening

  • Savings bank and current accounts are opened via the C-KYC process.
  • Other non-financial customer service requests are handled by Branch and LCPC, with standardized Customer Request Forms (CRF-1 and CRF-2).
  • CRF-1 requests are handled by the branch and entered into CRM for further processing.
  • CRF-2 requests are handled directly by the branch.
  • Key concepts of KYC guidelines, risk categorization, and due diligence are included.
  • The manual details the process of opening saving and current accounts, highlighting the legal requirements related to money laundering in accordance with the Prevention of Money Laundering Act of 2002(PMLA).
  • It discusses the related customer acceptance policy, risk management procedures, and customer identification procedures (CIP).
  • The manual details the steps for KYC guidelines and adherence. A detailed description of the offence of money laundering is included in the chapter.

Other Chapters

  • Subsequent chapters cover topics like C-KYC introduction and process, Non-Personalized Welcome Kits (NPWKs), Foreign Account Tax Compliance Act (FATCA), CRS, Cyber fraud prevention, and handling issues related to various customer types.
  • Each chapter details relevant guidelines, processes, and common problems observed and guidelines for their solution.

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LCPC Role Guide Cum Certification Manual PDF

Description

This quiz explores key concepts and regulations related to Know Your Customer (KYC) guidelines in the account opening process. Topics covered include the purpose of KYC, common irregularities, and documentation requirements, as well as relevant chapters addressing operational due diligence and small account limitations.

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