KYC Standards and Money Laundering Quiz

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Questions and Answers

What is the purpose of KYC standards as specified by the RBI?

To facilitate faster loan processing

To ensure compliance with tax regulations

To enhance customer satisfaction in banking

To prevent money laundering and financing of terrorism (correct)

Which document is used by branches for accepting service requests for non-financial customer services?

Customer Identification Document

Account Opening Form

Loan Application Form

Customer Request Form (CRF-1) (correct)

What does the term 'money laundering' encompass?

Concealing funds obtained from legal business activities

Using money from legal sources for illegal activities

Only the process of depositing illegal funds

Cleansing 'dirty money' through legitimate transactions (correct)

What is the role of CKYCR in the account opening process?

To ensure all new accounts are opened under a unified system Signup and view all the answers

According to the Prevention of Money Laundering Act, 2002, what constitutes an offence of money laundering?

Concealing the source of crime-related funds Signup and view all the answers

Which services are handled at the centralized location (CPC)?

Requests entered through CRM from CRF-1 Signup and view all the answers

What does the acronym E-KYC stand for?

Electronic Know Your Customer Signup and view all the answers

What is one of the main objectives of standardizing customer request forms?

To ensure consistency and efficiency in processing requests Signup and view all the answers

What is required before opening an account for a Politically Exposed Person (PEP)?

Approval from a senior level Signup and view all the answers

What is the primary reason for enhanced monitoring of PEPs' accounts?

To mitigate the high risk associated with their accounts Signup and view all the answers

What should happen if an existing customer becomes a PEP?

Seek senior management's approval to continue the relationship Signup and view all the answers

Who are considered to be Politically Exposed Persons (PEPs)?

Individuals entrusted with prominent public functions in a foreign country Signup and view all the answers

What should be included in the Account Opening Form for PEPs?

Declaration of PEP status or relatives Signup and view all the answers

What should banks avoid when gathering information from PEPs?

Putting customers under inconvenience Signup and view all the answers

What is one of the guidelines regarding the Account Opening Form for PEPs?

It requires clear declaration of PEP or relative status Signup and view all the answers

Which of the following is NOT a type of PEP as defined by the Reserve Bank of India?

Local business owners Signup and view all the answers

What should be verified in addition to KYC documents during the registration of companies?

Company master data from the Ministry of Corporate Affairs Signup and view all the answers

Which entity’s defaulter list should be consulted?

Credit Information Companies Signup and view all the answers

What should be examined to identify the governance of an entity?

The control structure Signup and view all the answers

When banks manage pooled accounts, which clients do these accounts usually represent?

Mutual funds and pension funds Signup and view all the answers

Which type of accounts should not be opened by banks when there is client confidentiality involved?

Accounts of professional intermediaries bound by confidentiality Signup and view all the answers

What should be determined from the source of funds?

The legitimacy of the funds Signup and view all the answers

Which of the following is necessary when funds are co-mingled at the bank level?

Identifying the beneficial owners Signup and view all the answers

In terms of client due diligence, what should branches satisfy themselves about concerning intermediaries?

They are regulated and supervised Signup and view all the answers

What process is compromised if existing account holders do not attest to the new account holder's signature?

Compliance with operational mandates Signup and view all the answers

What is a consequence of not obtaining the new CIF linked to the existing bank account during an addition?

Lack of updated customer records Signup and view all the answers

Why is certification of identification documents critical in account modifications?

To prevent fraudulent activities Signup and view all the answers

What document must be obtained from the Karta in a Joint Hindu Family account?

Declaration from the Karta Signup and view all the answers

What issue arises from not recording a customer's intent regarding nomination appropriately?

Inadequate compliance with regulations Signup and view all the answers

Which of the following is specifically mentioned as not being handed over to depositors?

Acknowledgment of receipt of nomination Signup and view all the answers

What is a consequence of not completing the DA1/DA2/DA3 forms in bank operations?

Inaccurate nominee records Signup and view all the answers

What routine verification is neglected for office bearers of the Self Help Group (SHG)?

KYC verification Signup and view all the answers

What is required from the authorized officer to validate their identity before making a declaration?

A One Time Password (OTP) Signup and view all the answers

What does the application generate after the completion of the process?

A transaction-id/reference-id number Signup and view all the answers

What is the primary requirement for accounts where a politically exposed person (PEP) is the beneficial owner?

To obtain prior approval to continue the business relationship Signup and view all the answers

Which of the following must the authorized officer verify during the account establishment process?

The live photograph matches the document's photo Signup and view all the answers

What is the first step to ensure Enhanced Due Diligence for non-face-to-face customers?

Make payment from a KYC-complied account with another RE Signup and view all the answers

Which group of individuals is classified as Politically Exposed Persons (PEPs)?

Heads of States, senior politicians, and military officers Signup and view all the answers

What information must be gathered about Politically Exposed Persons (PEPs) during account establishment?

Information about sources of funds of family members Signup and view all the answers

In managing accounts of non-face-to-face customers, what must branches ensure concerning the first payment?

It must come from a KYC-complied account at another bank Signup and view all the answers

What additional measures must be applied to customers identified as PEPs?

Enhanced ongoing monitoring Signup and view all the answers

What must happen after the authorized officer verifies the customer's documents?

The CAF is digitally signed and printed Signup and view all the answers

Which of the following is a responsibility of the authorized officer during the verification process?

To ensure all necessary details in the CAF are filled properly Signup and view all the answers

Which of the following statements is true regarding client accounts opened by professional intermediaries?

Clients should be identified at the time the account is opened Signup and view all the answers

What must the authorized officer do after capturing the customer's documents?

Upload the scanned document into the system Signup and view all the answers

Which type of accounts might be held by branches managed by professional intermediaries?

Pooled accounts for entities like mutual funds Signup and view all the answers

What additional procedures must be in place for non-face-to-face customers aside from usual identification?

Specific and adequate procedures to mitigate higher risks Signup and view all the answers

What is an essential factor in managing accounts of non-face-to-face clients?

Identifying the first payment source as safe Signup and view all the answers

Study Notes

SBI Training Manual - Summary

This is a role guide cum certification manual for the Liability Central Processing Centre (LCPC) at SBI, updated March 31, 2024.
Role-Based Certifications (RBCs) were introduced in 2018 to equip staff with knowledge and skills for banking challenges.
The manual has been updated to include SharePoint, videos, PPTs, quizzes, and booklets for self-learning.
Learning objectives are provided at the beginning of each chapter, along with recap questions and sample case studies.
The manual aims to equip staff with the expertise needed for their roles, ensuring customer satisfaction and mitigating risks.
The manual covers topics such as savings bank/current account opening in a branch, C-KYC introduction, non-personalized welcome kits (NPWKs), foreign accounts tax compliance act (FATCA), and cyber frauds.
The manual details KYC guidelines, common irregularities, and compliance aspects for various account types, including individual and entity accounts.
KYC policy has four elements: Customer Acceptance Policy (CAP), Risk Management, Customer Identification Procedures, and Monitoring of Transactions.
It also defines beneficial owners in different scenarios (e.g., companies, partnerships, and unincorporated associations).
The manual outlines the procedures for opening accounts and KYC compliance for different customer types, including politically exposed persons (PEPs).
It also addresses small accounts, transactions, and KYC updation procedures (both for individuals and non-individuals), including aspects for non-face-to-face customers.
It covers procedures for dealing with different types of customers, including those related to self-help groups (SHGs) and Hindu Undivided Families (HUFs).
The manual details procedures for the handling of various KYC documents and provides guidance on dealing with discrepancies.
It also provides details of the deemed Officially Valid Documents (OVDs).
The manual includes important clarifications and details on various aspects related to KYC updation, including periodic updation of KYC criteria and processes for different customer types (e.g., high-risk, medium-risk, low-risk customers) and different account types.
It specifies the required documents, and procedures for different categories of customers and accounts that should be followed by branches and the LCPC.
The manual includes illustrative examples of situations and potential discrepancies.
The manual provides a detailed index of topics and page numbers.

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Description

Test your knowledge on the Know Your Customer (KYC) regulations set by the Reserve Bank of India (RBI) and understand the implications of money laundering. This quiz covers critical concepts such as the roles of CKYCR and E-KYC, and guidelines for Politically Exposed Persons (PEPs).