Tuesday 22 May 2012

KYC (Know Your Customer)

Introduction
Money laundering has become a significant problem worldwide threatening the stability of various regions  by actively supporting and strengthening terrorist networks and criminal organizations. The links between money laundering, organized crime, drug trafficking and terrorism pose a risk to financial institutions globally.

What is Money Laundering and Financial Terrorism?

Money laundering refers to conversion of money illegally obtained to make it appear as if it originated from a legitimate source. Money laundering is being employed by launderers worldwide to conceal criminal activity associated with it such as drugs /arms trafficking, terrorism and extortion.

Financial Terrorism means financial support to, in any form of terrorism or to those who encourage, plan or engage in terrorism.

Money launderers send illegal funds through legal channels in order to conceal their criminal origin while those who finance terrorism transfer funds that may be legal or illegal in original in such a way as to conceal their source and ultimate use, which is to support Financial Terrorism.

What is KYC?

KYC is an ellipsis for “Know your Customer” a term used for Customer identification process. It involves making reasonable efforts to determine, the true identity and beneficial ownership of accounts, source of funds, the nature of customer’s business, reasonableness of operations in the account in relation to the customer’s business, etc which in turn helps the banks to manage their risks prudently.

The objective of the KYC guidelines is to prevent banks being used, intentionally or unintentionally by criminal elements for money laundering.

What is KYC Policy?

As per RBI guidelines issued vide their circular dated 29/11/2004, all banks are required to formulate a KYC Policy with the approval of their respective boards. The KYC Policy consists of the following four key elements.

1) Customer Acceptance Policy
2) Customer Identification Procedures
3) Monitoring of Transactions
4) Risk Management.

Who is a Customer?

For the purpose of KYC policy a ‘customer” may be defined as:
a. A person or entity that maintains an account and/or has a business relationship with the bank;
b. One on whose behalf the account is maintained (i.e. the beneficial owner);
c. Beneficiaries of transactions conducted by professional intermediaries, such as Stock Brokers, Chartered Accountants, Solicitors etc as permitted under the law, and
d. Any person or entity connected with a financial transaction which can pose significant reputational or other risks to the bank, say a wire transfer or issue of high value demand draft as a single transaction.

What is a Customer Acceptance Policy?

Customer Acceptance Policy refers to the general guidelines followed by banks in allowing customers to open accounts with them. Generally the guidelines stipulate that no accounts shall be opened in anonymous or fictitious names or when the identity of the customer matches with any person with known criminal background or banned entities. Similarly accounts should not be opened when the bank is unable to verify the identity and/or obtain documents required as per the bank’s policy.

What is the Customer Identification Procedure?

Customer identification means identifying the customer and verifying his/her identity through reliable and independent documents, data and information. Banks would need to satisfy to the competent authorities that due diligence was observed in accordance with the requirements of existing laws and regulations.

What are the features to be verified and documents required to be obtained from
customers?

The features to be verified and documents that may be obtained vary depending upon the type of customers. The same are furnished below:

Features Documents*

1.0 Accounts of Individuals

1.1   Legal name and any other names used

(i) Passport (ii) PAN Card (iii) Voter’s Identity Card (iv)Driving License (v) Identity Card (Subject to the bank’s satisfaction) (vi) Letter from a recognized public authority or public servant verifying the identity and residence of the customer to the satisfaction of bank

1.2 Correct permanent address

 (i) Telephone bill (not older than 3 months) (ii) Bank account statement /Pass Book (iii) Letter from any recognized public authority (iv) Electricity bill (not older than 3 months) (v) Ration Card (vi) Letter from employer (Subject to satisfaction of the bank)

2.0 Accounts of Companies
2.1 Name of the Company
2.2 Principal place of business
2.3 Mailing address of the company
2.4 T e l e p h o n e / F a x number

(i) Certificate of incorporation and Memorandum & Articles of Association. (ii) Resolution of the Board of Directors to open an account and identification of those who have authority to operate the account. (iii) Power of Attorney granted to its managers, officers or employees to transact business on its behalf (iv) Copy of PAN allotment letter (v) Any officially valid document establishing the proof of existence and proof of address of the entity to the satisfaction of the bank. (vi) Certificate of Commencement of Business.

3.0 Accounts of partnership firms

3.1 Legal name
3.2 Address
3.3 Names of all partners and
their addresses
3.4 Telephone numbers of the firm and partners
(i) Registration certificate, if registered.(ii) Partnership deed (iii) Power of Attorney granted to a partner or an employee of the firm to transact business on its behalf (iv) Any officially valid document identifying the partners and the persons holding the Power of Attorney and their addresses (v) Proof of existence & proof of address of the firm.

4.0 Accounts of trusts& foundations

4.1 Names of trustees, settlers, beneficiaries and signatories
4.2 Name and addresses of the founder, the managers / Directors and the beneficiaries
4.3 T e l e p h o n e / F a x Numbers
(i) Certificate of registration, if registered. (ii) Power of Attorney granted to transact business on its behalf (iii) Any officially valid document to identify the trustees, settlers, beneficiaries and those holding Power of Attorney, founders/managers / directors and their addresses. (iv) Resolution of the managing body of the foundation/association (v) Any officially valid document establishing the proof of existence and proof of address of the entity to the satisfaction of the bank.


When does KYC apply?

KYC will be carried out for the following but is not limited to:
a. Opening a new account.(deposit/ borrowable )
b. Opening a subsequent account where documents as per current KYC standards not submitted while     
      opening  the initial account.
c. Opening a locker facility where these documents are not available with the bank for all locker facility  
      holders.
d. When the bank feels it is necessary to obtain additional information from existing customers based on     
     the conduct of the account.
c. After periodic intervals based on instructions received from RBI.
d. When there are changes to signatories, mandate holders, beneficial

Detail KYC Documents
KYC Application form for Individual
KYC Application form for Non Individual

Monday 21 May 2012

How to Save money




A Person cannot always in situation where he/she could earn money but defiantly could save money with few easy tips if followed. Thus it would not be wrong to say saving money is nothing but few initiatives on our part.

It is never easy to read others mind, but it is often seen that what so ever rich a man even small tips to save money has worth as per the need of different human need.
We shall be discussing few simple and unique tips to save money during our discussion. Trust it would catch your eye and will make you to think.
 
1.      Avoid using public transport for small distance: It is normal tendency of human being to use public transport such as rickshaw, auto etc. for even a small distance. Try to walk around for going for small distance this could also help us to maintain health and save money.

2.      Enable Auto Sweep in bank account: Everyone has bank account of their own. Particularly in case of saving bank account of salaried person lots of money remains unused and thus earn normal saving bank interest i.e. 4 % P.a. Auto sweep facility enable one to enjoy facility of saving bank account with their money in account earning for them @ fixed deposit interest rate i.e. around 8-9.25%. This facility is available with most of the banks including PSU's with different name. One can really earn extra money using this facility.

3.      Always do plan shopping: Life has become so busy, human being do not find time for themselves. It is always advisable to go for plan shopping instead of haphazard one, therefore before going out for shopping makes it planned by making list of your requirements.
4.      Planned travelling: whole idea is to travel smart i.e. pre plan your travel and get your ticket booked earlier this will help to save ‘tatkal charges’ if travel by train or high air fare if travel by air. Instead of booking through broker make use of fare finding web site and discount air charges. Also join hotel reward program to earn more reward points.

5.      Value for money buy: Do not be extravagant when you buy there is nothing to show off always hangs around with value/ worth purchase.

6.      Pool your car or use bike: This is particularly for office person, always try to pool your car with your office colleague to save fuel cost and try to use your bike instead of car where ever possible to save fuel cost.

7.       Use paper both side: If you are running office always ask your employee to use paper both side and get print both side. This will help you to save money and will also contribute towards environment.

8.      Use of Credit Card: In today’s market lots of life time free credit cards are available in market which gives credit for your shopping for around 50-55 days. It is advisable to use at least one credit card which has lower credit limit say up to 25K to cater your monthly needs. This credit can be use and interest for that period can be saved. More ever some credit card offer reward point with each Rs. 100 spent and some credit card give discount up to 10% on dinning, movie etc. 

9.      Buy generics/store brands: Instead of always going for branded purchase one should also try for generic purchase. 

10.   Use your library/E Book: Instead of buying books one could use facilities of library. You can also get movies, read periodicals, and even check out other media in some cases. Many libraries are also lending eBooks.

11.   Refinance your home/ Buy Bank Loan: One could take advantage of volatile market by refinancing there existing loan with lower interest options available with other bank. This could be helpful in saving around Rs. 5000 monthly.

12.   Buy a late model used/lease return: Instead of buying a brand new car, you can consider buying a late model used car.

Note: We have just expressed our suggestion. We shall not be responsible of loss to any one going forward by our advice.