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Reserve Bank of India (All India Financial Institutions – Know Your Customer) Directions, 2025 (Updated as on December 29, 2025)
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RBI/DOR/2025-26/335 November 28, 2025 Reserve Bank of India (All India Financial Institutions – Know Your Customer) Directions, 2025 (Updated as on December 29, 2025) Introduction In order to prevent AIFIs and other financial institutions from being used as a channel for Money Laundering (ML) / Terrorist Financing (TF) and to ensure the integrity and stability of the financial system, efforts are continuously being made both internationally and nationally, by way of prescribing various rules and regulations. Internationally, the Financial Action Task Force (FATF), which is an inter-governmental body established in 1989 by the Ministers of its member jurisdictions, sets standards and promotes effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. India, as a member of FATF, is committed to upholding measures to protect the integrity of the international financial system. In India, the Prevention of Money-Laundering Act, 2002, and the Prevention of Money- Laundering (Maintenance of Records) Rules, 2005, form the legal framework on Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT). The provisions of the PML Act, 2002 and the PML Rules, 2005, as amended from time to time by the Government of India, require Regulated Entities (REs) to follow certain customer identification procedures while undertaking a transaction either by establishing an account-based relationship or otherwise, and to monitor their transactions. Accordingly, in exercise of the powers conferred by sections 35A of the Banking Regulation Act, 1949, the Banking Regulation Act (AACS), 1949, read with section 56 of the Act ibid., sections 45JA, 45K, and 45L of the Reserve Bank of India Act, 1934, section 10(2) read with section 18 of Payment and Settlement Systems Act 2007 (Act 51 of 2007), section 11(1) of the Foreign Exchange Management Act, 1999, Rule 9(14) of the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005, and all other laws enabling the Reserve Bank in this regard, the RBI being satisfied that it is necessary and expedient in the public interest so to do, hereby issues the Directions hereinafter specified. A. Short Title and Commencement 1. These Directions shall be called the Reserve Bank of India (All India Financial Institutions – Know Your Customer) Directions, 2025. 2. These directions shall come into force with immediate effect 3. These Directions shall be applicable to All-India Financial Institutions (hereinafter collectively referred to as ‘AIFIs’ and individually as an ‘AIFI’) viz. Export Import Bank of India (‘EXIM Bank’), National Bank for Agriculture and Rural Development (‘NABARD’), Small Industries Development Bank of India (‘SIDBI’), National Housing Bank (‘NHB’) and National Bank for Financing Infrastructure and Development (‘NaBFID’). 4. These directions shall also apply to those branches and majority-owned subsidiaries of the AIFI which are located abroad, to the extent they are not contradictory to the local laws in the host country, provided that:
5. In these Directions, unless the context otherwise requires, the following meanings are assigned to the terms herein: (1) Terms bearing meaning assigned in terms of the Prevention of Money-Laundering Act, 2002, and the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005: (i) ‘Aadhaar number’ shall have the meaning assigned to it in clause (a) of section 2 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 (18 of 2016); (ii) ‘Act’ and ‘Rules’ mean the Prevention of Money-Laundering Act, 2002 and the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005, respectively and amendments thereto. (iii) ‘Authentication’, in the context of Aadhaar authentication, means the process as defined under sub-section (c) of section 2 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016. (iv) Beneficial Owner (BO) (a) Where the customer is a company, the beneficial owner is the natural person(s), who, whether acting alone or together, or through one or more juridical persons, has / have a controlling ownership interest or who exercises control through other means. Explanation: For the purpose of this sub-clause-
(b) Where the customer is a partnership firm, the beneficial owner is the natural person(s), who, whether acting alone or together, or through one or more juridical person(s), has / have ownership of / entitlement to more than 10 percent of capital or profits of the partnership or who exercises control through other means. Explanation: For the purpose of this sub-clause, ‘control’ shall include the right to control the management or policy decision. (c) Where the customer is an unincorporated association or body of individuals, the beneficial owner is the natural person(s), who, whether acting alone or together, or through one or more juridical person, has / have ownership of / entitlement to more than 15 percent of the property or capital or profits of the unincorporated association or body of individuals. Explanation: Term ‘body of individuals’ includes societies. Where no natural person is identified under (a), (b) or (c) above, the beneficial owner is the relevant natural person who holds the position of senior managing official. (d) Where the customer is a trust, the identification of beneficial owner(s) shall include identification of the author of the trust, the trustee, the beneficiaries with 10 percent or more interest in the trust and any other natural person exercising ultimate effective control over the trust through a chain of control or ownership. (v) ‘Certified Copy’ – Obtaining the certified copy by the AIFI shall mean comparing the copy of the proof of possession of Aadhaar number where offline verification cannot be carried out or the officially valid document produced by the customer with the original, and an authorised officer of the AIFI shall record the comparison on the copy as per the provisions contained in the Act. Provided that in case of Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs), as defined in Foreign Exchange Management (Deposit) Regulations, 2016 {FEMA 5(R)}, the AIFI may alternatively obtain the original certified copy, certified by any one of the following:
(vi) ‘Central KYC Records Registry’ (CKYCR) means an entity defined under Rule 2(1) of the Rules, to receive, store, safeguard and retrieve the KYC records in digital form of a customer. (vii) ‘Designated Director’ means a person whom the AIFI designates to ensure overall compliance with the obligations imposed under chapter IV of the PML Act and the Rules and shall include the Managing Director or a whole-time Director, whom the Board of Directors has duly authorised. Explanation: For the purpose of this clause, the terms ‘Managing Director’ and ‘Whole-time Director’ shall have the meaning assigned to them in the Companies Act, 2013. (viii) ‘Digital KYC’ means that an authorised officer of the AIFI captures a live photo of the customer and officially valid document or the proof of possession of Aadhaar (where offline verification cannot be carried out), along with the latitude and longitude of the location where such live photo is being taken, as per the provisions contained in the Act. (ix) ‘Digital Signature’ shall have the same meaning as assigned to it in clause (p) of sub-section (1) of section (2) of the Information Technology Act, 2000 (21 of 2000). (x) ‘Equivalent e-document’ means an electronic equivalent of a document that the issuing authority of such document issues with its valid digital signature, including documents issued to the digital locker account of the customer as per rule 9 of the Information Technology (Preservation and Retention of Information by Intermediaries Providing Digital Locker Facilities) Rules, 2016. (xi) ‘Group’ – The term ‘group’ shall have the same meaning assigned to it in clause (e) of sub-section (9) of section 286 of the Income-tax Act,1961 (43 of 1961). (xii) ‘Know Your Client (KYC) Identifier’ means the unique number or code that the Central KYC Records Registry assigns to a customer. Explanation: A customer can obtain his KYC Identifier through the following ways: In the process of opening an account, once the customer’s KYC Identifier is generated by CKYCR and provided to the AIFI, the latter shall share the same with the concerned customer. The customer can also access his KYC Identifier on CKYCR Portal (www.ckycindia.in). (xiii) ‘Non-profit organisations’ (NPO) means any entity or organisation, constituted for religious or charitable purposes referred to in clause (15) of section 2 of the Income-tax Act, 1961 (43 of 1961), that is registered as a trust or a society under the Societies Registration Act, 1860 or any similar State legislation or a company registered under section 8 of the Companies Act, 2013 (18 of 2013). (xiv) ‘Officially Valid Document’ (OVD) means the passport, the driving licence, proof of possession of Aadhaar number, the Voter's Identity Card that the Election Commission of India issues, the job card that NREGA issues and an officer of the State Government duly signs, and the letter that the National Population Register issues containing details of name and address. Provided that, (a) where the customer submits his proof of possession of Aadhaar number as an OVD, he may submit it in such form that the Unique Identification Authority of India (UIDAI) issues. (b) When the customer furnishes an OVD that does not have an updated address, the AIFI shall deem the following documents or the equivalent e-documents thereof to be OVDs for the limited purpose of proof of address:-
(c) the customer shall submit OVD with current address within a period of three months of submitting the documents specified at (b) above (d) if the OVD that a foreign national present does not contain the details of address, the AIFI shall accept documents that Government departments of foreign jurisdictions issue, and a letter that the Foreign Embassy or Mission in India issues, as proof of address. Explanation: For the purpose of this clause, the AIFI shall deem a document to be an OVD even if there is a change in the name subsequent to its issuance provided that it is supported by a marriage certificate that the State Government issues or a Gazette notification, indicating such a change of name. (xv) ‘Offline verification’ shall have the same meaning as assigned to it in clause (pa) of section 2 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 (18 of 2016). (xvi) ‘Person’ has the same meaning assigned in the Act and includes:
(xvii) ‘Principal Officer’ means a AIFI’s nominated officer at the management level, responsible for furnishing information as per rule 8 of the Rules. (xviii) ‘Suspicious transaction’ means a ‘transaction’ as defined below, including an attempted transaction, whether or not made in cash, which, to a person acting in good faith:
(xix) ‘Transaction’ means a purchase, sale, loan, pledge, gift, transfer, delivery or the arrangement thereof and includes:
(2) Unless the context otherwise requires, terms in these Directions shall bear the meanings assigned to them below: (i) ‘Common Reporting Standards’ (CRS) means reporting standards set for implementation of multilateral agreement signed to automatically exchange information based on Article 6 of the Convention on Mutual Administrative Assistance in Tax Matters. (ii) Correspondent Banking: Correspondent banking is the provision of banking services by one bank (the ‘correspondent bank’) to another bank (the ‘respondent bank’). A correspondent bank may provide the respondent bankswithawiderangeof services, including cash management (e.g., interest-bearing accounts in a variety of currencies), international wire transfers, cheque clearing, payable- through accounts and foreign exchange services. (iii) ‘Customer’ means a person who is engaged in a financial transaction or activity with the AIFI and includes a person on whose behalf the person who is engaged in the transaction or activity, is acting. (iv) ‘Walk-in Customer’ means a person who does not have an account-based relationship with the AIFI, but undertakes transactions with the AIFI. (v) ‘Customer Due Diligence (CDD)’ means identifying and verifying the customer and the beneficial owner using reliable and independent sources of identification. Explanation: The CDD, at the time of commencement of an account-based relationship or while carrying out occasional transaction of an amount equal to or exceeding ₹50,000, whether conducted as a single transaction or several transactions that appear to be connected, or any international money transfer operations, shall include:
(vi) ‘Customer identification’ means undertaking the process of CDD. (vii) ‘FATCA’ means Foreign Account Tax Compliance Act of the United States of America (USA) which, inter alia, requires foreign financial institutions to report about financial accounts held by U.S. taxpayers or foreign entities in which U.S. taxpayers hold a substantial ownership interest. (viii) ‘IGA’ means Inter Governmental Agreement between the Governments of India and the USA to improve international tax compliance and to implement FATCA of the USA. (ix) ‘KYC Templates’ means templates prepared to facilitate collating and reporting KYC data to the CKYCR, for individuals and legal entities. (x) ‘Non-face-to-face customers’ means customers who open accounts without visiting the branch / offices of the AIFI or meeting the officials of the AIFI. (xi) ‘On-going Due Diligence’ means regular monitoring of transactions in accounts to ensure that transactions are consistent with the AIFI’s knowledge about the customers, customers’ business and risk profile, the source of funds / wealth. (xii) Payable-through accounts: The term payable-through accounts refers to correspondent accounts that third parties use directly to transact business on their own behalf. (xiii) ‘Periodic Updation’ means the steps taken to ensure that documents, data or information collected under the CDD process are kept up-to-date and relevant by undertaking reviews of existing records at the periodicity prescribed by the RBI. (xiv) ‘Shell Bank’ means a bank that has no physical presence in the country in which it is incorporated and licensed, and which is unaffiliated with a regulated financial group that is subject to effective consolidated supervision. Physical presence means meaningful mind and management located within a country. The existence simply of a local agent or low-level staff does not constitute physical presence. (xv) 'Regulated Entities' (REs) means:
(xvi) ‘Video based Customer Identification Process (V-CIP)’: an alternative method by which an authorised official of the AIFI conducts customer identification with facial recognition and customer due diligence. This process involves a seamless, secure, live, informed- consent based audio-visual interaction with the customer to obtain identification information required for CDD purpose, and to ascertain the veracity of the information which the customer furnished, through independent verification and by maintaining an audit trail of the process. The AIFI shall treat such processes complying with prescribed standards and procedures on par with face-to-face CIP for the purpose of this Direction. (xvii) ‘Wire transfer’ related definitions:
(3) Unless defined herein, all other expressions shall have the same meaning as has been assigned to them under the Banking Regulation Act, 1949, the Reserve Bank of India Act, 1935, the Prevention of Money Laundering Act, 2002, the Prevention of Money Laundering (Maintenance of Records) Rules, 2005, the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 and regulations made thereunder, any statutory modification or re-enactment thereto or as used in commercial parlance, as the case may be. A. Board of Directors / Policies-related guidelines: 6. Know Your Customer (KYC) Policy: (1) The AIFI shall have a KYC policy. The Board of Directors of the AIFI, or any committee to which the power has been delegated shall duly approve the KYC policy. (2) The KYC policy shall include following four key elements:
(3) The KYC policy shall, inter alia, incorporate provisions for the following:
(4) Furthermore, the AIFI shall have the policies approved by the Board detailing a robust due diligence process for managing requests to change the registered Mobile Number for Accounts opened in non-face-to-face mode. 7. The specific responsibilities and actions stipulated for the Board or its relevant committees in paragraph 6 above are elaborated upon in greater detail within the Directions. 8. In terms of PML Rules, groups shall implement group-wide policies for the purpose of discharging obligations under the provisions of Chapter IV of the PML Act, 2002. (15 of 2003). Accordingly, every AIFI which is part of a group, shall implement group-wide programmes against money laundering and terror financing, including group-wide policies for sharing information required for the purposes of client due diligence, money laundering, and terrorist finance risk management, and such programmes shall include adequate safeguards on the confidentiality and use of information exchanged, including safeguards to prevent tipping-off. 9. AIFI’s policy framework shall seek to ensure compliance with PML Act / Rules, including regulatory instructions in this regard and shall provide a bulwark against threats arising from money laundering, terrorist financing, proliferation financing and other related risks. While ensuring compliance with the legal / regulatory requirements as above, the AIFI may also consider adoption of best international practices taking into account the FATF standards and FATF guidance notes, for managing risks better. 10. Money Laundering and Terrorist Financing Risk Assessment by the AIFI: (1) The AIFI shall carry out ‘Money Laundering (ML) and Terrorist Financing (TF) Risk Assessment’ exercises periodically to identify, assess and take effective measures to mitigate its money laundering and terrorist financing risk for clients, countries or geographic areas, products, services, transactions or delivery channels, etc. The assessment process shall consider all the relevant risk factors before determining the level of overall risk and the appropriate level and type of mitigation to be applied. While preparing the internal risk assessment, the AIFI shall take cognizance of the overall sector-specific vulnerabilities, if any, that the regulator / supervisor may share with the AIFI from time to time. (2) The AIFI shall properly document its risk assessment and it shall be proportionate to the nature, size, geographical presence, complexity of activities / structure, etc. of the AIFI. Further, the Board or a committee of the Board to which it has delegated power shall determine the periodicity of the risk assessment exercise, in alignment with the outcome of the risk assessment exercise. However, the AIFI shall review it at least annually. (3) The AIFI shall present the outcome of the exercise to the Board or any committee of the Board to which power has been delegated in this regard. The outcome shall also be made available to competent authorities and self-regulating bodies. 11. The AIFI shall apply a Risk Based Approach (RBA) for mitigation and management of the risks (identified on its own or through national risk assessment) and shall have Board-approved policies, controls and procedures in this regard. The AIFI shall implement a CDD programme, having regard to the ML / TF risks identified and the size of business. Further, the AIFI shall monitor the implementation of the controls and enhance them if necessary. 12. Compliance of KYC policy: The AIFI shall ensure compliance with KYC Policy through:
13. The AIFI shall ensure that it does not outsource the decision-making functions of determining compliance with KYC norms. 14. Designated Director:
15. Principal Officer: (1) The Principal Officer shall be responsible for ensuring compliance, monitoring transactions, and sharing and reporting information as required under the law / regulations. (2) The AIFI shall communicate the name, designation, address, and contact details of the Principal Officer to the FIU-IND and RBI. Chapter III – Customer Acceptance Policy 16. The AIFI shall frame a Customer Acceptance Policy. 17. Without prejudice to the generality of the aspect that Customer Acceptance Policy may contain, the AIFI shall:
18. Customer Acceptance Policy shall not result in denial of a banking / financial facility to members of the general public, especially those who are financially or socially disadvantaged, including the Persons with Disabilities (PwDs). The AIFI shall not reject an application for onboarding or periodic updation of KYC without application of mind. The officer concerned shall duly record the reason(s) for rejection. 19. Where the AIFI forms a suspicion of money laundering or terrorist financing, and it reasonably believes that performing the CDD process will tip off the customer, it shall not pursue the CDD process and instead file an STR with FIU-IND. 20. For risk management, the AIFI shall have a risk-based approach which includes the following. (1) The AIFI shall categorise customers into low, medium, and high-risk categories, based on its assessment and risk perception. (2) The AIFI may lay down broad principles for the risk-categorisation of customers. (3) The AIFI shall undertake risk categorisation based on parameters such as the customer’s identity, social / financial status, nature of business activity, and information about the customer’s business and its location, geographical risk covering customers as well as transactions, type of products / services offered, delivery channel used for delivery of products / services, types of transactions undertaken such as cash, cheque / monetary instruments, wire transfers, forex transactions, etc. The AIFI may also factor in the ability to confirm identity documents through online or other services offered by issuing authorities, while considering customer’s identity. (4) The AIFI shall keep the risk categorisation of a customer and the specific reasons for such categorisation confidential and shall not reveal this information to the customer to avoid tipping off. Provided that the AIFI collects various other non-intrusive information from different categories of customers relating to the perceived risk, and specifies the same in the KYC policy. Explanation: The AIFI may also use the FATF Public Statement, the reports and guidance notes on KYC / AML issued by the Indian Banks Association (IBA), and other agencies, etc., in its risk assessment. Chapter V – Customer Identification Procedure (CIP) 21. The AIFI shall undertake identification of customers in the following cases:
22. For the purpose of verifying the identity of customers at the time of commencement of an account-based relationship or while carrying out an occasional transaction of an amount equal to or exceeding ₹50,000, whether conducted as a single transaction or several transactions that appear to be connected, or any international money transfer operations, the AIFI, shall at its option, rely on customer due diligence done by a third party, subject to the following conditions:
Chapter VI – Customer Due Diligence (CDD) Procedure A. CDD Procedure in case of Individuals 23. For undertaking CDD, the AIFI shall obtain the following from an individual while establishing an account-based relationship or while dealing with the individual who is a beneficial owner, authorised signatory or the power of attorney holder related to any legal entity: (1) the Aadhaar number where,
(2) the proof of possession of Aadhaar number where the AIFI can carry out offline verification; or (3) the proof of possession of Aadhaar number where the AIFI cannot carry out the offline verification or any OVD or the equivalent e-document thereof containing the details of their identity and address; or (4) the KYC Identifier with an explicit consent to download records from CKYCR; and (5) the PAN or the equivalent e-document thereof or Form No. 60 as defined in Income-tax Rules, 1962; and (6) the AIFI may require such other documents including in respect of the nature of business and financial status of the customer, or the equivalent e-documents thereof. Provided that where the customer has submitted, (i) Aadhaar number under clause (1) above to a AIFI notified under first proviso to sub-section (1) of section 11A of the PML Act, such AIFI shall carry out authentication of the customer’s Aadhaar number using UIDAI’s e-KYC authentication facility. Further, in such a case, if the customer wants to provide a current address, different from the address as per the identity information available in the Central Identities Data Repository, they may give a self-declaration to that effect to the AIFI. (ii) proof of possession of Aadhaar under clause (2) above where offline verification can be carried out, the AIFI shall carry out offline verification. (iii) an equivalent e-document of any OVD, the AIFI shall verify the digital signature as per the provisions of the Information Technology Act, 2000 (21 of 2000) and any rules issued thereunder and take a live photo as specified under paragraph 24 below. (iv) any OVD or proof of possession of Aadhaar number under clause (3) above where offline verification cannot be carried out, the AIFI shall carry out verification through digital KYC as specified under paragraph 24 below. (v) KYC Identifier under clause (4) above, the AIFI shall retrieve the KYC records online from the CKYCR in accordance with paragraph 62. Provided that for a period not beyond such date as the Government may notify for a class of REs, instead of carrying out digital KYC, the AIFI pertaining to such class may obtain a certified copy of the proof of possession of Aadhaar number or the OVD and a recent photograph where the customer does not submit an equivalent e- document. Provided further that in case the AIFI cannot perform an e-KYC authentication for an individual desirous of receiving any benefit or subsidy under any scheme notified under section 7 of the Aadhaar (Targeted Delivery of Financial and Other subsidies, Benefits and Services) Act, 2016 owing to injury, illness or infirmity on account of old age or otherwise, and similar causes, the AIFI shall, apart from obtaining the Aadhaar number, perform identification preferably by carrying out offline verification or alternatively by obtaining the certified copy of any other OVD or the equivalent e-document thereof from the customer. An official of the AIFI shall invariably carry out CDD done in this manner, and such exception handling shall also be a part of the concurrent audit as mandated in paragraphs 12. The AIFI shall ensure to duly record the cases of exception handling in a centralised exception database. The database shall contain the details of grounds of granting exception, customer details, name of the designated official authorising the exception and additional details, if any. The AIFI shall subject the database to periodic internal audit / inspection and the AIFI shall make database available for supervisory review. Explanation 1: The AIFI shall, where its customer submits a proof of possession of Aadhaar Number containing Aadhaar Number, ensure that such customer redacts or blacks out his Aadhaar number through appropriate means where the authentication of Aadhaar number is not required as per proviso (i) above. Explanation 2: An AIFI official can perform biometric-based e-KYC authentication, including Aadhaar Face Authentication. Explanation 3: The AIFI shall ensure that the use of Aadhaar, proof of possession of Aadhaar etc., is in accordance with the Aadhaar (Targeted Delivery of Financial and Other Subsidies Benefits and Services) Act, 2016 and the regulations made thereunder. Explanation 4: Aadhaar number is not mandatory for purposes of KYC. However, in case the customer is desirous of receiving any benefit or subsidy under any scheme notified under section 7 of the Aadhaar (Targeted Delivery of Financial and Other subsidies, Benefits and Services) Act, 2016 (18 of 2016), the customershallprovide the Aadhaar number to the AIFI. In other cases, customers may provide the Aadhaar numbervoluntarily. 24. Digital KYC Process: (1) The AIFI shall develop an application for digital KYC process and make it available at customer touch points for undertaking KYC of its customers and shall undertake the KYC process only through this authenticated application. (2) The AIFI shall control the access to the Application and shall ensure that unauthorised persons do not use it. Authorised officials shall access the Application only through a login-id and password or a Live OTP or Time OTP controlled mechanism that the AIFI provides. (3) The customer, for the purpose of KYC, shall visit the location of the authorised official of the AIFI or vice-versa. The original OVD shall be in possession of the customer. (4) The AIFI shall ensure that the authorised officer takes a Live photograph of the customer and embeds the same photograph in the Customer Application Form (CAF). Further, the AIFI’s system Application shall put a watermark in readable form, containing the CAF number, GPS coordinates, authorised official’s name, unique employee code (which the AIFI assigns) and date (DD:MM:YYYY) and time stamp (HH:MM:SS), on the captured live photograph of the customer. (5) The AIFI’s Application shall have the feature that it captures only a live photograph of the customer and does not capture any printed or video graphed photograph. The background behind the customer while capturing live photograph shall be of white colour and no other person shall come into the frame while capturing the live photograph of the customer. (6) Similarly, the authorised officer shall capture the live photograph of the original OVD or proof of possession of Aadhaar where offline verification cannot be carried out (placed horizontally), vertically from above and shall apply a water-marking in readable form as mentioned above. The authorised officer shall ensure there is no skew or tilt in the mobile device while capturing the live photograph of the original documents. (7) The authorised officer shall capture the live photograph of the customer and his original documents in proper light so that they are clearly readable and identifiable. (8) Thereafter, the authorised officer shall fill all the entries in the CAF as per the documents and information furnished by the customer. In those documents where Quick Response (QR) code is available, such details may be auto-populated by scanning the QR code instead of manual filing the details. For example, in case of physical Aadhaar / e-Aadhaar downloaded from UIDAI where QR code is available, the details like name, gender, date of birth and address may be auto-populated by scanning the QR available on Aadhaar / e-Aadhaar. (9) Once the above-mentioned process is completed, a One Time Password (OTP) message containing the text that ‘Please verify the details filled in form before sharing OTP’ shall be sent to customer’s own mobile number. Upon successful validation of the OTP, the AIFI will treat it as the customer’s signature on CAF. However, if the customer does not have their own mobile number, the AIFI may use the mobile number of their family / relatives / known persons for this purpose and clearly mention it in the CAF. In any case, the AIFI shall not use the mobile number of authorised officer registered with the AIFI for the customer signature. The AIFI shall check that the mobile number used in customer signature is not the mobile number of the authorised officer. (10) The authorised officer shall provide a declaration about the capturing of the live photograph of the customer and original document. For this purpose, the AIFI shall verify the authorised officer with One Time Password (OTP) which will be sent to his mobile number registered with the AIFI. Upon successful OTP validation, the AIFI shall treat it as the authorised officer’s signature on the declaration. The live photograph of the authorised officer shall also be captured in this authorised officer’s declaration. (11) Subsequent to all these activities, the Application shall give information about the completion of the process and submission of activation request to activation officer of the AIFI, and also generate the transaction-id / reference-id number of the process. The authorised officer shall intimate the details regarding transaction-id / reference-id number to the customer for future reference. (12) The authorised officer of the AIFI shall check and verify that:
(13) On Successful verification, the CAF shall be digitally signed by authorised officer of the AIFI who will take a print of CAF, get signatures / thumb-impression of customer at appropriate place, then scan and upload the same in system. Original hard copy may be returned to the customer. 25. Accounts opened using Aadhaar OTP based e-KYC, in non-face-to-face mode, are subject to the following conditions: (1) The Customer shall give specific consent for the authentication through OTP. (2) As a risk-mitigating measure for such accounts, the AIFI shall ensure that it sends transaction alerts, OTP, etc., only to the mobile number of the customer registered with Aadhaar. The AIFI shall have a Board-approved policy delineating a robust process of due diligence for dealing with requests for change of mobile number in such accounts. (3) The aggregate balance of all the deposit accounts of the customer shall not exceed Rupees One Lakh. In case the balance exceeds the threshold, the AIFI shall cease the account’s operation, until it completes the CDD as mentioned at (6) below. (4) The aggregate of all credits in a financial year, in all the deposit accounts taken together, shall not exceed Rupees Two Lakh. (5) As regards borrowal accounts, the AIFI shall sanction only term loans. The aggregate amount of term loans sanctioned shall not exceed ₹60,000 in a year. (6) The AIFI shall not allow accounts, both deposit and borrowal, opened using OTP based e-KYC to operate for more than one year unless it carries out identification as per paragraph 23 or as per paragraphs 26 and 27 (V-CIP). If the AIFI uses Aadhaar details under paragraphs 26 and 27, it shall follow the process in its entirety, including fresh Aadhaar OTP authentication. (7) If the AIFI does not complete the CDD procedure as mentioned above within a year; (a) in respect of deposit accounts, the AIFI shall close the same immediately, and (b) in respect of borrowal accounts, the AIFI shall allow no further debits. (8) The AIFI shall obtain declaration from the customer to the effect that no other account has been opened nor will be opened using OTP based KYC in non-face-to-face mode with any other RE. Further, while uploading KYC information to CKYCR, AIFI shall clearly indicate that such accounts are opened using OTP based e-KYC and other REs shall not open accounts based on the KYC information of accounts opened with OTP based e-KYC procedure in non-face- to-face mode. (9) The AIFI shall have strict monitoring procedures including systems to generate alerts in case of any non-compliance / violation, to ensure compliance with the above-mentioned conditions. 26. The AIFI may undertake V-CIP to carry out: (1) CDD in case of new customer onboarding for individual customers, proprietor in case of proprietorship firm, authorised signatories and Beneficial Owners (BOs) in case of Legal Entity (LE) customers. Provided that in case of CDD of a proprietorship firm, the AIFI shall also obtain the equivalent e-document of the activity proofs with respect to the proprietorship firm, as mentioned in paragraph 30 and paragraph 31, apart from undertaking CDD of the proprietor. (2) Conversion of existing accounts opened in non-face-to-face mode using Aadhaar OTP based e-KYC authentication as per paragraph 25. (3) Updation / Periodic updation of KYC for eligible customers. 27. The AIFI opting to undertake V-CIP, shall adhere to the following minimum standards: (1) V-CIP Infrastructure
(2) V-CIP Procedure
(3) V-CIP Records and Data Management
28. KYC verification once done by one branch / office of the AIFI shall be valid for transfer of the account to any other branch / office of the same AIFI, provided the AIFI has already completed the full KYC verification for the concerned account and the same is not due for periodic updation. B. CDD Measures for Sole Proprietary firms 29. For opening an account in the name of a sole proprietary firm, the AIFI shall carry out the CDD of the individual (proprietor). 30. In addition to the above, the AIFI shall also obtain any two of the following documents or the equivalent e-documents thereof as proof of business / activity in the name of the proprietary firm:
31. In cases where the AIFI is satisfied that it is not possible to furnish two such documents, the AIFI may, at its discretion, accept only one of those documents as proof of business / activity. Provided that the AIFI undertakes contact point verification and collects such other information and clarifications as would be required to establish the existence of such firm, and shall confirm and satisfy itself that it has verified the business activity from the address of the proprietary concern. C. CDD Measures for Legal Entities 32. For opening an account of a company, the AIFI shall obtain certified copies of each of the following documents or the equivalent e-documents thereof:
33. For opening an account of a partnership firm, the AIFI shall obtain the certified copies of each of the following documents or the equivalent e-documents thereof:
34. For opening an account of a trust, certified copies of each of the following documents or the equivalent e-documents thereof shall be obtained:
35. For opening an account of an unincorporated association or a body of individuals, the AIFI shall obtain the certified copies of each of the following documents or the equivalent e-documents thereof:
Explanation: Unregistered trusts / partnership firms shall be included under the term ‘unincorporated association’. Explanation: The term ‘body of individuals’ includes societies. 36. For opening account of a customer who is a juridical person (not specifically covered in the earlier part) such as societies, universities and local bodies like village panchayats, etc., or who purports to act on behalf of such juridical person or individual or trust, the AIFI shall obtain and verify the certified copies of the following documents or the equivalent e-documents thereof:
Provided that in case of a trust, the AIFI shall ensure that trustees disclose their status at the time of commencement of an account-based relationship or when carrying out transactions as specified in clause (2) and (5) of paragraph 21 of these directions. D. Identification of Beneficial Owner 37. For opening an account of a Legal Person who is not a natural person, the AIFI shall identify the beneficial owner(s) and shall undertake all reasonable steps in terms of sub- rule (3) of Rule 9 of the Rules to verify their identity, keeping in view the following: (1) Where the customer or the owner of the controlling interest is:
(2) In cases of trust / nominee or fiduciary accounts, the AIFI determines whether the customer is acting on behalf of another person as trustee / nominee or any other intermediary. In such cases, the AIFI shall obtain satisfactory evidence of the identity of the intermediaries and of the persons on whose behalf they are acting, as well as details of the nature of the trust or other arrangements in place. 38. The AIFI shall undertake ongoing due diligence of customers to ensure that their transactions are consistent with their knowledge about the customers, customers’ business and risk profile, the source of funds / wealth. 39. Without prejudice to the generality of factors that call for close monitoring, the AIFI shall necessarily monitor the following types of transactions: (1) Large and complex transactions including RTGS transactions, and those with unusual patterns, inconsistent with the normal and expected activity of the customer, which have no apparent economic rationale or legitimate purpose. (2) Transactions which exceed the thresholds prescribed for specific categories of accounts. (3) High account turnover inconsistent with the size of the balance maintained. (4) Deposit of third-party cheques, drafts, etc. in the existing and newly opened accounts followed by cash withdrawals for large amounts. For ongoing due diligence, the AIFI may consider adopting appropriate innovations including artificial intelligence and machine learning (AI and ML) technologies to support effective monitoring. 40. The AIFI shall align the extent of monitoring with the risk category of the customer. (1) The AIFI shall put in place a system of periodic review of risk categorisation of accounts, with such periodicity being at least once in every six months, and shall establish the need for applying enhanced due diligence measures. (2) The AIFI shall closely monitor the transactions in accounts of marketing firms, especially accounts of Multi-level Marketing (MLM) companies. Explanation: The AIFI shall subject high-risk accounts to more intensified monitoring. Explanation: Cases where a large number of cheque books are sought by the company and/or multiple small deposits (generally in cash) across the country in one AIFI account and / or where a large number of cheques are issued bearing similar amounts / dates, shall be immediately reported to RBI and other appropriate authorities such as FIU-IND. 41. Updation / Periodic Updation of KYC (1) The AIFI shall adopt a risk-based approach for periodic updation of KYC ensuring that it keeps the information or data collected under CDD is kept up-to-date and relevant, particularly where there is high risk. However, the AIFI shall carry out periodic updation at least once in every two years for high-risk customers, once in every eight years for medium risk customers and once in every 10 years for low-risk customers from the date of opening of the account / last KYC updation. The AIFI shall document its policy in this regard as part of the AIFI’s internal KYC policy duly approved by the Board of Directors of AIFI or any committee of the Board to which power has been delegated. (2) Notwithstanding the provisions given above, in respect of an individual customer who is categorised as low-risk, the AIFI shall allow all transactions and ensure the updation of KYC within one year of its falling due for KYC or up to June 30, 2026, whichever is later. The AIFI shall subject accounts of such customers to regular monitoring. This shall also apply to low-risk individual customers for whom periodic updation of KYC has already fallen due. (3) Individuals:
(4) Customers other than individuals:
(5) Additional measures: In addition to the above, the AIFI shall ensure that:
(6) The AIFI shall advise the customers that in order to comply with the PML Rules, in case of any update in the documents submitted by the customer at the time of establishment of business relationship / account-based relationship and thereafter, as necessary; customers shall submit to the AIFI the update of such documents. This shall be done within 30 days of the update to the documents for the purpose of updating the records at the AIFI’s end. (7) Due Notices for Periodic Updation of KYC: The AIFI shall intimate its customers, in advance, to update their KYC. Prior to the due date of periodic updation of KYC, the AIFI shall give at least three advance intimations, including at least one intimation by letter, at appropriate intervals to its customers through available communication options / channels for complying with the requirement of periodic updation of KYC. Subsequent to the due date, the AIFI shall give at least three reminders, including at least one reminder by letter, at appropriate intervals, to such customers who have still not complied with the requirements, despite advance intimations. The letter of intimation / reminder may, inter alia, contain easy-to-understand instructions for updating KYC, escalation mechanism for seeking help, if required, and the consequences, if any, of failure to update their KYC in time. Issue of such advance intimation / reminder shall be duly recorded in the AIFI’s system against each customer for audit trail. The AIFI shall expeditiously implement the same but not later than January 01, 2026. 42. In case of existing customers, the AIFI shall obtain the PAN or equivalent e-document thereof or Form No. 60, by such date which the Central Government may notify, failing which the AIFI shall temporarily cease operations in the account until the customer submits the PAN or equivalent e-documents thereof or Form No. 60. Provided that before temporarily ceasing operations for an account, the AIFI shall give the customer an accessible notice and a reasonable opportunity to be heard. Further, the AIFI shall include, in its internal policy, appropriate relaxation(s) for continued operation of accounts for customers who are unable to provide PAN or equivalent e-document thereof or Form No. 60 owing to injury, illness or infirmity on account of old age or otherwise, and such like causes. However, the AIFI shall subject such accounts to enhanced monitoring. Provided further that if a customer having an existing account-based relationship with a AIFI gives in writing to the AIFI that they do not want to submit their PAN or equivalent e-document thereof or Form No. 60, the AIFI shall close the account and all obligations due in relation to the account shall be appropriately settled after establishing the identity of the customer by obtaining the identification documents as applicable to the customer. Explanation: For the purpose of this paragraph, ‘temporary ceasing of operations’ in relation to an account shall mean the temporary suspension of all transactions or activities in relation to that account by the AIFI till such time the customer complies with the provisions of this paragraph. In case of asset accounts such as loan accounts, for the purpose of ceasing the operation in the account, only credits shall be allowed. F. Enhanced and Simplified Due Diligence Procedure F1. Enhanced Due Diligence43. Enhanced Due Diligence (EDD) for non-face-to-face customer onboarding (other than customer onboarding in terms of paragraph 25): Non-face-to-face onboarding facilitates the AIFI to establish a relationship with the customer without meeting the customer physically or through V-CIP. Such non-face-to-face modes for the purpose of this paragraph include use of digital channels such as CKYCR, DigiLocker, equivalent e-document, etc., and non- digital modes such as obtaining copy of OVD certified by additional certifying authorities as allowed for NRIs and PIOs. The AIFI shall undertake the following EDD measures for non-face-to-face customer onboarding (other than customer onboarding in terms of paragraph 25):
44. Accounts of Politically Exposed Persons (PEPs) (1) The AIFI shall have the option of establishing a relationship with PEPs (whether as customer or beneficial owner) provided that, apart from performing normal customer due diligence:
(2) These instructions shall also apply to family members or close associates of PEPs. Explanation: For the purpose of this paragraph, ‘Politically Exposed Persons’ (PEPs) are individuals who are or have been entrusted with prominent public functions by a foreign country, including the Heads of States / Governments, senior politicians, senior government or judicial or military officers, senior executives of state-owned corporations and important political party officials. 45. Client accounts opened by professional intermediaries: The AIFI shall ensure while opening client accounts through professional intermediaries, that:
(6) The ultimate responsibility for knowing the customer lies with the AIFI. F2. Simplified Due Diligence 46. Simplified norms for Self Help Groups (SHGs): (1) The AIFI shall not require CDD of all the members of an SHG while opening the savings bank account of the SHG. (2) The CDD of all the office bearers shall suffice. (3) The AIFI may undertake CDD of all the members of an SHG at the time of credit linking of SHGs. Chapter VII – Record Management 47. The AIFI shall take the following steps regarding maintenance, preservation and reporting of customer information, with reference to provisions of PML Act and Rules. The AIFI shall, (1) maintain all necessary records of transactions between the AIFI and the customer, both domestic and international, for at least five years from the date of transaction; (2) preserve the records pertaining to the identification of the customers and their addresses, obtained while opening the account and during the course of business relationship, for at least five years after the business relationship has ended; (3) swiftly make available, the identification records and transaction data to the competent authorities upon request; (4) introduce a system of maintaining proper records of transactions prescribed under Rule 3 of Prevention of Money Laundering (Maintenance of Records) Rules, 2005 (PML Rules, 2005); (5) maintain all necessary information in respect of transactions prescribed under PML Rule 3 to permit the reconstruction of an individual transaction, including the following:
(6) evolve a system for proper maintenance and preservation of account information in a manner that allows the AIFI to retrieve data easily and quickly whenever required or when competent authorities request it; (7) maintain records of the identity and address of its customers, and records in respect of transactions referred to in Rule 3 in hard or soft format. Explanation: For the purpose of this paragraph, the expressions ‘records pertaining to the identification’, ‘identification records’, etc., shall include updated records of the identification data, account files, business correspondence and results of any analysis undertaken. 48. The AIFI shall ensure that in case of customers who are non-profit organisations, the AIFI registers details of such customers on the DARPAN Portal of NITI Aayog. If they are not registered, the AIFI shall register the details on the DARPAN Portal. The AIFI shall also maintain such registration records for a period of five years after the business relationship between the customer and the AIFI has ended or the account has been closed, whichever is later. Chapter VIII – Reporting Requirements to Financial Intelligence Unit – India 49. The AIFI shall furnish to the Director, Financial Intelligence Unit-India (FIU-IND), the information referred to in Rule 3 of the PML (Maintenance of Records) Rules, 2005 in accordance with Rule 7 thereof. Explanation: In terms of Third Amendment Rules notified September 22, 2015 regarding amendment to sub rule 3 and 4 of rule 7, Director, FIU-IND shall have powers to issue guidelines to the REs for detecting transactions referred to in various clauses of sub-rule (1) of rule 3, to direct them about the form of furnishing information and to specify the procedure and the manner of furnishing information. 50. The AIFI shall take note of the reporting formats and comprehensive reporting format guide, prescribed / released by FIU-IND and Report Generation Utility and Report Validation Utility developed to assist reporting entities in the preparation of prescribed reports. The AIFI which is yet to install / adopt suitable technological tools for extracting CTR / STR from its live transaction data shall make use of the editable electronic utilities to file electronic Cash Transaction Reports (CTR) / Suspicious Transaction Reports (STR) which FIU- IND has placed on its website. The Principal Officer of the AIFI, shall have suitable arrangement to cull out the transaction details from branches which are yet to be computerised and to feed the data into an electronic file with the help of the editable electronic utilities of CTR / STR as have been made available by FIU-IND on its website http://fiuindia.gov.in. 51. When furnishing information to the Director, FIU-IND, a delay of each day in not reporting a transaction or delay of each day in rectifying a mis-represented transaction beyond the time limit as specified in the Rule shall constitute as a separate violation. The AIFI shall not put any restriction on operations in the accounts merely on the basis of the STR filed. The AIFI, its directors, officers, and all employees shall ensure that the fact of maintenance of records referred to in rule 3 of the PML (Maintenance of Records) Rules, 2005, and furnishing of the information to the Director is confidential. However, such confidentiality requirement shall not inhibit sharing of information under paragraph 8 of these Directions of any analysis of transactions and activities which appear unusual, if the AIFI has done any such analysis. 52. To identify and report suspicious transactions effectively, the AIFI shall implement robust software that generates alerts when transactions are inconsistent with a customer's risk categorisation and updated profile. Chapter IX – Requirements/obligations under International Agreements - Communications from International Agencies 53. Obligations under the Unlawful Activities (Prevention) (UAPA) Act, 1967: (1) The AIFI shall ensure that in terms of section 51A of the Unlawful Activities (Prevention) (UAPA) Act, 1967 and amendments thereto, it does not have any account in the name of individuals / entities appearing in the lists of individuals and entities, suspected of having terrorist links, which are approved by and periodically circulated by the United Nations Security Council (UNSC). The details of the two lists are as under:
(2) The AIFI shall also ensure to refer to the lists as available in the Schedules to the Prevention and Suppression of Terrorism (Implementation of Security Council Resolutions) Order, 2007, as amended from time to time. The AIFI shall verify the aforementioned lists, i.e., UNSC Sanctions Lists and lists as available in the Schedules to the Prevention and Suppression of Terrorism (Implementation of Security Council Resolutions) Order, 2007, as amended from time to time, on a daily basis, and any modifications to the lists in terms of additions, deletions or other changes shall be taken into account by the AIFI for meticulous compliance. (3) The AIFI shall report the details of accounts resembling any of the individuals / entities in the lists to FIU-IND in addition to advising the Ministry of Home Affairs (MHA) as required under UAPA notification dated February 2, 2021 (Annex I of these Directions). (4) Freezing of Assets under Section 51A of UAPA, 1967: The AIFI shall strictly follow the procedure laid down in the UAPA Order dated February 2, 2021 (Annex I of these Directions), and shall ensure the meticulous compliance with the Order issued by the Government. The list of Nodal Officers for UAPA is available on the website of MHA. 54. Obligations under Weapons of Mass Destruction (WMD) and their Delivery Systems (Prohibition of Unlawful Activities) Act, 2005 (WMD Act, 2005):
55. The AIFI shall verify every day, the ‘UNSCR 1718 Sanctions List of Designated Individuals and Entities‘, as available at https://www.mea.gov.in/Implementation- of-UNSC-Sanctions-DPRK.htm, to take into account any modifications to the list in terms of additions, deletions or other changes and also ensure compliance with the ‘Implementation of Security Council Resolution on Democratic People’s Republic of Korea Order, 2017’, as amended from time to time by the Central Government. 56. In addition to the above, the AIFI shall take into account:
57. The AIFI shall undertake countermeasures when called upon so to do by any international or intergovernmental organisation of which India is a member and which is accepted by the Central Government. 58. Jurisdictions that do not or insufficiently apply the FATF Recommendations:
59. The AIFI is encouraged to leverage latest technological innovations and tools for effective implementation of name screening to meet the sanctions requirements. Chapter X – Other Instructions 60. Secrecy Obligations and Sharing of Information: (1) The AIFI shall maintain secrecy regarding the customer information that arises out of the contractual relationship between the AIFI and the customer. (2) The AIFI shall treat information collected from customers for the purpose of opening of account as confidential and shall not divulge details thereof for the purpose of cross-selling, or for any other purpose without the express permission of the customer. (3) While considering the requests for data / information from Government and other agencies, the AIFI shall satisfy itself that the information being sought is not of such a nature as will violate the provisions of the laws relating to secrecy in the transactions. (4) The exceptions to the said rule shall be as under:
61. Compliance with the provisions of Foreign Contribution (Regulation) Act, 2010: The AIFI shall ensure adherence to the provisions of Foreign Contribution (Regulation) Act, 2010, and Rules made thereunder. Further, the AIFI shall also ensure meticulous compliance with any instructions / communications on the matter issued from time to time by the RBI based on advice received from the Ministry of Home Affairs, Government of India. 62. CDD Procedure and sharing KYC information with Central KYC Records Registry (CKYCR) (1) Government of India has authorised the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI), to act as, and to perform the functions of the CKYCR vide Gazette Notification No. S.O. 3183(E) dated November 26, 2015. (2) In terms of provision of Rule 9(1A) of the PML Rules, the AIFI shall capture customer’s KYC records and upload onto CKYCR within 10 days of commencement of an account-based relationship with the customer. (3) Operational Guidelines for uploading the KYC data have been released by CERSAI. (4) The AIFI shall capture the KYC information for sharing with the CKYCR in the manner mentioned in the Rules, as per the KYC templates prepared for ‘Individuals’ and ‘Legal Entities’ (LEs), as the case may be. The templates may be revised from time to time, as may be required and released by CERSAI. (5) The ‘live run’ of the CKYCR started from July 15, 2016, in a phased manner, beginning with new ‘individual accounts’. The AIFI shall upload KYC records pertaining to accounts of LEs opened on or after April 1, 2021, with CKYCR in terms of the provisions of the Rules ibid. The AIFI shall upload KYC records as per the LE Template released by CERSAI. (6) Once KYC Identifier is generated by CKYCR, the AIFI shall ensure that the same is communicated to the LE as the case may be. (7) In order to ensure that all KYC records are incrementally uploaded on to CKYCR, the AIFI shall upload / update the KYC data pertaining to accounts of LEs opened prior to the above-mentioned dates as per clauses (5) and (6), respectively, at the time of periodic updation as specified in paragraph 41 of these Directions, or earlier, when the updated KYC information is obtained / received from the customer. Also, whenever the AIFI obtains additional or updated information from any customer as per clause (10) below in this paragraph or Rule 9 (1C) of the PML Rules, the AIFI shall within seven days or within such period as may be notified by the Central Government, furnish the updated information to CKYCR, which shall update the KYC records of the existing customer in CKYCR. CKYCR shall thereafter inform electronically all the reporting entities who have dealt with the concerned customer regarding updation of KYC record of the said customer. Once CKYCR informs the AIFI regarding an update in the KYC record of an existing customer, the AIFI shall retrieve the updated KYC records from CKYCR and update the KYC record maintained by the AIFI. (8) The AIFI shall ensure that during periodic updation, the customers are migrated to the current CDD standard. (9) For the purpose of establishing an account-based relationship, updation / periodic updation or for verification of identity of a customer, the AIFI shall seek the KYC Identifier from the customer or retrieve the KYC Identifier, if available, from the CKYCR and proceed to obtain KYC records online by using such KYC Identifier and shall not require a customer to submit the same KYC records or information or any other additional identification documents or details, unless–
1Explanation: The RE that has last uploaded or updated the customer’s KYC records in the CKYCR shall be responsible for verifying the identity and / or address of the customer, as applicable. Accordingly, any AIFI downloading and relying on such records from the CKCYR shall not be required to re-verify the authenticity of the customer’s identity and / or address, provided the KYC records downloaded from CKYCR are current and compliant with the PML Act, 2002 / PML Rules, 2005. The AIFI downloading and relying on KYC records downloaded from the CKCYR shall remain responsible for all aspects of CDD procedure and provisions of these Directions, except verification of identity and / or address of the customer.] 63. Reporting requirement under Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standards (CRS): Under FATCA and CRS, the AIFI shall adhere to the provisions of Income Tax Rules 114F, 114G and 114H and determine whether they are a Reporting Financial Institution as defined in Income Tax Rule 114F and if so, shall take following steps for complying with the reporting requirements: (1) Register on the related e-filing portal of Income Tax Department as Reporting Financial Institutions at the link https://incometaxindiaefiling.gov.in/ post login -> My Account --> Register as Reporting Financial Institution. (2) Submit online reports by using the digital signature of the ‘Designated Director’ by either uploading the Form 61B or ‘NIL’ report, for which, the schema prepared by Central Board of Direct Taxes (CBDT) shall be referred to. Explanation: REs shall refer to the spot reference rates published by Foreign Exchange Dealers’ Association of India (FEDAI) on their website at http://www.fedai.org.in/RevaluationRates.aspx for carrying out the due diligence procedure for the purposes of identifying reportable accounts in terms of Rule 114H. (3) Develop Information Technology (IT) framework for carrying out due diligence procedure and for recording and maintaining the same, as provided in Rule 114H. (4) Develop a system of audit for the IT framework and compliance with Rules 114F, 114G and 114H of Income Tax Rules. (5) Constitute a ‘High-Level Monitoring Committee’ under the Designated Director or any other equivalent functionary to ensure compliance. (6) Ensure compliance with updated instructions / rules / guidance notes / Press releases / issued on the subject by Central Board of Direct Taxes (CBDT) from time to time and available on the website http://www.incometaxindia.gov.in/Pages/default.aspx. REs may take note of the following:
64. Operation of Accounts and Money Mules: The AIFI shall strictly adhere to the instructions on opening of accounts and monitoring of transactions, to minimise the operations of ‘Money Mules’ that are used to launder the proceeds of fraud schemes (e.g., phishing and identity theft) by criminals who gain illegal access to deposit accounts by recruiting third parties that act as ‘money mules’. The AIFI shall undertake diligence measures and meticulous monitoring to identify accounts which are operated as Money Mules and take appropriate action, including reporting of suspicious transactions to FIU-IND. Further, if it is established that an account opened and operated is that of a Money Mule, but STR was not filed by the concerned AIFI, it shall then be deemed that the AIFI has not complied with these directions. 65. The AIFI shall allot Unique Customer Identification Code (UCIC) while entering into new relationships with individual customers as also the existing individual customers. 66. The AIFI shall, at their option, not issue UCIC to all walk-in / occasional customers provided it is ensured that there is adequate mechanism to identify such walk-in customers who have frequent transactions with them and ensure that they are allotted UCIC. 67. Introduction of New Technologies: The AIFI shall identify and assess the ML / TF risks that may arise in relation to the development of new products and new business practices, including new delivery mechanisms, and the use of new or developing technologies for both new and existing products. Further, the AIFI shall ensure:
68. Correspondent Banking: The AIFI shall have a policy approved by its Boards, or by a committee headed by the Chairman / CEO / MD, to lay down parameters for approving cross-border correspondent banking and other similar relationships. In addition to performing normal CDD measures, such relationships shall be subject to the following conditions:
69. Wire Transfer (1) Information requirements for wire transfers for the purpose of this Direction: (i) All cross-border wire transfers shall be accompanied by accurate, complete, and meaningful originator and beneficiary information as mentioned below:
In the absence of an account, a unique transaction reference number should be included which permits traceability of the transaction. (ii) In case of batch transfer, where several individual cross-border wire transfers from a single originator are bundled in a batch file for transmission to beneficiaries, they (i.e., individual transfers) are exempted from the requirements of clause (i) above in respect of originator information, provided that they include the originator’s account number or unique transaction reference number, as mentioned above, and the batch file contains required and accurate originator information, and full beneficiary information, that is fully traceable within the beneficiary country. (iii) Domestic wire transfer, where the originator is an account holder of the ordering AIFI, shall be accompanied by originator and beneficiary information, as indicated for cross-border wire transfers in (i) and (ii) above. (iv) Domestic wire transfers of ₹50,000 and above, where the originator is not an account holder of the ordering AIFI, shall also be accompanied by originator and beneficiary information as indicated for cross-border wire transfers. In case of domestic wire transfers below ₹50,000 where the originator is not an account holder of the ordering AIFIs and where the information accompanying the wire transfer can be made available to the beneficiary RE and appropriate authorities by other means, it is sufficient for the ordering AIFI to include a unique transaction reference number, provided that this number or identifier will permit the transaction to be traced back to the originator or the beneficiary. The ordering AIFI shall make the information available within three working / business days of receiving the request from the intermediary RE, beneficiary RE, or from appropriate competent authorities. (v) The AIFI shall ensure that all the information on the wire transfers shall be immediately made available to appropriate law enforcement authorities, prosecuting / competent authorities as well as FIU-IND on receiving such requests with appropriate level provisions. (vi) The wire transfer instructions are not intended to cover the following types of payments:
It is, however, clarified that nothing within these instructions will impact the obligation of the AIFI to comply with applicable reporting requirements under PML Act, 2002, and the Rules made thereunder, or any other statutory requirement in force. (2) Responsibilities of ordering AIFI, intermediary AIFI and beneficiary AIFI, effecting wire transfer, are as under: (i) Ordering AIFI:
(ii) Intermediary AIFI:
(iii) Beneficiary AIFI:
(3) Other Obligations: (i) Obligations in respect of the AIFI’s engagement or involvement with unregulated entities in the process of wire transfer: The AIFI shall be cognizant of their obligations under these instructions and ensure strict compliance, in respect of engagement or involvement of any unregulated entities in the process of wire transfer. More specifically, whenever there is involvement of any unregulated entities in the process of wire transfers, the concerned AIFI shall be fully responsible for information, reporting and other requirements and therefore shall ensure, inter alia, that:
(ii) The AIFI’s responsibility while undertaking cross-border wire transfer with respect to name screening (such that they do not process cross-border transactions of designated persons and entities). The AIFI is prohibited from conducting transactions with designated persons and entities and accordingly, in addition to compliance with Chapter IX of the Directions, the AIFI shall ensure that they do not process cross-border transactions of designated persons and entities. (iii) The AIFI’s responsibility to fulfil record management requirements: Complete originator and beneficiary information relating to wire transfers shall be preserved by the AIFI involved in the wire transfer, in accordance with paragraph 47 of these Directions. 70. Quoting of PAN: PAN or equivalent e-document thereof of customers shall be obtained and verified while undertaking transactions as per the provisions of Income Tax Rule 114B applicable to AIFIs, as amended from time to time, which includes opening of accounts with AIFIs, etc. Form 60 shall be obtained from persons who do not have PAN or equivalent e-document thereof. 71. Hiring of Employees and Employee training: (1) The AIFI shall put in place an adequate screening mechanism, including Know Your Employee / Staff policy, as an integral part of its personnel recruitment / hiring process. (2) The AIFI shall endeavour to ensure that the staff dealing with / being deployed for KYC / AML / CFT matters have: high integrity and ethical standards, good understanding of extant KYC / AML / CFT standards, effective communication skills and ability to keep up with the changing KYC / AML / CFT landscape, nationally and internationally. The AIFI shall also strive to develop an environment which fosters open communication and high integrity amongst the staff. (3) The AIFI shall put in place an on-going employee training programme so that the members of staff are adequately trained in KYC / AML / CFT policy. The focus of the training shall be different for frontline staff, compliance staff and staff dealing with new customers. The AIFI shall specially train the front desk staff to handle issues arising from lack of customer education. The AIFI shall ensure the proper staffing of the audit function with persons adequately trained and well-versed in KYC / AML / CFT policies of the AIFI, regulation and related issues. Chapter XI – Repeal and Other Provisions A. Repeal and saving 72. With the issue of these Directions, the existing Directions, instructions, and guidelines relating to Know Your Customer as applicable to All India Financial Institutions stand repealed, as communicated vide circular DOR.RRC.REC.302/33-01-010/2025-26 dated November 28, 2025. The Directions, instructions, and guidelines repealed prior to the issuance of these Directions shall continue to remain repealed. 73. Notwithstanding such repeal, any action taken or purported to have been taken, or initiated under the repealed Directions, instructions, or guidelines shall continue to be governed by the provisions thereof. All approvals or acknowledgments granted under these repealed lists shall be deemed as governed by these Directions. Further, the repeal of these directions, instructions, or guidelines shall not in any way prejudicially affect: (1) any right, obligation or liability acquired, accrued, or incurred thereunder; (2) any penalty, forfeiture, or punishment incurred in respect of any contravention committed thereunder; (3) any investigation, legal proceeding, or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture, or punishment as aforesaid; and any such investigation, legal proceedings or remedy may be instituted, continued, or enforced and any such penalty, forfeiture or punishment may be imposed as if those directions, instructions, or guidelines had not been repealed. B. Application of other laws not barred: 74. The provisions of these Directions shall be in addition to, and not in derogation of the provisions of any other laws, rules, regulations, or directions, for the time being in force. C. Interpretation: 75. For the purpose of giving effect to the provisions of these Directions or in order to remove any difficulties in the application or interpretation of the provisions of these Directions, the RBI may, if it considers necessary, issue necessary clarifications in respect of any matter covered herein and the interpretation of any provision of these Directions given by the RBI shall be final and binding. (Veena Srivastava) 1Inserted with effect from December 29, 2025 vide Reserve Bank of India (All India Financial Institutions – Know Your Customer) Amendment Directions, 2025 dated December 29, 2025 |
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