RBI has issued Master Directions (RBI/DBR/2015-16/18 Master Direction DBR.AML.BC.No.81/14.01.001/2015-16 updated on July 08, 2016) called the Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016. In terms of the provisions of Prevention of Money- Laundering Act, 2002 and the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005, Regulated Entities (REs) are required to follow certain customer identification procedure while undertaking a transaction either by establishing an account based relationship or otherwise and monitor their transactions.

Knab Finance Advisors Private Limited is a non-deposit taking NBFC (Regulated Entity as defined under these Directions). The Board of Directors have adopted the ‘Know Your Customer’ (KYC) and Anti-Money Laundering measures for Knab Finance Advisors Private Limited (“Company”).

The Company shall adopt all the best practices prescribed by RBI from time to time and shall make appropriate modifications if any necessary to this Code to conform to the standards so prescribed

Objectives

The objective of KYC policy is to

  • Put in place an effective system and procedure for customer identification and verifying its / his / her identity and residential address and conduct Customer Due Diligence (CDD) based on the risk factor associated with each customer
  • Have in place a system of assessing and monitoring the risk factors associated with each customer
  • Put in place a system of checks and balances to ensure formulation and effective implementation of procedures to help control and mitigate the risk of occurrence of financial frauds, swiftly identify probable transactions of money laundering and related suspicious activities and safeguarding Knab Finance Advisors from being unwittingly used as a conduit for transfer or deposit of funds derived from criminal activity or for financing of terrorism, irrespective of whether such money can be traced to a specific act of terrorism or not
  • Monitor transactions of a suspicious nature and report the same to the Financial Intelligence Unit- India (FIU- IND); verification and maintenance of records of transactions of customers in accordance with PMLA and the Rules made thereunder

The Company hereunder frames its KYC policies incorporating the following four key elements

  1. Customer Acceptance policy
  2. Risk Management policy
  3. Customer Identification Process
  4. Monitoring of transactions

Definitions

For the purpose of this Policy, “Customer” means a person who is engaged in a financial transaction or activity with the Company and includes a person on whose behalf the person who is engaged in the transaction or activity, is acting. Other terms not specifically defined here shall have the same meaning as assigned to them under the RBI KYC Directions, 2016 or the PMLA.

1.      Customer Acceptance Policy

  • Customers who are acceptable to Knab Finance Advisors as per the Risk categorization should fulfill all criteria related to submission of Officially Valid Documents (OVD) as defined by RBI from time to time and more specifically stated under the Customer Identification
  • Knab Finance Advisors shall refrain from opening an account, where Knab Finance Advisors is unable to apply appropriate Customer Due Diligence (CDD) measures either due to non-cooperation of the customer or non-reliability of the documents / information furnished by the
  • In the event, the customer is permitted to act on behalf of another person / entity, Knab Finance Advisors shall verify that the customer has the necessary authority to do so by scrutinizing the authorizing document/s.
  • An account shall not be opened in an anonymous or fictitious/ benami name(s) and Knab Finance Advisors will also use RBI caution advices in determining the customer acceptance framework.
  • CDD Procedure shall be followed for all the joint account holders, while opening a joint account.

2.      Risk Management

Risk categorization of customers shall be undertaken on the basis of various factors such as business activity of the customer, location of customer and its clients, mode of payments, turnover, social / financial status, nature of employment and credit history. Knab Finance Advisors may at its discretion identify additional factors that it may wish to utilize for customer acceptance based on risk profile determined by Knab Finance Advisors.

3.      Customer Identification Procedure

Customer identification means identifying the customer and verifying their identity by using reliable, independent source documents, data or information. The company would ensure that the following procured are followed.

  • Knab Finance Advisors shall ensure that customer identification process is undertaken, whenever an account based relationship is being
  • While undertaking customer identification, Knab Finance Advisors shall ensure that the decision-making functions of determining compliance with KYC shall not be
  • Knab Finance Advisors shall be adequately satisfied with the information furnished by each new  customer  with respect to  identity of  the customer  and  the  purpose  of the

intended nature of relationship with Knab Finance Advisors. The satisfaction of Knab Finance Advisors with respect to the information/ documents furnished by the customers should be such that if circumstances necessitate, Knab Finance Advisors shall ensure that it is in a position to satisfy the competent authorities that CDD was duly observed by Knab Finance Advisors, based on the risk profile/categorization of the customer.

  • As stated in the Customer Acceptance Policy, Knab Finance Advisors shall ensure that its customer is not a fictitious person by verifying the identity of the customer through documentation and shall also carry out necessary checks, so as to confirm that the identity of the customer on the basis of the documents obtained does not match with any person with known criminal background or with banned entities, such as individual terrorists or terrorist
  • For opening an account of a Legal Person who is not a natural person, the beneficial owner(s) shall be identified and all reasonable steps to verify their identity shall be undertaken.
  • One or more of the following valid documents may be called for from the customers as OVD, containing details of proof of their identity and address
Type of CustomerOfficially Valid documents
In Case of Individuals

Identity proof (Copy / Check on any one of the following)

·        Passport 
·        Driving License 
·        Income Tax PAN Card 
·        Aadhaar Card

Residence proof (Copy / Check on any one of the following)

·        Utility Bill (Telephone / Post-paid mobile / Electricity bill) 
·        Property or Municipal Tax receipt 
·        Passport 
·        Driving License 
·        Aadhaar Card

A copy of the marriage certificate or Gazette notification, in case of change in name

In Case of Non- Individuals

Identity & Residence proof (Copies of the following)

·        Incorporation Certificate, Memorandum and Articles of Association (Registration Certificate & Deed, in case of Partnership firm/Trust) 
·        CST / VAT / GST / Service Tax registration / Shops & Establishment Certificate, as applicable 
·        List of Directors / Partners / Trustees along with their OVDs as above 
·        Latest shareholding pattern, along with the list of major shareholders having more than 25% of holding, in case of company 
·        Income Tax PAN Card 
·        Utility bill

o  The  e-KYC  service of  Unique  Identification  Authority of  India  (UIDAI) shall be accepted as a valid process for KYC verification under the PML Rules.

Simplified process procedure for opening accounts:

In case a person who desires to open an account is not able to produce KYC documents, Knab Finance Advisors may at its discretion open accounts by following the simplified procedure, as may be directed by RBI from time to time. Simplified process is using C-KYC to check identity of the person. It applies only for the individual customers.

4.      Monitoring of Transactions

Ongoing monitoring is an essential element of effective KYC procedures.

The company shall monitor transactions of a suspicious nature and all the cash transactions (if any) on an ongoing basis for the purpose of reporting it to the appropriate authorities.

Knab Finance Advisors shall exercise caution with respect to the transactions with persons (including legal persons and other financial institutions) from the countries which have been identified by Financial Action Task Force (FATF) as high risk and non-cooperative jurisdictions with respect to compliance with the FATF Recommendations, 2012.

Periodic Updation

Periodic updation shall be carried out at least once every two years, for high risk customers, once every eight years, for medium risk customers and once every ten years, for low risk customers

Enhanced Due Diligence

Politically Exposed Persons (PEPs) are individuals, who are or have been entrusted with prominent public functions in a foreign country, e.g., Heads of States/Governments, senior politicians, senior government/judicial/military officers, senior executives of state-owned corporations, important political party officials, etc.

Generally, Knab Finance Advisors would not open accounts of PEP. The Decision to deal with such persons as a customer shall be taken up at a senior management level and shall be subjected to enhanced monitoring.

Introduction of New Technologies

Adequate attention shall be paid by the company to any money-laundering and financing of terrorism threats that may arise from new or developing technologies and it shall be ensured that appropriate KYC procedures issued from time to time are duly applied before introducing new products / services

/ technologies.

Customer Education

Implementation of KYC procedures requires the Company to demand certain information from customers which may be of personal nature or which have hitherto never been called for. This can sometimes lead to a lot of questioning by the customer as to the motive and purpose of collecting such information. The front desk staff shall be specially trained to handle issues arising from lack of customer education. It is crucial that all those concerned fully understand the rationale behind the KYC policies and implement them consistently.

Appointment of Principal Officer

The Company has a senior management officer to be designated as Principal Officer. Principal Officer shall be located at the head/corporate office of the Company and shall be responsible for monitoring and reporting of all transactions and sharing of information as required under the law. He will maintain close liaison with enforcement agencies, banks and any other institution which are involved in the fight against money laundering and combating financing of terrorism.

Client accounts opened by professional intermediaries

Knab Finance Advisors shall ensure identification of all beneficial owners in respect of accounts opened or managed by professional intermediaries. Further, Knab Finance Advisors shall also ensure that the CDD conducted by the intermediaries is in line with KYC requirements mandated by RBI.

Knab Finance Advisors shall ensure that no professional intermediary, who cannot reveal the identity of a customer should be allowed to open such an account with it.

Information obtained from Customers

All the information collected from the customers by Knab Finance Advisors shall be kept confidential and all such information shall be treated as per the agreement/terms and conditions signed by the customers. Additionally, the information sought from each customer should be relevant to the risk perceived in respect of that particular customer, should not be intrusive and should be in line with the guidelines issued by the RBI in that behalf.

Record Management

Knab Finance Advisors shall take steps in the direction of maintenance and preservation of the records pertaining to KYC and transactions for the time duration as prescribed by RBI from time to time.

Other Requirements All other requirements under FATCA/CRS/PML/FIU-Ind relating to appointment of designated director, principal officer and reporting requirements relating to filling of Suspicious Transaction Report (STR), Cash Transaction Report (CTR), counterfeit currency report (CCR) and other applicable reports filling under FATCA will be complied with in terms of the direction of the RBI or the other authorities to the extent applicable to Knab Finance Advisors.