The Board of Directors (the “Board”) of Uni-Com Fincorp Private Limited (the “Company” or “Uni-Com Fincorp”), has adopted the following policy regarding salient features of Know Your Customer (‘KYC’) / Anti-Money Laundering (‘‘AML’’) norms for Uni-Com Fincorp Private Limited as prescribed by Reserve Bank of India (“RBI”).
The policy has been framed in accordance with Reserve Bank of India (Know Your Customer (KYC) Directions, 2016 issued vide circular no. RBI/DBR/2015-16/18 dated Feb 25, 2016 and revised vide circular no. RBI/2016-17/183 DBR.AML.BC.48/14.01.01/2016-17 dated December 15, 2016.
“Uni-Com Fincorp” is required to adopt the guidelines contained therein with suitable modifications in accordance with the Company’s business activity and ensure that a proper policy framework on KYC and AML measures are formulated and put in place with the approval of the Board.
In terms of the provisions of Prevention of Money-Laundering Act, 2002, Amendment to Prevention of Money-Laundering (Maintenance of Records) Rules, 2005 and Prevention of Money-laundering (Maintenance of Records) Amendment Rules, 2019. “Uni-Com Fincorp” is required to follow certain customer identification procedures while undertaking a transaction either by establishing an account-based relationship or otherwise and monitor their transactions.
Further, the policy is amended in accordance with the changes carried out in the Reserve Bank of India (Know Your Customer (KYC) Directions, 2016 issued vide notification no. DOR.AML.BC. No.66/14.01.001/2019-20 dated April 20, 2020.
This policy document envisages the establishment and adoption of measures and procedures relating to KYC, AML and CFT for “Uni-Com Fincorp” in accordance with the requirements prescribed by RBI and modified from time to time.
In these Directions, unless the context otherwise requires, the terms herein shall bear the meanings assigned to them below:
A. Terms bearing meaning assigned in terms of 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” means 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 exercise control through other means.
Explanation- For the purpose of this sub-clause-
“Controlling ownership interest” means ownership of/entitlement to more than 25 per cent of the shares or capital or profits of the company.
“Control” shall include the right to appoint majority of the directors or to control the management or policy decisions including by virtue of their shareholding or management rights or shareholders agreements or voting agreements.
b. Where the customer is a partnership firm or Unincorporated Association of Body of Individuals or Trust the beneficial owner is the natural person(s) or trustee, who, whether acting alone or together, or through one or more juridical person, has/have ownership of/entitlement to more than 15 per cent of capital or profits of the partnership.
v. “Certified Copy” – Obtaining a certified copy by the RE shall mean comparing the copy of the proof of possession of Aadhaar number where offline verification cannot be carried out or officially valid document so produced by the customer with the original and recording the same on the copy by the authorised officer of the RE as per the provisions contained in the Act.
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 designated by the RE to ensure overall compliance with the obligations imposed under chapter IV of the PML Act and the Rules and shall include:
a. the Managing Director or a whole-time Director, duly authorized by the Board of Directors, if the RE is a company,
b. the Managing Partner, if the RE is a partnership firm,
c. the Proprietor, if the RE is a proprietorship concern,
d. the Managing Trustee, if the RE is a trust,
e. a person or individual, as the case may be, who controls and manages the affairs of the RE, if the RE is an unincorporated association or a body of individuals, and
f. a person who holds the position of senior management or equivalent designated as a ‘Designated Director’ in respect of Cooperative Banks and Regional Rural Banks.
“Digital KYC” means the capturing 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 by an authorised officer of the RE as per the provisions contained in the Act.
viii. “Digital Signature” shall have the same meaning as assigned to it in clause (p) of subsection (1) of section (2) of the Information Technology Act, 2000 (21 of 2000).
ix. “Equivalent e-document” means an electronic equivalent of a document, issued by the issuing authority of such document 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.
x. “Know Your Client (KYC) Identifier” means the unique number or code assigned to a customer by the Central KYC Records Registry.
xi. “Non-profit organisations” (NPO) means any entity or organisation 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.
xii. “Officially Valid Document” (OVD) means the passport, the driving licence, proof of possession of Aadhaar number, the Voter’s Identity Card issued by the Election Commission of India, job card issued by NREGA duly signed by an officer of the State Government and letter issued by the National Population Register containing details of name and address.
a. where the customer submits his proof of possession of Aadhaar number as an OVD, he may submit it in such form as are issued by the Unique Identification Authority of India.
b. where the OVD furnished by the customer does not have updated address, the following documents or the equivalent e-documents thereof shall be deemed to be OVDs for the limited purpose of proof of address:-
• Utility bill which is not more than two months old of any service provider (electricity, telephone, post-paid mobile phone, piped gas, water bill
• Property or Municipal tax receipt;
• Pension or family pension payment orders (PPOs) issued to retired employees by Government Departments or Public Sector Undertakings, if they contain the address;
• letter of allotment of accommodation from employer issued by State Government or Central Government Departments, statutory or regulatory bodies, public sector undertakings, scheduled commercial banks, financial institutions and listed companies and leave and licence agreements with such employers allotting official accommodation;
c. the customer shall submit OVD with current address within a period of three months of submitting the documents specified at ‘b’ above
d. where the OVD presented by a foreign national does not contain the details of address, in such case the documents issued by the Government departments of foreign jurisdictions and letter issued by the Foreign Embassy or Mission in India shall be accepted as proof of address.
[Explanation: For the purpose of this clause, a document shall be deemed to be an OVD even if there is a change in the name subsequent to its issuance provided it is supported by a
marriage certificate issued by the State Government or Gazette notification, indicating such a change of name.]
xiii.“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).
xiv.“Person” has the same meaning assigned in the Act and includes:
• an individual,
• a Hindu undivided family,
• a company,
• a firm
• an association of persons or a body of individuals, whether incorporated or not,
• every artificial juridical person, not falling within any one of the above persons (a to e), and
• any agency, office or branch owned or controlled by any of the above persons (a to f).
xv. “Principal Officer” means an officer nominated by the RE, responsible for furnishing information as per rule 8 of the Rules.
xvi.“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:
gives rise to a reasonable ground of suspicion that it may involve proceeds of an offence specified in the Schedule to the Act, regardless of the value involved; or appears to be made in circumstances of unusual or unjustified complexity; or appears to not have economic rationale or bona-fide purpose; or gives rise to a reasonable ground of suspicion that it may involve financing of the activities relating to terrorism.
Explanation: Transaction involving financing of the activities relating to terrorism includes transaction involving funds suspected to be linked or related to, or to be used for terrorism, terrorist acts or by a terrorist, terrorist organization or those who finance or are attempting to finance terrorism.
xvii.“Transaction” means a purchase, sale, loan, pledge, gift, transfer, delivery or the arrangement thereof and includes:
a. opening of an account;
b. deposit, withdrawal, exchange or transfer of funds in whatever currency, whether in cash or by cheque, payment order or other instruments or by electronic or other non-physical means;
c. the use of a safety deposit box or any other form of safe deposit;
d. entering into any fiduciary relationship;
e. any payment made or received, in whole or in part, for any contractual or other legal obligation; or establishing or creating a legal person or legal arrangement.
xix. “Video based Customer Identification Process (V-CIP)”: an alternate method of customer identification with facial recognition and customer due diligence by an authorised official of the RE by undertaking 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 furnished by the customer through independent verification and maintaining audit trail of the process. Such processes complying with prescribed standards and procedures shall be treated on par with face-to-face CIP for the purpose of this Master Direction.
B. Terms bearing meaning assigned in this Directions, unless the context otherwise requires, 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. “Customer” means a person who is engaged in a financial transaction or activity with a Regulated Entity (RE) and includes a person on whose behalf the person who is engaged in the transaction or activity, is acting.
iii.“Walk-in Customer” means a person who does not have an account-based relationship with the RE, but undertakes transactions with the RE.
iv. “Customer Due Diligence (CDD)” means identifying and verifying the customer and the beneficial owner.
v. “Customer identification” means undertaking the process of CDD.
4. KEY ELEMENTS
The objective of KYC guidelines is to prevent “Uni-Com Fincorp” from being used, intentionally or unintentionally, by criminal elements for money laundering activities. KYC procedures also enable the Company to know/understand its customers and their financial dealings better which in turn help them manage the risks prudently.
Fincorp has framed its KYC policy incorporating the following four key elements: –
A) Customer Identification Procedures (CIP); and
B) Customer Acceptance Policy;
C) Risk Management;
D) Monitoring of Transactions
A) CUSTOMER IDENTIFICATION PROCEDURE
Customer Identification means identifying the Customer and verifying his/her identity by using reliable, independent source documents, data or information. Company shall obtain documents as per Annexure-1 for identification and residential proof.
Besides risk perception, the nature of information/documents required would also depend on the type of Customer (Individual, corporate etc.). For Customers that are natural persons, Company shall obtain sufficient identification with regard to:
• Identity of the Customer
• His Address/Location
• Recent photograph
For Customers that are Legal Persons or Entities, The Company shall:
• Verify the legal status of the legal person/ entity through proper and relevant documents.
• Verify that any person purporting to act on behalf of the legal person/entity is so authorized and identify and verify the identity of that person.
• The Company will formulate and implement a Customer Identification Programme to determine the true identity of its Customers keeping the above in view. The Policy shall also cover the Identification Procedure to be carried out at different stages, i.e. while establishing a relationship; carrying out a financial transaction or when there is a doubt about the authenticity/veracity or the adequacy of the previously obtained Customer Identification data.
• Periodic Updation: The Company shall periodically update Customer Identification Data after the transaction is entered. The periodicity of updating of Customer Identification data shall be once in ten years in case of Low Risk Category Customers and once in two years in case of High and once in 8 years for Medium Risk Categories.
No Fresh proof will be required at the time of periodic updation if there is no change in the particulars of OVD and a self-declaration in this behalf to be received from Customer.
B. CUSTOMER ACCEPTANCE POLICY
As stated in the Customer Acceptance Policy, “Uni-Com Fincorp” 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 organizations.
C. RISK MANAGEMENT
The Board of Directors of the Company shall ensure that an effective KYC program is put in place by establishing appropriate procedures and ensuring their effective implementation. It shall cover proper management oversight, systems and controls, segregation of duties, training and other related matters.
The Company shall, in consultation with their Board, devise procedures for creating Risk Profiles of their existing and new customers and apply various Anti Money Laundering measures keeping in view the risks involved in a transaction, account or business relationship.
D. MONITORING OF TRANSCATIONS
The Company must pay special attention to all complex, unusually large transactions and all unusual patterns which have no apparent economic or visible lawful purpose. The Company must also have understanding of the normal and reasonable activity of the customer so that they have the means of identifying transactions that fall outside the regular pattern of activity in order to effectively control and reduce the risk. Transactions that involve large amounts of cash inconsistent with the normal and expected activity of the customer should be noted and must be reported to the Registered Office. The Company shall ensure that it has an appropriate mechanism for monitoring the suspicious transactions.
[Explanation: Suspicious Transactions means a transaction whether or not made in cash which, to a person acting in good faith, gives rise to a reasonable ground of suspicion that it may involve the proceeds of crime, appears to be made in circumstances of unusual or unjustified complexity, Appears to have no economic rationale or bonafide purpose.]
MAINTAINENCE OF RECORDS OF TRANSCATIONS
1. The company shall continue the system of maintaining proper record of transactions as required under section 12 of the PMLA read with Rule 3 of the PML Rules.
2. The company shall continue to ensure that its branches (if any) maintain proper record of all cash transactions (deposits and withdrawals) of Rs.10 lakhs and above in the format as may be prescribed. The internal monitoring system should have an inbuilt procedure for reporting of such cash transactions and those of suspicious nature whether made in cash or otherwise, to the Principal Officer on fortnightly basis. However, there is no need to furnish NIL reports.
RECORDS TO CONTAIN THE SPECIFIED INFORMATION
The company shall ensure that the records referred in Rule 3 of the PML Rules contain the following information:
• The nature of the transactions
• The amount of the transaction and the currency in which it was denominated
• The date on which the transaction was conducted
• The parties to the transaction
MAINTAINENCE & PRESERVATION OF RECORDS
In accordance with Section 12 of PMLA, the company will take appropriate steps to evolve a system for proper maintenance and preservation of account information in a manner that allows data to be retrieved easily and quickly whenever required or when requested by the competent authorities. Further, the Company must also preserve and maintain all necessary records pertaining to the identification of the customer and his address (e.g. copies of documents like passports, identity cards, driving licenses, PAN, utility bills etc.) obtained while opening the account and during the course of business relationship for at least ten years from the date of cessation of transaction between the Company and the customer, so as to provide, if necessary, evidence for prosecution of persons involved in criminal activity.
REPORTING TO FINANCIAL INTELLIGENCE UNIT- INDIA
The company as per the proviso of Section 12 of PMLA wherever it notices a reason to believe that a single transaction or series of transactions are integrally connected to each other and have been valued below the prescribed value so as to defeat the provisions of this section, will furnish to the Director, FIU such information/transaction after retaining a copy for records within the prescribed period at the following address:
The Director, FIU-IND
Financial Intelligence Unit- India
6th Floor, Hotel Samrat
The company assures to strictly comply with all formalities including timely submission of all applicable report and returns in the prescribed format with regards to cash & suspicious transaction qualifying under PML Rules directly to FIU-IND through the designated Principal Officer(s) of the company. However, as had been earlier advised, there is no need for submission of NIL report in respect to the above. Further, the company and its employees shall maintain strict confidentiality of the fact of furnishing/reporting details of suspicious transactions.
INTERNAL CONTROL SYSTEM
The Company’s internal audit and compliance functions shall have an important role in evaluating and ensuring adherence to the KYC policies and procedures. As a general rule, the compliance function shall provide independent evaluation of the Companies own policies and procedures including legal and regulatory requirements. The Company shall ensure that its audit machinery is staffed adequately with individuals who are well-versed in such policies and procedures. Concurrent / Internal Auditors shall specifically check and verify the application of KYC procedures at the branches and comment on the lapses observed in this regard. The compliance in this regard shall be put up before the Audit Committee of the Board on quarterly intervals.
GENERAL CUSTOMER EDUCATION
The Company shall educate Customers on the objectives of the KYC program so that Customer understands and appreciates the motive and purpose of collecting such information. The Company shall prepare specific literature/ pamphlets, terms and conditions etc. so as to educate the Customer about the objectives of the KYC programme. The front desk staff shall be specially trained to handle such situations while dealing with Customers.
INTRODUCTION OF NEW TECHNOLOGIES
Company shall pay special attention to any money laundering threats that may arise from new or developing technologies including online transactions that may favor anonymity, and take measures, if needed, to prevent their use in money laundering. Company shall ensure that any remittance of funds by way of demand draft, mail/telegraphic transfer or any other mode for any amount is affected by cheques and not against cash payment
APPLICABILITY OF BRANCHES
This Policy shall also be applicable to all branches.
CLOSURE OF ACCOUNTS/TERMINATION OF FINANCING/BUSINESS RELATIONSHIP
Where Company is unable to apply appropriate KYC measures due to non-furnishing of information and/or non-operation by the Customer, Company shall terminate Financing/Business Relationship after issuing due notice to the Customer explaining the reasons for taking such a decision. Such decision shall be taken with the approval of Chairman & Managing Director or key managerial persons authorized for the purpose
KYC FOR THE EXISTING ACCOUNTS
While the KYC Policy will apply to all new Customers, the same would be applied to the existing Customers on the basis of materiality and risk. However, transactions with existing Customers would be continuously monitored for any unusual pattern in the operation of the accounts.
UPDATION IN KYC POLICY OF THE COMPANY
After taking the due approval from the Board of Directors NBFC shall make the necessary amendments/modifications in the KYC/ AML/ CFT Policy or such other related guidance notes of Company, to be in line with RBI or such other statutory authority’s requirements/updates/ amendments from time to time.
SUSPICION OF MONEY LAUNDERING/TERRORIST FINANCING
With a view to preventing NBFCs from being used, intentionally or unintentionally, by criminal elements for money laundering or terrorist financing, it was clarified that whenever there is
suspicion of money laundering or terrorist financing or when other factors give rise to a belief that the customer does not, in fact, pose a low risk, Uni-Com Fincorp will carry out full scale customer due diligence (CDD) before opening an account.
ANNEXURE-1 (KYC DOCUMENTS)
FOR INDIVIDUALS (FOR PROOF OF IDENTITY)
• Aadhar Card
• Pan Card
• Voter’s Identity Card
• Driving License
• Identity card (subject to the bank’s satisfaction)
• Letter from a recognized public authority or public servant verifying the identity and residence of the customer to the satisfaction of bank
• any one document which provides customer information to the satisfaction of the Company will suffice
CORRECT PERMANENT ADDRESS
• Telephone bill
• Bank Account statement
• Letter from any recognized public authority
• Electricity bill
• Letter from employer (subject to satisfaction of the Company) (Any one document which provides customer information to the satisfaction of the Company will suffice ) One recent passport size photograph except in case of transactions referred to in Rule 9(1)(b) of the PML Rules.
• Certificate of incorporation and Memorandum & Articles of Association
• Name of the company
• Resolution of the Board of Directors for acceptance of the transaction
• Copy of PAN allotment letter
• Copy of telephone Bill In case of an NBFC
• Certificate of Registration issued by RBI In case of a section 25 company
• A copy of the letter issued by the Regional Director
• Principal place of business mailing
• Address of the Company
• Telephone/Fax Number
FOR TRUSTS & FOUNDATIONS INFORMATION REQUIRED
• Certificate of registration, if registered
• Power of Attorney granted to transact business on its behalf
• Any officially valid document to identify the trustees, settlors, beneficiaries and those holding Power of Attorney, founders/managers/ directors and their addresses
• Resolution of the managing body of the foundation/association
ACCOUNTS OF PARTNERHSIP FIRMS
• Registration certificate, if registered
• Partnership Deed
• Power of Attorney granted to a partner or an employee of the firm to transact business on its behalf
• Any officially valid document identifying the partners and the persons holding the Power of Attorney and their addresses
• Telephone bill in the name of firm/partners
ACCOUNTS OF PROPRIETORSHIP CONCERNS
• Registration certificate (in the case of a registered concern)
• Certificate/license issued by the Municipal authorities under Shop & Establishment Act
• Sales and income tax returns
• CST/VAT Certificate
• Certificate/registration document issued by Sales Tax/Service Tax/Professional Tax authorities
• License issued by the Registering authority like Certificate of Practice issued by Institute of Chartered Accountants of India, Institute of Cost Accountants of India, Institute of Company Secretaries of India, Indian Medical Council, Food and Drug Control Authorities, registration/licensing document issued in the name of the proprietary concern by the Central Government or State Government Authority/ Department, etc. Banks may also accept IEC (Importer Exporter Code) issued to the proprietary concern by the office of DGFT as an identity document for opening of the bank account etc.
• The complete Income Tax return (not just the acknowledgement) in the name of the sole proprietor where the firm’s income is reflected, duly authenticated/ acknowledged by the Income Tax Authorities.
• Utility bills such as electricity, water, and landline telephone bills in the name of the proprietary concern.
Any two of the above documents would suffice. These documents should be in the name of the proprietary concern.