AI Drafter 
TaxTMI 
TaxTMI 
Client Due Diligence.
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....errorist financing risks are effectively managed and where this is essential not to interrupt the normal conduct of business, the Regulator may permit the reporting entity to complete the verification as soon as reasonably practicable following the establishment of the relationship: Provided further that where a client is subscribing or dealing with depositary receipts or equity shares, issued or listed in jurisdictions notified by the Central Government, of a company incorporated in India, and it is acting on behalf of a beneficial owner who is a resident of such jurisdiction, the determination, identification and verification of such beneficial owner, shall be as per the norms of such jurisdiction and nothing in sub-rule (3) to sub-rule (9) shall be applicable for due-diligence of such beneficial owner. Explanation.- For the purposes of this proviso, the expression "equity shares" means a share in the equity share capital of a company and equity share capital shall have the same meaning as assigned to it in the Explanation to section 43 of the Companies Act, 2013 (18 of 2013).] ^2[(1A) Subject to the provisions of sub-rule (1)....
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....entity or address of the client. (1F) A reporting entity shall not use the KYC records of a client obtained from the Central KYC Records Registry for purposes other than verifying the identity or address of the client and shall not transfer KYC records or any information contained therein to any third party unless authorised to do so by the client or by the Regulator or by the Director; (1G) The regulator shall issue guidelines to ensure that the Central KYC records are accessible to the reporting entities in real time.] ^80[(1H) If an update in the KYC record of an existing client is informed by the Central KYC Records Registry to a reporting entity under sub-rule (1D), the reporting entity shall retrieve the updated KYC records from the Central KYC Records Registry and update the KYC record maintained by the reporting entity as per the guidelines issued by the regulator under sub-rule (14) and under clause (g) of sub-rule (2) of rule 9A.] (2) For the purpose of clause (a) of sub-rule (1), a reporting entity may rely on a third party subject to the conditions that- ^73[(a) the reporting entity immediately obtains from the third party or from the Central KYC Records ....
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....cial owner is the natural person(s), who, whether acting alone or together, or through one or more juridical person, has ownership of or entitlement to more than fifteen per cent of the property or capital or profits of such association or body of individuals; (d) where no natural person is identified under (a) or (b) or (c) above, the beneficial owner is the relevant natural person who holds the position of senior managing official; (e) where the client is a trust, the identification of beneficial owner(s) shall include identification of the author of the trust, the trustee, the beneficiaries with ^62[ten] per cent 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; and ^58[(f) where the client or the owner of the controlling interest is an entity listed on a stock exchange in India, or it is an entity resident in jurisdictions notified by the Central Government and listed on stock exchanges in such jurisdictions notified by the Central Government, or it is a subsidiary of such listed entities, it is not necessary to identify and verify the identity of any shareholder or b....
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....ranch where it is possible to manually monitor and ensure that foreign remittances are not credited to a small account and that the stipulated limits on monthly and annual aggregate of transactions and balance in such accounts are not breached, before a transaction is allowed to take place; (iii) the small account shall remain operational initially for a period of twelve months, and thereafter for a further period of twelve months if the holder of such an account provides evidence before the banking company of having applied for any of the officially valid documents within twelve months of the opening of the said account, with the entire relaxation provisions to be reviewed in respect of the said account after twenty-four months; ^60[(iiia) Notwithstanding anything contained in clause (iii), the small account shall remain operational between 1^st April, 2020 and 30th June 2020 and such other periods as may be notified by the Central Government.] (iv) the small account shall be monitored and when there is suspicion of money laundering or financing of terrorism or other high risk scenarios, the identity of client shall be established ^36[as per the provisions of sub-ru....
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....h documents as are required for an individual under sub-rule (4) relating to beneficial owner, managers, officers or employees, as the case may be, holding an attorney to transact on its behalf;]] ^64[(v) the names of the beneficiaries, trustees, settlor ^74[, protector, if any] and authors of the trust and the address of the registered office of the trust; and (vi) list of trustees and documents as are required for individuals under sub-rule (4) for those discharging role as trustee and authorised to transact on behalf of the trust."] ^25[(9) Where the client is an unincorporated association or a body of individuals, it shall submit to the reporting entity the certified copies of the following documents ^45[or the equivalent e-documents thereof], namely:- (i) resolution of the managing body of such association or body of individuals; (ii) Permanent account number or Form No.60 of the unincorporated association or a body of individuals; (iii) power of attorney granted to him to transact on its behalf;^ 46[and] ^47[(iv) such documents as are required for an individual under sub-rule (4) relating to beneficial owner, managers, officers or employees, as the case m....
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.... the business relationship, as the case may be. (iii) The reporting entity shall apply client due diligence measures also to existing clients on the basis of materiality and risk, and conduct due diligence on such existing relationships at appropriate times or as may be specified by the regulator, taking into account whether and when client due diligence measures have previously been undertaken and the adequacy of data obtained ^75[, such that the information or data collected under client due diligence is kept up-to-date and relevant, particularly where there is high risk]. (13) (i) Every reporting entity shall carry out risk assessment to identify, assess and take effective measures to mitigate its money laundering and terrorist financing risk for clients, countries or geographic areas, and products, services, transactions or delivery channels that is consistent with any national risk assessment conducted by a body or authority duly notified by the Central Government. (ii) The risk assessment mentioned in clause (i) shall- (a) be documented; (b) consider all the relevant risk factors before determining the level of overall ....
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....bsp;terrorist financing risks and the size of the business and] shall include policies, controls and procedures, approved by the senior management, to enable the reporting entity to manage and mitigate the risk that have been identified either by the reporting entity or through national risk assessment.] ^51[(15) Where the client has submitted- (a) his Aadhaar number under clause (a) of sub-rule (4) to the banking company or a reporting entity notified under first proviso to sub-section (1) of section 11A, such banking company or reporting entity shall carry out authentication of the client's Aadhaar number using e-KYC authentication facility provided by the Unique Identification Authority of India; (b) proof of possession of Aadhaar under clause (aa) of sub-rule (4) where offline verification can be carried out, the reporting entity shall carry out offline verification; (c) an equivalent e-document of any officially valid document, the reporting entity shall verify the digital signature as per the provisions of the Information Technology Act, 2000 (21 of 2000) and any rules issues thereunder and take a live photo as specified under Annexure 1. ....
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....nt Account Number ^53[or equivalent e-document thereof] or Form No.60, as the case may be, the client's account with the reporting entity shall be closed and all obligations due in relation to the account shall be appropriately settled after establishing the identity of the client in the manner as may be determined by the regulator. ] ^32[(18) In case of officially valid document furnished by the client does not contain updated address, the following documents ^55[or their equivalent e-documents thereof] shall be deemed to be officially valid documents for the limited purpose of proof of address:- (a) utility bill which is not more than two months old of any service provider (electricity, telephone, post-paid mobile phone, piped gas, water bill); (b) property or Municipal tax receipt; (c) pension or family pension payment orders (PPOs) issued to retired employees by Government Departments or Public Sector Undertakings, if they contain the address; (d) 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 institut....
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....ctions, the Procedure and Manner of Maintaining and Time for Furnishing Information and Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Third Amendment Rules, 2010, w.e.f. 16-12-2010, before it was read as: "9. Verification of the records of the identity of clients.-(1) Every banking company, financial institution and intermediary, as the case may be, shall,- (a) at the time of commencement of an account-based relationship, identify its clients, verify their identity and obtain information on the purpose and intended nature of the business relationship, and (b) in all other cases, verify identity while carrying out: (i) transaction of an amount equal to or exceeding rupees fifty thousand, whether conducted as a single transaction or several transactions that appear to be connected, or (ii) any international money transfer operations. (1A) Every banking company, financial institution and intermediary, as the case may be, shall determine whether a client is acting on behalf of a beneficial owner, identify the beneficial owner and take all reasonable st....
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....: Provided that- (i) the designated officer of the banking company, while opening the small account, certifies under his signature that the person opening the account has affixed his signature or thumb print, as the case may be, in his presence; (ii) a small account shall be opened only at Core Banking Solution linked banking company branches or in a branch where it is possible to manually monitor and ensure that foreign remittances are not credited to a small account and that the stipulated limits on monthly and annual aggregate of transactions and balance in such accounts are not breached, before a transaction is allowed to take place; (iii) a small account shall remain operational initially for a period of twelve months, and thereafter for a further period of twelve months if the holder of such an account provides evidence before the banking company of having applied for any of the officially valid documents within twelve months of the opening of the said account, with the entire relaxation provisions to be reviewed in respect of the said account after twenty four months; (iv) a small account shall be monitored and when there is suspicion o....
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....as may be required by the banking company or the financial institution or the intermediary to collectively establish the legal existence of such an association or body of individuals. (6A) Where the client is a juridical person, the banking company, financial institution and intermediary, as the case may be, shall verify that any person purporting to act on behalf of such client is so authorised and verify the identity of that person. (7) (i) The regulator shall issue guidelines incorporating the requirements of sub-rules (1) to (6A) above and may prescribe enhanced measures to verify the client's identity taking into consideration type of client, business relationship or nature and value of transactions. (ii) Every banking company, financial institution and intermediary as the case may be, shall formulate and implement a Client Identification Programme to determine the true identity of its clients, incorporating requirements of sub-rules (1) to (6A) and guidelines issued under clause (i) above." 2. Inserted Vide Prevention of Money-laundering (Maintenance of Records) Amendment Rules, 2015, w.e.f. 7-7-2015. 3. Substituted Vide Prevention of Money-laundering....
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....ty of client shall be established through the production of officially valid documents, as referred to in sub-rule (4) of rule 9; and (v) foreign remittance shall not be allowed to be credited into a small account unless the identity of the client is fully established through the production of officially valid documents, as referred to in sub-rule (4) of rule 9. (6) Where the client is a company, it shall for the purposes of sub-rule (1) submit to the reporting entity one certified copy of the following documents:- (i) Certificate of incorporation; (ii) Memorandum and Articles of Association; (iii) A resolution from the Board of Directors and power of attorney granted to its managers, officers or employees to transact on its behalf; and (iv) an officially valid document in respect of managers, officers or employees holding an attorney to transact on its behalf. (7) Where the client is a partnership firm, it shall for the purposes of sub-rule (1) submit to the reporting entity one certified copy of the following documents:- (i) registration certificate; (ii) partnership deed; and (iii) an officially valid ....
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....d 13-10-2018 before it was read as "three days" 14. Omitted vide NOTIFICATION No. G.S.R. 108(E) dated 13-02-2019 before it was read as "who is eligible to be enrolled for an Aadhaar number," 15. Substituted vide NOTIFICATION No. G.S.R. 108(E) dated 13-02-2019 before it was read as "(a) the Aadhaar number issued by the Unique Identification Authority of India; and" 16. Omitted vide NOTIFICATION No. G.S.R. 108(E) dated 13-02-2019 before it was read as "Provided that where an Aadhaar number has not been assigned to a client, the client shall furnish proof of application of enrolment for Aadhaar and in case the Permanent Account Number is not submitted, one certified copy of an 'officially valid document' shall be submitted." 17. Omitted vide NOTIFICATION No. G.S.R. 108(E) dated 13-02-2019 before it was read as "(4A) Where the client is an individual, who is not eligible to be enrolled for an Aadhaar number, he shall for the purpose of sub-rule (1), submit to the reporting entity, the Permanent Account Number or Form No.60 as defined in the Income-tax Rules, 1962: Provided that if the client does not submit the Permanent Account Number, he shall su....
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....G.S.R. 108(E) dated 13-02-2019 before it was read as "(7) Where the client is a partnership firm, it shall, for the purposes of sub-rule (1), submit to the reporting entity the certified copies of the following documents:- (i) registration certificate; (ii) partnership deed; and (iii) (a) Aadhaar number; and (b) Permanent Account Number or Form 60 as defined in the Income-tax Rules, 1962, issued to the person holding an attorney to transact on its behalf or where an Aadhaar number has not been assigned, proof of application towards enrolment for Aadhaar and in case Permanent Account Number is not submitted an officially valid document shall be submitted: Provided that for the purpose of this clause, if the person holding an attorney to transact on the company's behalf is not eligible to be enrolled for Aadhaar number and does not submit the Permanent Account Number, certified copy of an officially valid document shall be submitted. 24. Substituted vide NOTIFICATION No. G.S.R. 108(E) dated 13-02-2019 before it was read as "(8) Where the client is a trust, it shall, for the purposes of sub-rule (1) submit to the reporting entity ....
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....xemptions, limitations and conditions and alternate and viable means of identification, to provide account based services to clients who are unable to undergo biometric authentication owing to injury, illness or infirmity on account of old age or otherwise, and such like causes.]" 28. Substituted vide NOTIFICATION No. G.S.R. 108(E) dated 13-02-2019 before it was read as "and sub-rule (15)" 29. Substituted vide NOTIFICATION No. G.S.R. 108(E) dated 13-02-2019 before it was read as "^5[(15) Any reporting entity, at the time of receipt of the Aadhaar number under provisions of this rule, shall carry out authentication using either e-KYC authentication facility or Yes/No authentication facility provided by Unique Identification Authority of India." 30. Substituted vide NOTIFICATION No. G.S.R. 108(E) dated 13-02-2019 before it was read as "(16) In case the client referred to in sub-rules (4) to (9) of rule 9 is not a resident or is a resident in the States of Jammu and Kashmir, Assam or Maghalaya and does not submit the Permanent Account Number, the client shall submit to the reporting entity one certified copy of officially valid document containing details of hi....
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.... the said account shall cease to be operational till the time the Aadhaar Number and Permanent Account Number is submitted by the client.]" 32. Substituted vide NOTIFICATION No. G.S.R. 108(E) dated 13-02-2019 before it was read as "(18) In case the identity information relating to the Aadhaar number or Permanent Account Number submitted by the client referred to in sub-rules (4) to (9) of rule 9 does not have current address of the client, the client shall submit an officially valid document to the reporting entity.] ^7[Provided that in case of officially valid document furnished by the client does not contain updated address, the following documents shall be deemed to be officially valid documents for the limited purpose of proof of address:- (a) utility bill which is not more than two months old of any service provider (electricity, telephone, post-paid mobile phone, piped gas, water bill); (b) property or Municipal tax receipt; (c) pension or family pension payment orders (PPOs) issued to retired employees by Government Departments or Public Sector Undertakings, if they contain the address; (d) letter of allotment of accommod....
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....oreign remittance shall not be allowed to be credited into the small account unless the identity of the client is fully established through the production of officially valid documents, as referred to in sub rule (4) and the Aadhaar number of the client or where an Aadhaar number has not been assigned to the client, through the production of proof of application towards enrolment for Aadhaar along with an officially valid document:" 38. Inserted vide NOTIFICATION No. [F. No. P.12011/24/2017-ES Cell-DoR] dated 19-08-2019 39. Inserted vide NOTIFICATION No. [F. No. P.12011/24/2017-ES Cell-DoR] dated 19-08-2019 40. Substituted vide NOTIFICATION No. [F. No. P.12011/24/2017-ES Cell-DoR] dated 19-08-2019 before it was read as "(v) one copy of an officially valid document containing details of identity and address, one recent photograph and Permanent Account Numbers or Form No.60 of the managers, officers or employees, as the case may be, holding an attorney to transact on the company's behalf." 41. Inserted vide NOTIFICATION No. [F. No. P.12011/24/2017-ES Cell-DoR] dated 19-08-2019 42. Substituted vide NOTIFICATION No. [F. No. P.12011/24/2017-ES Cell-DoR] ....
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....t and photograph need not be submitted by the client.]" 52. Substituted vide NOTIFICATION No. [F. No. P.12011/24/2017-ES Cell-DoR] dated 19-08-2019 before it was read as "submits his Aadhaar number, ensure such client to redact or blackout" 53. Inserted vide NOTIFICATION No. [F. No. P.12011/24/2017-ES Cell-DoR] dated 19-08-2019 54. Substituted vide NOTIFICATION No. [F. No. P.12011/24/2017-ES Cell-DoR] dated 19-08-2019 before it was read as "in relation an account" 55. Inserted vide NOTIFICATION No. [F. No. P.12011/24/2017-ES Cell-DoR] dated 19-08-2019 56. Inserted vide NOTIFICATION No. [F. No. P.12011/24/2017-ES Cell-DoR] dated 19-08-2019 57. Inserted vide NOTIFICATION No. G.S.R. 669(E) dated 18-09-2019 58. Substituted vide NOTIFICATION No. G.S.R. 669(E) dated 18-09-2019 before it was read as "(f) where the client or the owner of the controlling interest is a company listed on a stock exchange, or is a subsidiary of such a company, it is not necessary to identify and verify the identity of any shareholder or beneficial owner of such companies." 59. Inserted vide Notification No. G.S.R. 840(E) dated 13-11-2019 60. Inserted vid....
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.... money transfer operations. ^57[Provided that where a client is subscribing or dealing with depository receipts or equity shares, issued or listed in jurisdictions notified by the Central Government, of a company incorporated in India, and it is acting on behalf of a beneficial owner who is a resident of such jurisdiction, the determination, identification and verification of such beneficial owner, shall be as per the norms of such jurisdiction and nothing in the sub-rules (3) to (9) of these rules shall be applicable for due-diligence of such beneficial owner.". Explanation-For the purposes of this proviso, the expression "equity share" means a share in the equity share capital of a company and equity share capital shall have the same meaning as assigned to it in the Explanation to section 43 of the Companies Act, 2013.]" 73. Substituted vide Notification No. G.S.R. 745(E) dated 17-10-2023 before it was read as, "^3[(a) the reporting entity, within two days, obtains from the third party or from the Central KYC Records Registry records or the information of the client due diligence carried out by the third party.]" 74. Inserted vide Notificatio....