Section 9 in Prevention of Money-Laundering (Maintenance of Records) Rules, 2005
9. [ Client Due Diligence. [Substituted by Notification No. G.S.R. 576(E), dated 27.8.2013 (w.e.f. 1.7.2005).]
(1)Every reporting entity shall-(a)at the time of commencement of an account-based relationship -(i)identify its clients, verify their identity, obtain information on the purpose and intended nature of the business relationship; and(ii)determine whether a client is acting on behalf of a beneficial owner, and identify the beneficial owner and take all steps to verify the identity of the beneficial owner:Provided that where the Regulator is of the view that money laundering and terrorist 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; 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.][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.] [Inserted by Notification No. G.S.R. 669(E), dated 18.9.2019 (w.e.f. 1.7.2005).](1A)[ Subject to the provisions of sub-rule (1), every reporting entity shall within [ten days] [Inserted by Notification No. G.S.R. 544(E), dated 7.7.2015 (w.e.f. 1.7.2005).] after the commencement of an account-based relationship with a client, file the electronic copy of the client's KYC records with the Central KYC Records Registry;(1B)The Central KYC Records Registry shall process the KYC records received from a reporting entity for de-duplicating and issue a KYC Identifier for each client to the reporting entity, which shall communicate the KYC Identifier in writing to their client;(1C)Where a client, for the purposes of clause (a) and clause (b), submits a KYC Identifier to a reporting entity, then such reporting entity shall retrieve the KYC records online from the Central KYC Records Registry by using the KYC Identifier and shall not require a client to submit the same KYC records or information or any other additional identification documents or details, unless -(i)there is a change in the information of the client as existing in the records of Central KYC Records Registry;(ii)the current address of the client is required to be verified;(iii)the reporting entity considers it necessary in order to verify the identity or address of the client, or to perform enhanced due diligence or to build an appropriate risk profile of the client.(1D)A reporting entity after obtaining additional or updated information from a client under subrule (1C), shall as soon as possible furnish the updated information to the Central KYC Records Registry which shall update the existing KYC records of the client and the Central KYC Records Registry shall thereafter inform electronically all reporting entities who have dealt with the concerned client regarding updatation of KYC record of the said client.(1E)The reporting entity which performed the last KYC verification or sent updated information in respect of a client shall be responsible for verifying the authenticity of the identity 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.](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-(a)the reporting entity immediately obtains necessary information of such client due diligence carried out by the third party;(b)the reporting entity takes adequate steps to satisfy itself that copies of identification data and other relevant documentation relating to the client due diligence requirements will be made available from the third party upon request without delay;(c)the reporting entity is satisfied that such third party is regulated, supervised or monitored for, and has measures in place for compliance with client due diligence and record-keeping requirements in line with the requirements and obligations under the Act;(d)the third party is not based in a country or jurisdiction assessed as high risk;(e)the reporting entity is ultimately responsible for client due diligence and undertaking enhanced due diligence measures, as applicable; and(f)where a reporting entity relies on a third party that is part of the same financial group, the Regulator may issue guidelines to consider any relaxation in the conditions (a) to (d).(3)The beneficial owner for the purpose of sub-rule (1) shall be determined as under -(a)where the client is a company, the beneficial owner is the natural person(s), who, whether acting alone or together, or through one or more juridical person, has a controlling ownership interest or who exercises control through other means.Explanation. - For the purpose of this sub-clause-
