Section 9 in The Prevention of Money-laundering (Maintenance of Records of the Nature and Value of Transactions, the .. of the Banking Companies, Financial Institutions and Intermediaries) Rules, 2005
9. Verification of the records of the identity of clients. — 10 [(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. 11 [(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 steps to verify his identity.] 12 [ Explanation .—For the purposes of this sub-rule “beneficial owner” shall mean the natural person who ultimately owns or controls a client and or the person on whose behalf a transaction is being conducted, and includes a person who exercise ultimate effective control over a juridical person.] 13 [(1B) Every banking company, financial institution and intermediary, as the case may be, shall exercise ongoing due diligence with respect to the business relationship with every client and closely examine the transactions in order to ensure that they are consistent with their knowledge of the client, his business and risk profile and where necessary, the source of funds.] 14 [(1C) No banking company, financial institution or intermediary, as the case may be, shall allow the opening of or keep any anonymous account or account in fictitious names or account on behalf of other persons whose identity has not been disclosed or cannot be verified.] 15 [(1D) When there are suspicions of money laundering or financing of the activities relating to terrorism or where there are doubts about the adequacy or veracity of previously obtained customer identification data, every banking company, financial institution and intermediary shall review the due diligence measures including verifying again the identity of the client and obtaining information on the purpose and intended nature of the business relationship, as the case may be.](2)Where the client is an individual, he shall for the purpose of sub-rule (1), submit to the banking company, financial institution and intermediary, as the case may be, one certified copy of an ‘officially valid document' containing details of his identity and address, one recent photograph and such other documents including in respect of the nature of business and financial status of the client as may be required by the banking company or the financial institution or the intermediary, as the case may be: Provided that photograph need not be submitted by a client falling under clause (b) of sub-rule (1).](3)Where the client is a company, it shall for the purposes of sub-rule (1) submit to the banking company or financial institution or intermediary, as the case may be, 16 [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.(4)Where the client is a partnership firm, it shall for the purposes of sub-rule (1) submit to the banking company, or the financial institution, or the intermediary 2 [one certified copy] of the following documents:—(i) registration certificate;(ii)partnership deed; and(iii)an officially valid document in respect of the person holding an attorney to transact on its behalf.(5)Where the client is a trust, it shall, “for the purposes of sub-rule (1) submit to the banking company,” or the financial institution, or the intermediary 16 [one certified copy] of the following documents:—(i) registration certificate;(ii)trust deed; and(iii)an officially valid document in respect of the person holding an attorney to transact on its behalf.(6)Where the client is an unincorporated association or a body of individuals, it shall submit to the banking company, or the financial institution or the intermediary 16 [one certified copy] of the following documents:—(i) resolution of the managing body of such association or body of individuals;(ii)power of attorney granted to him to transact on its behalf;(iii)an officially valid document in respect of the person holding an attorney to transact on its behalf; and(iv)such information 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. 17 [(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.] 18 [(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.]
