Customers had better take their bank’s request to submit know-your-customer (KYC) documents seriously. Else, some banking services may be curtailed.
ICICI Bank has sent SMSes to its customers who did not respond to its earlier requests for furnishing KYC documents, to the effect that if they don’t submit the documents within seven days Internet banking services may be discontinued.
Now, if you have not stepped into a bank branch in a long time due to the convenience of Net banking, then not submitting the KYC documents (latest photograph, original and self-attested copies of identity and address proofs) could land you in hot water.
ICICI Bank has asked its customers to submit the documents at the branch nearest to them. A senior Reserve Bank of India official said that he too was asked by his bank — HDFC Bank — to submit KYC documents.
“In the backdrop of online frauds that have recently taken place, banks are only trying to secure customers’ interest by seeking KYC details. Online fraudsters are on the prowl. So, revalidation of the proof of identity and address is in order.
“Unauthorised access to accounts/transactions can be prevented. Moreover, it will also help check attempts at money laundering,” said the official.
A special KYC audit conducted by banks at RBI’s behest, in the November-December 2012, period, found that customers who have been banking with them for a long time are not coming forward to provide the latest documents.
A senior public sector bank official said though his bank sent a number of letters to customers requesting them to provide the documents, hardly 10-15 per cent of them have responded.
Given this, banks probably have been left with no choice but to prod the accountholders.
The KYC process involves determining the true identity and beneficial ownership of accounts, source of funds, the nature of customer’s business, reasonableness of operations in the account in relation to the customer’s business, and so on.
The objective of the KYC guidelines is to prevent banks from being used, intentionally or unintentionally, by criminal elements for money-laundering or terrorist-financing activities.