Master Direction – Reporting under Foreign Exchange Management Act, 1999 (Updated as on June 20, 2024)

RBI Master Direction Link

Master Direction on KYC Norms

This Master Direction outlines the Know Your Customer (KYC) norms for banks, financial institutions, and other entities regulated by the Reserve Bank of India (RBI).

The direction aims to prevent money laundering, terrorist financing, and other illicit activities by ensuring that these entities have adequate customer identification and verification processes in place.

The Master Direction applies to:

Entities Regulated by RBI:

Commercial banks, urban co-operative banks, rural co-operative banks, state co-operative banks, district central co-operative banks, and primary co-operative banks.

Financial institutions, including non-banking financial companies (NBFCs), housing finance companies, and mutual funds.

Payment system providers, prepaid payment instrument issuers, and card networks.

Customer Identification and Verification:

Entities must obtain sufficient information about their customers to verify their identity, including name, address, date of birth, and PAN (Permanent Account Number) or Form 60.

Entities must also verify the identity of customers through independent and reliable sources, such as official documents, utility bills, or other proof of address.

Ongoing Monitoring and Reporting:

Entities must continuously monitor their customers’ transactions and report suspicious transactions to the Financial Intelligence Unit-India (FIU-IND).

Entities must also maintain records of all transactions, including cash transactions above ₹50,000, for a period of five years.

Implementation and Compliance:

Entities must implement the KYC norms and ensure compliance with the Master Direction.

Entities must also train their staff on KYC norms and ensure that their systems and procedures are updated to comply with the direction.

The Master Direction is effective from January 1, 2016, and has been updated several times since then to incorporate changes and clarifications.

Chat with the Master Direction:

Download: Master Direction – Reporting under Foreign Exchange Management Act, 1999 (Updated as on June 20, 2024)

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