Policy Guidelines on KYC and AML |Myloancare

KYC And AML Policy

BACKGROUND

MyLoanCare Ventures Private Limited is a Private Limited Company registered under the Companies Act, 2013 vide CIN U65100DL2013PTC258637 and registered with the Reserve Bank of India as a Non-Systemically Important, Non-Deposit taking, Non-Banking Finance Company under the category NBFC- ICC vide CoR N-14.03560 dated 23rd Sep, 2021. The Company currently falls under the Base Layer NBFC classification (NBFC-BL) as per the Scale Based Regulation issued by RBI vide circular RBI/2021-22/112 DOR.CRE.REC.No.60/03.10.001/ 2021-22 dated 22nd October 2021.

The Reserve Bank of India has issued comprehensive master directions titled Know Your Customer (KYC) Direction, 2016 vide ref number RBI/ DBR/ 20151-6/ 18 (Master Direction DBR.AML.Bc.No.81/14.01.001/ 2015-16) dated February 26, 2016, as amended from time to time, stipulating KYC norms and Anti-Money Laundering (AML) standards and has advised all NBFCs to ensure that a proper policy framework on KYC and AML measures be formulated and put in place with the approval of the respective Board.

The objective of RBI Master Direction is to prevent regulated entities (RE’s) from being used, intentionally or unintentionally, by criminal elements for money laundering and / or terror funding activities. The guidelines also mandate making reasonable efforts to determine the 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, etc. which in turn helps the Company to manage its risks prudently.

Thus, in compliance with the guidelines issued by RBI, the following KYC & AML policy of the Company is approved by the Board of Directors of the Company.

This policy is applicable to all categories of products and services offered by the Company as also internal processes for effective and wholesome implementation of KYC and AML directions of RBI.

The Company shall conduct a periodic review of this policy, at least annually, to incorporate best practices prescribed by RBI from time to time and shall make appropriate modifications. The implementation of the Policy will be the responsibility of the entire Company including the Board of Directors and the management team.

'Senior Management’ for the purpose of KYC compliance under this policy shall be constituted of: (a) executive members of the Company’s Board of Directors, (b) head of the risk function at the level of Assistant Vice President and above, (c) compliance officer of the Company, and (d) any other such individual who may be designated as such by the Board from time to time.

Compliance with the KYC provisions under this policy shall be duly reported to the Company’s Audit Committee every quarter within one month of the end of the quarter. Compliance with anti-money laundering and anti-terror funding provisions under this policy shall be duly reported to the Company’s Audit Committee and the Risk and Product Committee every quarter within one month of the end of the quarter. The same may also be taken on record by the Board of Directors.

The Company will communicate the KYC & AML Policy to the customers and business partners by uploading the same on its website. The policy will be widely disseminated internally among employees and officials of the Company.

SCOPE AND APPLICATION OF THE POLICY
The scope of this policy is:
- Customer Acceptance Policy:
  - To lay down explicit criteria for acceptance of customers.
  - To define procedures to establish identify of individuals/ non-individual customers for opening of account.
- Risk Management:
  - To lay down clear procedures and guidelines to classify customers in different risk segments (Low/ Medium/ High)
  - To periodically, and at least annually, assess money laundering (ML) and terrorist financing (TF) risk as part of Company’s operations and to take effective measures to mitigate the same
- Customer Identification Procedures (CIP):
  - To define acceptable CIP including that for video – CIP
  - To set standards for technology infrastructure used for digital CIP procedures
- Monitoring of Transactions:
  - To establish processes and procedures to monitor transactions to be able to identify high value transactions and/or transactions of suspicious nature in accounts
  - To develop measures for conducting due diligence in respect of customers and reporting of such transactions.
CUSTOMER ACCEPTANCE POLICY
Definition of a Customer
- A person or entity that maintains an account and/or has a business relationship with the Company
- One on whose behalf the account is maintained (i.e. the beneficial owner)
- Beneficiaries of transactions conducted by professional intermediaries such as authorized power of attorney holders, authorized signatories etc.
- Chartered accountants, solicitors, registered brokers, etc. as permitted under the law, and
- Any other person or entity connected with a financial transaction which can pose significant reputation or other risks to the Company.
A “Person” shall have the meaning as defined under KYC policy of RBI (and any amendment from time to time by RBI) which at present includes:
1. an Individual;
2. a Hindu undivided family (HUF);
3. a company or a limited liability partnership;
4. a trust or a society;
5. a firm including a proprietorship or partnership;
6. an association of persons or a body of individuals, whether incorporated or not;
7. every artificial juridical person, not falling within any one of the above person (a to f);
8. aany agency, office or branch owned or controlled by any one of the above persons (a to g)
GUIDELINES FOR ACCEPTING CUSTOMERS
Following norms and procedures will be followed by the Company in relation to its customers who approach the Company for availing financial facilities. While taking decision to grant any one or more facilities to customers as well as during the continuation of any loan account of the customer, the following norms will be adhered to by the Company:
- No account will be opened, and / or money will be disbursed in a name which is anonymous or fictitious or appears to be a name borrowed only for opening the loan account i.e. Benami Account. The Company shall insist on sufficient proof about the identity of the customer to ensure his physical and legal existence at the time of accepting the application form from any customer.
- Circumstances, in which a customer is permitted to act on behalf of another person /entity, shall be clearly spelt out in conformity with the established law and practices, as there could be occasions when an account is operated by a mandate holder or where an account may be opened by intermediary in a fiduciary capacity.
- The Company shall not open any account or give / sanction any loan or enter into financial transactions with a customer where the Company is unable to apply appropriate customer due diligence (CDD) measures as described in Annexure I of this policy due to any of the following circumstances:
  - The Company is unable to verify the identity of the customer
  - The customer without any valid or convincing reasons refuses to provide documents to the Company which are needed to determine the risk level in relation to the customer loan applied for by the customer and his paying capacity
  - Information furnished by the customer does not originate from the reliable sources or appears to be doubtful due to lack of supporting evidence.
  - Identity of the customer directly or indirectly matches with any individual terrorist or prohibited / unlawful organizations, whether existing within the country or internationally, or if the customer or beneficiary is found, even remotely, to be associated with or affiliated to any illegal, prohibited or unlawful or terrorist organization as notified from time to time either by Govt. of India, State Govt. or any other national or international body / organization.
- Subject to the above-mentioned norms and caution, Company will also ensure that these norms and safeguards do not result in harassment or inconvenience to bonafide and genuine customers and that this does not unduly discourage them from dealing with the Company.
- The credit operations team shall, at the time of approving a financial transaction/ activity, or executing any transaction, verify the record of identity, signature proof and proof of address of the customer as provided for in Annexure I to this policy.
  Till further notice, the Company shall extend its loans and/ or credit facilities only to resident Indian individuals and shall not extend loans and / or facilities to any of the following categories:
  - Persons other than adult resident Indian individuals,
  - Minors,
  - Persons who are employees / directors of the Company or its affiliates or relatives of the same, and
  - Restricted profiles
RISK MANAGEMENT
- The purpose of adopting the below measures and norms while taking decisions on the issue of customer acceptance is twofold. Firstly, the Company should not suffer financially at later stage due to lack of proper due diligence exercise and lack of information which is the exclusive possession of the customers.
- Secondly, we aim to curb and prevent any practice which is aimed to achieve unlawful objectives or use of financial institutions to perpetuate any criminal or unlawful activities. At the same time, this policy does not aim or intend to deny the benefit of financial services to those who genuinely need such services / facilities due to real lack of their own sufficient financial resources.
  - Risk Classification of Customers
    The Company shall categorize its customers into three risk categories based on the risk perceived by the Company. The three levels of categorization would be:
    - Low Risk,
    - Medium Risk and
    - High Risk.
    The risk categorization would be a function of:
    - Customer’s Identity
    - Whether the customer is an individual or a non-individual
    - Source of income of the customer and its consistency
    - Social and financial status of the customer
    - Nature of the business activity/ job/ role of the customer
    - Whether the customer belongs to segments that are classified as restricted profiles by the Company
    The company considers following as restricted profiles for its risks management:
    - Foreign Delegates or those working in Foreign High commissions or Embassies,
    - All politically exposed persons
    - Senior politicians – includes past or present MLA’s, MP’s, state or union ministers, governors, elected heads of local bodies
    - Senior judicial officers – includes those holding rank of Session Judge, District judge and above, members of tribunals and appellate authorities
    - Senior military officers
    - Senior executives of central or state-owned corporations in the rank of L-14 and above
    - Officials of important and leading state, regional and national political parties
    - Non-resident Indians
    - Foreign nationals
    - Entities owned/ controlled by any of the above
    - Low Risk Customers
      Individuals, other than those in restricted roles, meeting the following criteria:
      - Customers with successful CDD, and
      - Those with either no record (new to credit) or reasonable / justifiable track record of past repayment as per bureau report, and
      - In case of salaried customers, employees of private/ public sector corporates/ non corporate employers, government departments or government owned companies, statutory bodies, societies, trusts, partnerships, proprietorships, having regular income from employer as verified from any one or more of recent salary slips, EPFO record, TDS record , income imputed from credit bureau records using algorithm and bank statement, or
      - In case of self-employed professional individuals, valid contract with customer / client with proof of payment or TDS deposited by customer’s client or credit of regular professional fees credit in bank account, or
      - In case of self-employed business-persons, those with
        
        valid registration under local shops and establishments act/ GST Act and
        
        either TDS deposit by customer’s clients or regular credit in customer’s bank account
    - High Risk Customers
      Following categories of customers are regarded as high-risk customers:
      - all restricted profiles as above
      - customers in whose case sources of income cannot be satisfactorily established from reasonable customary checks
      - customers with high velocity transactions in bank accounts that appear to be unusual to their nature of job/ employment
      - customers with unsatisfactory repayment track record of past obligations as per bureau
    - Medium Risk Customers
      Customers other than those who are covered under the definition of Low Risk and High Risk customers.
  - Information to be obtained for establishing risk classification of customers
    The extent of due diligence requirement will vary from case to case as the same will depend upon risk perceived by the Company while granting credit facilities to customers.
    
    Cases in which the risk level is higher will require intensive due diligence exercise. Such cases will include those where the sources of funds or sources to repay the loan to the Company are not clearly disclosed or cannot be ascertained from the information submitted by the customer to the Company such as:
    - NRI Customers
    - Trusts and societies (except those set up under a specific regulation)
    - Non-governmental charitable Institutions
    - NGOs and other organizations receiving donations from within or outside the country
    - Partnership firms with sleeping partners
    - Persons with dubious or notorious reputation as per the information available from different sources like media, newspapers etc
    - Restricted profiles as above
    - Non-face to face customers; it is clarified that those customers who are verified using RBI compliant V-CIP process shall not be regarded as non-face to face customers
    For the purpose of preparing customer profile, only such information will be sought from the customers which is needed to decide the risk category to be assigned to the customer.
    
    Information to be collected from the customers will vary according to categorization of customer from the point of view of risk perceived. However, while preparing customer profile the Company shall seek only such information from the customer which is relevant to the risk category and is not intrusive to the customer. Any other information from the customer should be sought separately with his/her consent and after opening the account.
    
    Company shall neither seek nor store any biometric information of the customer. Ordinarily, the customer profile maintained by the Company will be kept confidential except for cases where the customer himself allows and/or gives consent for the use of the information given in customer profile / application form for offering other products / services of other companies / entities belonging to the Company’s group or any other legal entity with whom the Company is having any business tie-ups. However, while taking any such permission or consent of the customer for using his above referred information provided to the Company, it will be ensured that such permission / consent of the customer is unambiguous and explicit and the purpose of obtaining such consent is clearly disclosed to the customer. In case the customer decides not to provide such necessary consent(s), the Company reserves the right to not process such customers’ loan application but in no circumstances shall a customer be forced to give such consent.
    
    In case of non-individual borrowers, the Company may, in addition to carrying out KYC and assessing credit worthiness of the borrower entity, also carry out similar checks on the authorized signatories/ partners/ proprietors/ directors/ controlling shareholders of such entities, as may be deemed appropriate and as per applicable law and guidlienes.
    
    In case of medium risk and high risk category of customers, the Company will apply higher due diligence measures keeping in view the risk level.
    
    In the event of an existing customer or the beneficial owner of an existing account subsequently becoming a restricted profile, the Company shall reclassify them into the applicable risk category and continue the business relationship with such persons with enhanced monitoring.
  - Periodic updation of KYC
    Revalidation and updation of KYC shall be conducted by the company in following cases:
    - On completion of ten years in case of low risk customers, eight years in case of medium risk customers and two years in case of high risk customers from last successful CDD
    - When there is a doubt or uncertainty with respect to the validity and / or authenticity of the KYC records of the customer
    - Transition of risk profile of a customer from low risk to medium risk or high risk or from medium risk to high risk
    - When mandated or required to do so by way of any direction of a regulatory body, including RBI, or as per any statute or law
    Process and requirements for updation of KYC shall be as per Annexure 1 to this policy.
  - DUE DILIGENCE OF BUSINESS PARTNERS AND LENDING SERVICE PROVIDERS
    The following due diligence must also be performed on prospective Business Partners.
    - Verify Identity:
      - Obtain and file legible copies of corporate formation and registration documents or public company prospectuses and government filings.
      - PAN card of the Directors etc.
      - Wherever possible (in the case of privately owned entities), arrange for recommendation from legal counsel to the company.
      - Wherever possible (in the case of privately owned entities), obtain from appropriate government entity confirmation of due incorporation and existence of the corporation.
    - Verify Source of Income:
      - Research for the Company details in available news or business databases and obtain all corporate earnings information available.
      The Company shall maintain files on each Business Partner with copies of all data obtained and memorialize in writing all the verification efforts. These files may be maintained electronically and should be accessible quickly when needed.
  - CUSTOMER IDENTIFICATION PROCEDURE (CIP)
    Customer identification refers to identifying the customer and verifying his / her identity by using reliable, independently sourced documents, data or information. The Company needs to obtain sufficient information necessary to establish, to its satisfaction, the identity of each customer in following cases:
    - at the time of opening an account;
    - at the time of initiating a significant financial transaction in case of existing customers;
    - when there is a doubt or lack of conviction with respect to the validity of the CDD carried out earlier;
    - where the customer is carrying out a transaction that is flagged by the system as being unusual for this customer or this risk segment;
    - Carrying out CIP
      The CIP to be adopted will vary by risk segment, nature of information / documents submitted and the type of the customer (individual, corporate etc.).
      
      Company has set up video based customer identification process (V-CIP) process as per specifications in Chapter VI of the RBI’s Master Direction, 2016 vide ref number RBI/ DBR/ 20151-6/ 18 (Master Direction DBR.AML.Bc.No.81/14.01.001/ 2015-16) dated February 26, 2016, and this shall be the preferred mode for conducting CIP in case no other full KYC has been carried out.
      Minimum capabilities of the V-CIP infrastructure are:
      - To be operated from own secured network domain
      - End to end encryption
      - Facility to record customer consent in auditable and alteration proof manner
      - IP protection through positive white-listing and anti-spoofing
      - Capturing live geo-tagging (latitude and longitude) alongwith date and time stamp
      - Good quality of video and audio to establish identity beyond doubt and entire audio and video shall be recorded and available for audit
      - Checks for face liveliness, spoof detection, face matching with OVD
      - All records, including video, audio, audit trail, activity log, date and time stamp, geo-tagging, photo, OVD, etc. shall be stored and maintained electronically on servers based in India in a secure manner as per Chapter VI of the above referred Master Direction.
      - Regular VAPT testing and information security audit by CISA certified auditors
      Operational guidelines for conduct of V-CIP:
      - CIP shall be carried out only by authorized employees/ officials of the Company and shall not be outsourced.
      - Detailed work flow and standard operating procedure for V-CIP shall be made available to employees who are authorized to conduct V-CIP, a copy of which shall also be available with the credit operations head in the Company’s premises.
      - Regular and periodic training shall be imparted for conducting V-CIP.
      - Officials carrying out V-CIP must check for face liveliness, cross check that all the essential information such as latitude longitude, face match, etc have been captured, that there is no attempted manipulation or suspicious conduct, that entire V-CIP has been completed in a single session and that there is no prompting of the customer by any third person
      - The official must remain alert at all times and in case any prompting or manipulation is observed during the V-CIP session, the identification shall be rejected and account opening shall not be allowed.
      - In case of disruption, whether due to technical reasons or due to any disruption at either customer or official end, the process shall be repeated afresh
      - A clear and readable image of the customer’s original PAN card must be captured except when the customer has provided e-PAN instead of PAN. Note that printed copy of any electronic OVD including e-PAN is not a valid OVD.
      - Official must match the live face of the customer with the photo as per OVD.
      - Official shall ask questions as he/ she may deem fit to establish identity of the customer beyond reasonable doubt and the sequence of these questions shall be varied from case to case or from time to time
      - Official must cross check the identity against the KYC details as available through offline Aadhaar verification or C-KYCR or OVD; in case of offline Aadhaar verification, the xml or QR code must not be more than three days old.
      - V-CIP record shall be concurrently audited by an authorized official of the Company, other than the one conducting the V-CIP before proceeding with opening the loan account/ processing the transaction.
  - PROVISIONS UNDER PMLA
    As per the provisions of Rule 9 of the Prevention of Money Laundering (Maintenance of Records of the Nature and Value of Transactions, 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) Rules, 2005 (hereinafter referred to as PML Rules), the Company shall:
    - 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
    - In all other cases, verify identify as per CDD process laid out in Annexure 1 to the policy while carrying out:
      - 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,
      - Any international money transfer operations.
    In terms of proviso to rule 9 of the PML Rules, the relaxation, in verifying the identity of the client within a reasonable time after opening the account / execution of the transaction, stands withdrawn.
    
    Abiding by the provisions of Rule 9, the Company shall identify the beneficial owner and take all reasonable steps to verify his identity. The said Rule also requires that the Company should exercise ongoing due diligence with respect to the business relationship with every client and closely examine the transactions to ensure that they are consistent with their knowledge of the customer, his business and risk profile.
    
    Customer identification requirements keeping in view the provisions of the said rule are given in “Annexure 1” for guidance.
- MONITORING OF TRANSACTIONS AND MAINTENANCE OF RECORDS OF TRANSACTIONS
  It is essential for the Company to have a clear knowledge and understanding about the normal working pattern and activity of the customer so that the Company can identify all such unusual transactions which would fall outside the normal transactions of the customer.
  
  To achieve this purpose, ongoing monitoring is necessary. The extent of such monitoring will depend upon the level of risk involved in a particular account. Any transaction or activity of the customer which gives rise to suspicion will be given special attention. Such monitoring is important to keep a check on any act or omission of the customer which may amount to money laundering or support any act relating to use of finance for criminal activities.
- SUSPICIOUS TRANSACTION REPORT (STR)
  A suspicious transaction is one for which there are reasonable grounds to suspect that the transaction is related to a money laundering offence or a terrorist activity financing offence. A suspicious transaction can include one that was attempted. Throughout this guideline, any mention of a “transaction” includes one that is either completed or attempted.
  
  “Reasonable grounds to suspect” is determined by what is reasonable in the circumstances, including normal business practices and systems within the industry.
  
  There is no monetary threshold for making a report on a suspicious transaction. A suspicious transaction may involve several factors that may on their own seem insignificant, but together may raise suspicion that the transaction is related to the commission or attempted commission of a money laundering offence, a terrorist activity financing offence, or both. The context in which the transaction occurs or is attempted is a significant factor in assessing suspicion.
  
  An assessment of suspicion should be based on a reasonable evaluation of relevant factors, including the knowledge of the customer’s business, financial history, background and behaviour.
  - Responsibility:
    The Principal Officer in co-ordination with the Credit Operations Team should review the STR Reports and finalize the transactions to be reported as STR. The Principal Officer is responsible for reporting the same to FIU-IND. The following activities will be undertaken in the process of reporting suspicious transactions:
    - Monitoring of large value and exceptional / unusual transactions in customer’s accounts with the Company
    - Escalation of suspicious transactions to respective business heads / product heads
    - Filing Cash Transaction Report (CTR) with the FIU by 15th of subsequent month
    - Filing Suspicious Transaction Report (STR) with FIU by 15th of subsequent month from date of establishing of suspicious transaction as per the FIU format in both electronic and manual form
    - Scrutinizing sample of customer data against UNSCR and other negative lists as issued by NHB / other Regulatory / Statutory entities from time-to-time and escalating the same to Business Heads.
- CASH TRANSACTION REPORTS (CTR)
  Company does not encourage dealing with any customer in cash in normal course except when such a request is specifically made by the customer citing valid reason or when doing so is deemed absolutely necessary. All cash collections made from customers, are to be deposited in the Company’s bank account within two working days and credited to the respective customer’s loan account.
  
  All individual cash transactions in an account during a calendar month, where either debits or credit summation, computed separately, exceeding Rupees Ten Lakhs or its equivalent in foreign currency, during the month should be reported to FIU-IND. However, while filing CTR, details of individual cash transactions below Rupees Fifty Thousand may not be indicated. The Principal Officer should ensure submission of CTR for every month to FIU-IND before 15th of the succeeding month. CTR should contain only the transactions carried out by the Company on behalf of their clients/customers excluding transactions between the internal accounts of the Company.
- COUNTERFEIT CURRENCY REPORT (CCR)
  Company does not encourage dealing with any customer in cash in normal course except when such a request is specifically made by the customer citing valid reason or when doing so is deemed absolutely necessary.
  
  A separate Counterfeit Currency Report should be filed for each incident of detection of Counterfeit Indian currency. If the detected counterfeit currency notes can be segregated on the basis of tendering person, a separate CCR should be filed for each such incident. These transactions should be reported to Director, Financial Intelligence Unit, India by not later than the 15th of the succeeding month from the date of occurrence of such transactions. In the event any fake or counterfeit note is detected by Company staff, despite taking all precautions; then it must be noted in a cash register separately. Reporting of the case with full details like name of customer, amount, denomination, date - must be reported to Compliance Officer. Compliance Officer shall collate all the data and report to NHB / RBI under PMLA, as mentioned above.
- MONITORING & REPORTING OF TRANSACTIONS
  - The Company will keep a continuous vigil, if any of the following acts or events is noticed in relation to the customer's approach or behaviour while dealing with the Company:
  - Reluctance of the customer to provide confirmation regarding his identity
  - Loan money is used for the purpose other than the one mentioned in the sanction letter form and the real purpose is not disclosed to the Company
  - Customer forecloses the loan prior to the stated maturity from suspect sources of funds
  - Customer suddenly pays a substantial amount towards partial repayment of the loan from suspect sources of funds
  - Customer defaults regularly and then pays substantial cash at periodical intervals i.e. once in six months.
  - The Company shall pay special attention to all complex, high-risk, unusually large transactions and all unusual or suspicious patterns which have no apparent economic or visible lawful purpose.
  The Company may prescribe threshold limits for a particular category of accounts and pay close attention to the transactions that exceed the prescribed threshold limits. Such transactions shall be reported to the Risk Department and the Principal Officer appointed as per this policy.
  
  Very high account turnover inconsistent with the size of the balance maintained may indicate that funds are being ‘washed’ through that account. Company shall ensure that proper record of all transactions and cash transactions (deposits and withdrawals) of Rs.10 lakhs and above in the accounts is preserved and maintained as required under the PMLA.
  
  The Company shall introduce a system of maintaining proper record of the following transactions:
  - All cash transactions of the value of more than rupees Ten lakhs to its equivalent in foreign currency;
  - All series of cash transactions integrally connected to each other which have been valued below rupees Ten lakhs or its equivalent in foreign currency where such series of transactions have taken place within a month and the aggregate value of such transactions exceeds rupees Ten lakhs;
  - All transactions involving receipts by non-profit organizations of rupees ten lakhs or its equivalent in foreign currency;
  - All suspicious transactions, where forged or counterfeit currency notes or bank notes have been used as genuine and where any forgery of valuable security or a document has taken place facilitating the transactions;
  - All suspicious transactions whether or not made in cash and by way of as mentioned in the Rules.
  The Company shall ensure that it continues to maintain proper record of all cash transactions (deposits and withdrawals) of Rs. 10 lakhs and above. The internal monitoring system shall have an inbuilt procedure for reporting of such transactions and those of suspicious nature whether made in cash or otherwise, to controlling / head office on a fortnightly basis.
  
  The records shall be preserved in the following manner:
  - The nature of transactions
  - The amount of the transaction and the currency in which it was denominated
  - The date on which the transaction was conducted
  - The parties to the transaction
  Notwithstanding the above, attention is drawn that dealing in cash with any customer in any amount is strictly prohibited and neither the Company nor any employee/ official of the Company shall deal with any customer in cash. All dealings shall be only through normal banking channels.
  
  The information in respect of the transactions referred to in clauses I, II and III referred above will be submitted to the Director - FIU every month by the 15th day of the succeeding month.
  
  The information in respect of the transactions referred to in clause IV referred above will be furnished promptly to the Director - FIU in writing, or by fax or by electronic mail not later than seven working days from the date of occurrence of such transaction.
  
  The information in respect of the transactions referred to in clause V referred above will be furnished promptly by the Director - FIU in writing, or by fax or by electronic mail not later than seven working days on being satisfied that transaction is suspicious.
  
  Strict confidentiality will be maintained by the Company and its employees of the fact of furnishing / reporting details of such suspicious transactions.
  
  As advised by the FIU-IND, New Delhi; the Company will not be required to submit 'NIL' reports in case there are no Cash / Suspicious Transactions, during a particular period.
  
  The required information will be furnished by the Company directly to the FIU-IND, through the designated Principal Officer.
  
  High risk accounts shall be subjected to intensified monitoring. The Company shall set key indicators for such high risk accounts, taking note of the background of the customer, which will include country of origin, source of funds, the type of transactions involved (like accounts having unusual transactions, inconsistent turnover, etc) and other risk factors. Additionally, the Company shall put in place a system of periodical review of risk categorization of accounts and the need for applying enhanced due diligence measures basis the revised risk categories.
  
  In addition to the Ordinary Monitoring Standards, any high-risk accounts should also receive the following monitoring:
  - Conduct periodic (at least quarterly) reviews of all medium to high-risk accounts
  - Create additional reports designed to monitor all transactions in an account to detect patterns of potential illegal activities
  - Follow up on any expectations detected from the monitoring reports by contacting the account owner personally to inquire about the unusual activity detected and regularly report status of account inquiries to Principal Officer.
- POLICY IMPLEMENTATION GUIDELINES
  - For effective implementation of KYC policy there has to be proper co-ordination, communication and understanding amongst all the functions of the Company. The Board of Directors shall ensure that an effective KYC program is put in place by establishing proper procedures and ensuring their effective implementation. Heads of all the Departments will ensure that the respective responsibilities in relation to KYC policy are properly understood, given proper attention and appreciated and discharged with utmost care and attention by all the employees of the Company.
  - The Risk department of the Company will carry out quarterly checks to find out as to whether all features of KYC policy are being followed and adhered to by all the Departments concerned. The Risk Department shall sign off on the KYC documents for corporate entities, before every disbursement.
  - The Company shall also mandatorily include KYC adherence in its internal audit scope every quarter. For co-lending partners, the Company shall carry out sample quarterly KYC sample audit by independent audit firms to assess adherence with the KYC norms.
  - Company will take steps to ensure that its internal auditors are made well versed with this policy that will carry out regular checks about the compliance of KYC procedures by all the branches of the Company. Any lapse or short coming observed by the internal auditors will be brought to the notice of Department Heads concerned. There will be quarterly assessment to check the compliance level by a committee to be constituted by the Board.
  - The Company will conduct at regular intervals training programmes to impart training to its staff members regarding KYC procedures to ensure consistent and highest degree of compliance level. A record of these training sessions may be maintained including date of training, topic of training and list of attendees.
  - The inadequacy or absence of KYC standards can subject the Company to serious risks especially reputational, operational, legal and concentration risks.
  - Reputational risk is defined as the risk of loss of confidence in the integrity of the institution, that adverse publicity regarding the Company's business practices and associations, whether accurate or not causes.
  - Operational risk can be defined as the risk of direct and indirect loss resulting from inadequate or failed internal processes, people and systems or from external events.
  - Legal risk is the possibility that law suits, adverse judgments or contracts that turn out to be unenforceable can disrupt or adversely affect the operations or condition of the Company.
  - Concentration risk although mostly applicable on the assets side of the balance sheet, may affect the liability as it is also closely associated with funding risk, particularly the risk of early and sudden withdrawal of funds by large depositors, with potentially damaging consequences for the liquidity of the Company.
  - All these risks are interrelated. Any one of them can result in significant financial cost to the Company and diverts considerable management time and energy to resolving problems that arise.
  - Customer education
    For implementing KYC policy, the Company shall have to seek personal and financial information from the new and intended customers at the time they apply for availing the loan facilities. It is likely that any such information, if asked from the intended customer, may be objected to or questioned by the customers. To effectively address such situations, it is necessary that the customers are educated and appraised about the sanctity and objectives of KYC procedures so that the customers do not feel hesitant or have any reservation while passing on the information to the Company. For this purpose, all the staff members with whom the customers will have their first interaction / dealing will be provided training to answer any query or questions of the customers and satisfy them while seeking certain information in furtherance of KYC Policy. To educate the customers and win their confidence in this regard, a copy of the updated version of KYC policy shall be available at the Company’s website and the employees of the Company shall encourage customers to check the policy on the Company’s website.
  - Threat from adoption of new technologies
    As part of the KYC and AML Policy, special attention should be paid to any money laundering threats that may arise from new or developing technologies including on-line transactions that might favour anonymity and adequate measures, if needed, should be taken to prevent their use in money laundering schemes. The Principal Officer should ensure to submit CTR for every month to FIU-IND within the prescribed time schedule.
  - KYC policy for existing customers
    Although this KYC Policy will apply and govern all the new and prospective customers; some of the KYC procedures laid down in this policy particularly which deal with Customer Identification, Monitoring of Transactions and Risk Management need to be effectively applied to the existing customers and their loan accounts. While applying such KYC procedures to the existing loan accounts if any unusual pattern is noticed, the same should be brought to the notice of the Department Heads concerned and the Principal Officer appointed by the Company as per RBI directives.
    
    In case any existing customer does not co-operate in providing the information required as per KYC policy or conducts himself in such manner which gives rise to suspicion about his identity or credentials, such matters will be brought to the notice of Principal Officer who in turn will make necessary inquiries and if required shall forward the name of such customers to the authorities concerned for appropriate action. Besides above, in such situation the Company, for reasons to be recorded, may recall the loan granted to such customers and take recourse to legal remedy against the customers as well as security furnished by such customers.
- APPOINTMENT OF PRINCIPAL OFFICER
  To ensure effective implementation of this KYC Policy and a proper co-ordination and communication between the Company and RBI and other enforcement agencies, the Company shall designate a senior official Principal Officer who will operate from the corporate office of the Company. The job of the Principal Officer will be to maintain an effective communication and liaison with RBI and other enforcement agencies which are involved in the fight against money laundering and combating financing of terrorism, and to take appropriate steps in all such matters which are brought to the notice of the Principal Officer by any department of the Company regard to any suspicious acts or omissions or acts of noncompliance on the part of any customers.
  
  The name of the Principal Officer so designated, his designation and address including changes from time to time, may please be advised to the Director, FIU-IND and the same shall also be prominently displayed on the company’s website.
  
  Principal Officer shall be located at the Head / Corporate office of the Company at Gurgaon.
- MAINTENANCE AND PRESERVATION OF RECORDS
  As per the provisions of PMLA, the Company shall maintain records as under:
  - Records of all transactions referred to in clause (a) of Sub-section (1) of section 12 read with Rule 3 of the PML Rules [referred to in Para 5. Supra] are required to be maintained for a period of ten years from the date of transactions between the Clients and the Company.
  - Records of the identity of all clients of the Company are required to be maintained for a period of ten years from the date of cessation of transactions between the Clients and the Company.
  The Company will ensure that the appropriate steps are taken to evolve a system for proper maintenance and preservation of information in a manner in soft copy that allows data to be retrieved easily and quickly whenever required or when requested by the competent authorities.
- REPORTING TO FINANCIAL INTELLIGENCE UNIT - INDIA
  The Principal Officer will report information relating to cash and suspicious transactions if detected, to the Director, Financial Intelligence Unit-India (FIU-IND) as advised in terms of the PMLA rules, in the prescribed formats as designed and circulated by RBI at the following address:
  Director, FIU-IND,
  Financial Intelligence Unit, India,
  6th Floor, Hotel Samrat,
  Chanakyapuri,
  New Delhi - 110021
  
  Where the Principal Officer has reason to believe that a single transaction or series of transactions integrally connected to each other have been valued below the prescribed value to so to defeat the provisions of PMLA rules, such officer shall furnish information in respect of such transactions to the Director, FIU-IND, within the prescribed time.
  
  A copy of all information furnished shall be retained by the Principal Officer for the purposes of official record.
- GENERAL
  The Company shall ensure that the provisions of PMLA and the Rules framed thereunder and the Foreign Contribution and Regulation Act, 1976, wherever applicable, are adhered to strictly.
  
  Where the Company is unable to apply appropriate KYC measures due to non-furnishing of information and /or non-cooperation by the customer, the Company may consider closing the account or terminating the business relationship after issuing due notice to the customer explaining the reasons for taking such a decision. Such decisions need to be taken at a reasonably senior level.

Annexure 1 to the KYC and AML Policy

Customer Due Diligence (CDD) Requirements, Acceptable OVD and Process for Verification

Company must obtain, through physical copy/ c-KYC process/ Digilocker / other physical or digital mode

PAN or e-PAN,

AND

A valid Officially Valid Documents (“OVD”), other than PAN, which may be:
1. Proof of possession of Aadhaar number, OR
2. Passport, OR
3. Driving license, OR
4. Voter id card, OR
5. NREGA job card OR
6. NPR letter,

AND

Proof of having a bank account with a scheduled commercial bank in India

AND

For loan amount greater than Rs. 60,000 in a financial year, proof of employment or income, which may be:

Salary slip not more than one month old, OR
Proof of credit in EPFO account not more than 90 days old, OR
Proof of salary credit with employer name visible in bank statement not more than one month old, OR
Form 16 issued by employer, not more than 1 year old, OR
Any other document such as valid identity card/ appointment letter/ employment certificate issued by the employer, OR
Rent agreement or credit of rent in bank account, OR
Algorithm based imputed income from customer’s bureau record
Any other document confirming income and its source

For programs where employment check is mandated as per product policy, proof of employment or income, which may be:
1. Salary slip not more than one month old, OR
2. Proof of credit in EPFO account not more than 90 days old, OR
3. Proof of salary credit with employer name visible in bank statement not more than one month old, OR
4. Form 16 issued by employer, not more than 1 year old, OR
5. Any other document such as valid identity card/ appointment letter/ employment certificate issued by the employer, OR
6. Access to official email id, OR
7. Any other document confirming income and its source

The same must then be validated through the below validation process.

	Proof of Identification (POI)	Proof of address (POA)	Validation process	Validity
PAN	Yes	No	With NSDL data; original card to be verified, read, stored, data matched and face matched during CIP (e-PAN printout copy or PAN photocopy not valid for CIP).	180 days
Proof of possession of Aadhaar number	Yes	For either permanent or current address proof	Through offline Aadhaar verification (o-KYC) or Digilocker or e-KYC along with verification trail	Gap between Aadhaar verification and CIP must not exceed 3 days
OVD other than proof of possession of Aadhaar number	Yes	For current address proof together with valid OVD as permanent address proof	Against government data or using AI based utility to check for fraud or positive verification through dispatch of letter/ physical customer premise verification	10 years
Bank account	No	No	Penny drop and/ or successful e-NACH set up and/ or successful online latest bank statement pull over internet banking/ account aggregator. In such cases, requirement for physical cancelled cheque copy or physical bank statement/ passbook may be dispensed with.	30 days

Aadhaar card/ number, if and when obtained, shall always be obtained and stored in redated (masked) form only. No biometric information of the customer shall either be sought or stored as part of the KYC process or otherwise.

In case the current address of the customer is different from the address as per the proof submitted, the same shall be recorded as alternate address and the customer shall submit any one of the following documents (or equivalent e-documents) as proof of the same:

Any OVD, OR
Utility bill (electricity, fixed line telephone/ broadband, post-paid mobile phone, piped gas, water bill) which should not be more than two months old, OR
Property or municipal tax receipt not more than one year old, OR
Letter of allotment of accommodation from reputed employers including central/ state government, public sector undertaking, companies listed on recognized stock exchanges, banks, financial institutions, statutory/ regulatory bodies

provided that when the proof submitted is other than an OVD, the customer shall undertake to submit an OVD as proof within three months.

The proof of alternate address may be either in the name of the customer or any immediate family member of the customer with proof of relationship.

In case of change of name on marriage, the OVD in pre marriage name shall be accepted alongwith a copy of the marriage certificate.

Effective Date- 16th Jan 2023