In
view of recent heightened global efforts to prevent the possible
use of the banking sector for money laundering, terrorist
financing, transfer of illegal/ill-gotten monies and as a
conduit for white collar crime etc., the importance of ‘Know
Your Customer (KYC)’/”customer due diligence” has increased.
In line with the international best practices, the existing
instructions issued vide PR XI need to be further strengthened
to reinforce the checks and controls already developed by
banks as also to ensure due diligence is done while starting
relationship with a new customer and maintaining and continuing
relationship with existing customers. Although, overall PRs
are being revised and will be issued shortly, the sensitivity
and importance of the subject (KYC) requires that revised
PR XI be issued straightaway and implemented immediately.
This revised PR XI will be included in the overall Prudential
Regulations when the latter are issued. Accordingly the
existing PR XI is being substituted with following minimum
guidelines to be followed while opening /dealing with the
accounts of the customers. Banks are, however, free to obtain
any further information/documents as they deem fit,
provided the same are reasonable and applied across
the board to all of their customers.
GUIDELINES
a)
All reasonable efforts shall be made to determine true identity
of every prospective customer. The following minimum set of
documents must be obtained from various types of customers/
account holder(s).
S.No. |
Nature
of Account |
Documents/papers
to be obtained |
I |
Individuals |
(i)
Attested photocopy of national identity card
or passport of the individual.
(ii)
In case the NIC does not contain a photograph,
the bank should also obtain, in addition to NIC, any
other document such as driver’s license etc that contains
a photograph.
(iii)
In case of a salaried person, attested copy of
his service card, or any other acceptable evidence of
service, including, but not limited to a certificate
from the employer.
(iv)
In case of illiterate person, a passport size
photograph of the new account holder besides taking
his right and left thumb impression on the specimen
signature card. |
II |
Partnership |
(i)
Attested photocopies of identity cards of all
partners.
(ii)
Attested copy of “Partnership Deed” duly signed
by all partners of the firm.
(iii)
Attested copy of Registration Certificate with
Registrar of Firms. In case the partnership is unregistered,
this fact should be clearly mentioned on the Account
Opening form.
(iv)
Authority letter, in original, in favor of the
person authorized to operate on the account of the firm. |
III |
Joint
Stock companies |
Certified
copies of:
(i)
Resolution of Board of Directors for opening
of account specifying the person(s) authorized to operate
the company account.
(ii)
Memorandum and Article of Association
(iii)
Certificate of Incorporation.
(iv)
Certificate of Commencement of Business.
(v)
Attested photocopies of identity cards of all
the directors. |
IV |
Clubs,
Societies and Associations |
(i)
Certified
copies of
(a)
Certificate of Registration.
(b)
By-laws/Rules & Regulations.
(ii)
Resolution of the Governing Body/Executive Committee
for opening of account authorizing the person(s) to
operate the account and attested copy of the identity
card of the authorized person(s).
(iii)
An undertaking signed by all the authorized persons
on behalf of the institution mentioning that when any
change takes place in the persons authorized to operate
on the account, the banker will be informed immediately. |
V |
Agents
Accounts |
(i)
Certified copy of “Power of Attorney”.
(ii)
Attested photocopy of identity card of the agent. |
VI |
Trust
Account |
(i)
Attested copy of Certificate of Registration.
(ii)
Attested copies of NIC of all the trustees.
(iii)
Certified copies of Instrument
of Trust. |
VII |
Executors
and Administrators |
(i)
Attested photocopy of identity cards of the
Executor/Administrator.
(ii)
Certified copy of Letter of Administration or
Probate. |
b)
The Banks shall obtain “Introduction” on the new account to
assess the prospective customer’s/account holder’s integrity,
respectability and the nature of business etc. Any laxity
in this regard may result in serious consequences for the
banker. The following guidelines are to be followed in this
regard:
(i)
Where the introducer is an existing account holder
of the same branch, his introduction should be accepted, after
due verification of signature by the official of the branch.
In case the introducer is an account holder of another branch
of the same bank, the account should only be opened after
proper verification of the signature from the concerned branch.
(ii)
Where the introducer happens to be an account holder
of another bank, the introduction should be accepted
after complete verification of the signature and other particulars
of the introducer from that bank.
(iii)
The introduction by the employees of the bank may also
be acceptable. However, he or she will have to establish that
sufficient information has been collected on the new account
holder for making the introduction and that they believe that
“Introduction” from a person other than the bank’s employee
is not necessary. (The introduction of a person other
than by the branch employee is being stressed to ensure maximum
authenticity on the status of the would-be accountholder/customer,
beside minimizing the chances of undesirable accounts which
may be opened on the introduction of the bank employees in
their pursuit to achieve targets of opening maximum number
of accounts and treating the “Introduction” a mere formality
in the process).
c)
The Bank/branch shall obtain satisfactory evidence duly verified/authenticated
by the branch manager and shall be placed on record in respect
of (i) the true
identity of the beneficial owners of all accounts opened by
a person, entity etc, (ii) the real party in interest or controlling
person/entity of the account(s) in case of nominee or minors
account.
d)
The Banks are also advised that KYC/customer due diligence
is not a one time exercise to be conducted at the time of
entering into a formal relationship with customer/account
holder. KYC/Customer due diligence is an on-going process
for prudent banking practices, therefore the banks are encouraged
to:-
(i)
Set up a compliance unit with a full time Head.
(ii)
Put in place a system to monitor the accounts and
transactions on a regular basis.
(iii)
Update customer information and records, if any,
at reasonable intervals.
(iv)
Install an effective MIS to monitor the activity
of the customers’ accounts.
(v)
Chalk out plan of imparting suitable training to
the staff of bank periodically.
(vi)
Maintain proper records of customer identifications
and clearly indicate, in writing, if any exception is made
in fulfilling the due diligence procedure.
(vii)
Monitor and check unusually large cash transactions,
especially those which are out of character/ inconsistent
with the history, pattern etc of the individual account(s).
e)
The banks shall develop guidelines for customer due diligence,
including a description of the types of customers that are
likely to pose a higher than average risk to a bank. In preparing
such policies, factors such as customers’ background, country
of origin, public or high profile position, nature of business
etc should be considered. Enhanced due diligence shall be
applied:
(i) To high-risk customers
such as those belonging to
countries where KYC and money laundering regulations are
lax, those with links to offshore tax havens, customers
in cash based businesses in high-value items, and high
net worth customers with no clearly identifiable source
of income etc.
(ii)
Where they have reason to believe that the customer
has been refused banking facilities by another bank.
(iii)
For opening of correspondent banks’ accounts, and taking
appropriate measures to obtain all relevant information about
the respondent bank.
(iv)
In dealing with non-face-to- face/ on-line customers.
Adequate measures in this regard should also be in place,
e.g. independent verification by a reliable third party, client
report from the previous bank of the customer etc.
2)
Each Bank shall formulate and keep in place, in writing,
a comprehensive Know-Your-Customer policy duly approved by
their Board of Directors and in case of branches of foreign
banks, approved by their head office, and cascade the same
down the line to each and every branch/office/ concerned officers
for strict compliance.
3)
State Bank of Pakistan, during the course of inspection,
would particularly check the efficacy of the KYC system put
in place by the banks and its compliance by all the branches
and the staff. Appropriate action shall be taken against the
bank and the concerned staff members for non-compliance and
negligence in this area under the provisions of Banking Companies
Ordinance 1962.
Please acknowledge receipt. |