What changed
Earlier, KYC updation was required at least once in five years for low-risk and once in two years for high/medium risk customers. Now, full KYC frequency is extended to every eight years for medium risk and every ten years for low risk, while high risk remains every two years. Additionally, a lighter 'positive confirmation' process is introduced every two years for medium risk and every three years for low risk.
What it means for you
UCBs can reduce the compliance burden for low and medium risk customers by spacing out full KYC renewals, but must still maintain ongoing due diligence. The new positive confirmation step ensures periodic contact without requiring fresh documents each time. Banks need to update their KYC policies and ensure strict adherence to these revised timelines.
What you must do
- Revise your bank's KYC policy to reflect the new periodicity: full KYC every 2 years for high risk, 8 for medium, 10 for low risk.
- Implement a system for positive confirmation every 2 years for medium risk and every 3 years for low risk customers.
- Ensure fresh photographs are obtained from minor customers upon their becoming major.
- Continue ongoing due diligence and transaction monitoring for all risk categories.
Who it affects
Primary (Urban) Co-operative Banks (UCBs), All UCB customers (low, medium, high risk), Minor customers turning major
What is the new full KYC updation frequency for low risk customers?
Full KYC exercise must be done at least every ten years for low risk individuals and entities.
What does 'positive confirmation' mean and how often is it required?
Positive confirmation is obtaining KYC updates through email, letter, phone, forms, interviews, or visits. It is required every two years for medium risk and every three years for low risk customers.
Do these changes apply to high risk customers?
Yes, high risk customers still require full KYC every two years, unchanged from the earlier norm.