What changed
RBI updated the KYC Master Direction to reflect amendments to the PML Rules via Government notifications dated September 4 and October 17, 2023. It also revised Annex II for UAPA changes and replaced the WMD Act order in Annex III with a new one dated September 1, 2023. A new Section 55A on FCRA was added, and other instructions were updated per FATF recommendations.
What it means for you
Banks and other regulated entities must update their KYC policies and procedures to incorporate the latest legal and regulatory changes, including enhanced due diligence for entities linked to UAPA and WMD Act. The addition of FCRA provisions means lenders dealing with foreign contribution accounts need to align their CDD processes accordingly. Immediate compliance is required, so internal audits and training programs should be revised without delay.
What you must do
- Review and update your KYC policy to incorporate the amendments to PML Rules, UAPA, and WMD Act orders.
- Add a new section on FCRA compliance in your KYC procedures as per Section 55A of the MD.
- Ensure all customer due diligence processes align with updated FATF recommendations.
- Communicate these changes to all relevant branches and compliance teams with immediate effect.
- Conduct a gap analysis and update internal systems and training materials accordingly.
Who it affects
All regulated entities under RBI (banks, NBFCs, payment system operators, etc.), Compliance and KYC teams, Internal audit and risk management departments, Customers dealing with foreign contributions (FCRA)
What is the effective date of these KYC amendments?
The amended provisions in the Master Direction on KYC come into force with immediate effect from October 17, 2023.
Do I need to update my KYC software for the new FCRA section?
Yes, you must incorporate the new Section 55A on FCRA into your KYC systems and processes to ensure proper due diligence for customers handling foreign contributions.
Are there any changes to the list of designated individuals/entities under UAPA?
Yes, Annex II of the KYC Master Direction has been updated to reflect the corrigendum dated August 29, 2023, to the Government of India Order related to UAPA.