Effective Date: January 1, 2025
1. Introduction FINSOVA is committed to ensuring compliance with the Prevention of Money Laundering Act, 2002 (PMLA) and the Reserve Bank of India (RBI) guidelines. This KYC (Know Your Customer) and KYB (Know Your Business) policy outlines the framework for verifying and authenticating customers and businesses to mitigate risks related to money laundering, terrorism financing, and other illicit activities.
2. Objectives
- To establish the identity of customers and businesses through reliable and independent sources.
- To monitor transactions and identify suspicious activities.
- To comply with legal and regulatory obligations as prescribed by the PMLA and RBI.
- To ensure a risk-based approach in customer onboarding and ongoing monitoring.
3. Scope This policy applies to all customers, retailers, distributors, and channel partners engaging with FINSOVA’s services, including Domestic Money Transfer (DMT), AEPS, BBPS, recharges, and utility payments.
4. Key Elements of KYC Policy The KYC policy consists of the following elements:
4.1 Customer Identification Procedure (CIP)
- Obtain and verify customer identity details such as name, address, date of birth, and contact details.
- Accept prescribed documents as proof of identity and address (e.g., Aadhaar card, PAN card, passport, voter ID).
- In case of minors, obtain identification details of the guardian.
4.2 Customer Due Diligence (CDD)
- Classify customers into low, medium, and high-risk categories based on transaction patterns and other factors.
- Conduct enhanced due diligence (EDD) for high-risk customers, including politically exposed persons (PEPs), non-resident Indians (NRIs), and customers from high-risk countries.
4.3 Ongoing Monitoring
- Regularly monitor transactions to identify and report suspicious activity.
- Maintain updated records of customers and reverify details periodically.
4.4 Risk Management
- Adopt a risk-based approach for customer onboarding and transaction monitoring.
- Implement appropriate controls for mitigating identified risks.
5. Key Elements of KYB Policy The KYB policy applies to businesses partnering with FINSOVA, including distributors, retailers, and channel partners.
5.1 Business Identification
- Obtain and verify business details such as legal name, address, registration number, and ownership details.
- Accept documents such as the Certificate of Incorporation, GST registration, partnership deed, and other applicable licenses.
5.2 Ultimate Beneficial Ownership (UBO)
- Identify and verify the ultimate beneficial owners (UBOs) of the business.
- UBOs are individuals holding a 25% or more stake in the business (10% for high-risk entities).
5.3 Risk Assessment
- Classify businesses into risk categories and conduct enhanced due diligence for high-risk entities.
- Verify the business’s compliance with local laws and regulations.
5.4 Ongoing Monitoring
- Monitor transactions and activities of businesses for compliance with FINSOVA’s policies.
- Periodically update KYB information and conduct audits.
6. Documentation Requirements The following documents are required for KYC and KYB compliance:
6.1 For Individual Customers
- Proof of Identity (Aadhaar, PAN, Passport, etc.)
- Proof of Address (Utility bill, Aadhaar, etc.)
6.2 For Businesses
- Certificate of Incorporation
- GST Registration
- PAN of the Business
- Partnership Deed/Board Resolution (if applicable)
- Details of UBOs
7. Record Keeping
- Maintain records of customer and business documents for at least five years after the end of the business relationship.
- Retain transaction records in a format that facilitates easy retrieval for regulatory audits.
8. Reporting Obligations
- Report suspicious transactions to the Financial Intelligence Unit-India (FIU-IND).
- File Cash Transaction Reports (CTRs) and Suspicious Transaction Reports (STRs) as per RBI guidelines.
9. Training and Awareness
- Conduct regular training for employees and partners on KYC/KYB procedures and regulatory requirements.
- Ensure awareness of the risks associated with non-compliance and the importance of adherence to policies.
10. Policy Review and Updates
- Review the KYC and KYB policies annually or as required to ensure alignment with regulatory changes.
- Obtain approval for any modifications from senior management and communicate updates to relevant stakeholders.
11. Non-Compliance Failure to comply with KYC/KYB requirements may result in the suspension or termination of services and may be reported to regulatory authorities as mandated.
12. Contact Information For any queries or concerns related to KYC/KYB compliance, contact:
- Email: compliance@finsova.org
- Support: +91 6376380550
Disclaimer: This policy is subject to changes in regulatory requirements and legal obligations as updated by the Government of India, RBI, and FIU-IND.
