Those troublesome KYC updates could be a thing of the past soon

Copyright © HT Digital Streams Limit all rights reserved. News India’s complex web of KYC regulations often lead to significant headaches for financial institutions and individuals. (IStock) Summary at the heart of the changes is a shift from a uniform KYC process to a risk-based framework, which allows financial institutions to apply differentiated caution, which is streamlining KYC for low-risk customers, while retaining tighter checks for higher-risk accounts. The center is working on long-awaited changes to know your customers (KYC) rules, to simplify the lower-risk clients process and tighten checks on higher-risk accounts. The government is preparing to amend the prevention of money laundering (PMLA) to bring about such a risk-based KYC framework, two people who are aware of the development said. Currently, financial institutions require a uniform KYC process for their clients, regardless of the risk. “The changes will align both the Regulations of the Reserve Bank of India and the broader PMLA compliance norms, streamlining the KYC -board process and improving the overall customer experience,” one of the two people above quoted on condition of anonymity. India’s complex web of KYC regulations often lead to significant headaches for financial institutions and individuals due to the need for repeated documentation and different requirements in different entities. The current system can be cumbersome and time -consuming, which requires several submissions of similar information to different agencies. The amendment of PMLA wants to correct this. Read also | The collateral damage in the RBI’s oppression of loan frenzy, KYC “There is a plethora of agencies that repeatedly collect and verify to keep KYC records informed,” the second person added. “However, if a financial institution has assessed the client’s risk profile and the account is active, such regular validation is unnecessary; the proposed changes to PMLA rules are aimed at streamlining this process,” the person added. A key pillar of the KYC reform is the launch of a revamped Central KYC Records Registry (CKYCRR), which aims to accelerate digitization, improve record sharing on financial institutions and simplify KYC updates. CKYCR aims to eliminate several KYC verifications by creating a central repository where customers submit their details once. A spokesman for the Ministry of Finance did not respond to email questions. The CKYCR renovation plan contains the verification of data and documents with the issuance of authorities, making the register a reliable source of KYC records. AI and facial recognition technology will be used for dedication, ensuring that only a golden plate – a single and definite record without duplicates – remains. Customers only have access to their KYC details and can request corrections, facilitating the topical records in the register. Read it | KYC MAZE: Updating of challenges facing investors and distributors with NDML & Dotex scratch economists said KYC reforms are needed, especially by expanding the update intervals and adopting a risk-based approach to customer profilation, which will improve the comfort. “Reforms in KYC are needed, and changing the requirement after update to longer period is also needed,” says Madan Sabnavis, chief economist, Bank of Baroda. He added that a risk -based approach was used to distinguish individuals for this purpose, which contributed to reducing the cost of compliance, while also improving comfort. The government is also planning to integrate KYC with Digilocker for digital on board, improving customer comfort and access to financial services. OTP/Face verification ensures that the consent of the customer for using personal data, which increases the confidence in data privacy. The reforms will provide financial institutions metadata to improve confidence in the CKYCR register, and a no-fee model will encourage further digitalization. Read it | No convenience to live for MF investors made by repeated KYC arrangements, KYC updates of the KYC update will also significantly reduce the reversal times for financial institutions on financial institutions. To be sure, the turnaround time for updating KYC records on financial institutions has already been significantly reduced with the implementation of CKYCR, and it will further improve with the launch of the renovated system. This centralized system enables FIs to obtain and verify KYC information electronically, which minimizes the need for repeated data collection. To date, CKYCR has digitalized about 990 million records and improved record interoperability among FIs, with a total of about 1.360 million records now accessible. And read | From AI to KYC, a hectic 100 days for the next Govt capture all business news, market news, news reports and latest news updates on Live Mint. Download the Mint News app to get daily market updates. More Topics #KyC Mint Specialies