Know Your Customer is a form issued by the Nepal Rastra Bank for bank and financial institutions to maintain an individual’s record of their clients. This is the unified directives of Nepal Rastra Bank.
Objective/Importance/Benefits of KYC
- To gather information about customer details.
- To gather information related to customer business.
- To control the money laundering.
- To control terrorist financing.
- To minimize operating risk.
- To compliance regulations.
- To make secured business.
- To protect bank and customers.
- To launch new products.
- To Expand business. KYC is a pool to earn profit in the business.
- To control the misuse of the banking system.
- While opening the bank account.
- While making a deposit.
- While advancing the loan.
- While remitting fund.
- While making foreign exchange transactions.
- While doing funded and non-funded business.
- While changing the signature.
- While activating account.
- While changing the nominees.
Sources of KYC
- Customer him/her self.
- Family members of the customer.
- Close friends.
- Organization/Office where the customer works.
- Government offices (Registrar’s Office, Tax Offices, PAN, Related department).
- Social networking.
- Yello pages.
- Magazines, newspapers, local people
KYC for a natural person
- Name, address (permanent, temporary)
- Occupation, address of the office, PAN
- Phone number, email address
- If the customer is staying in a rented room, then details of the house owner
- Parents name, grandfather’s name
- location map of the address
- Income source, frequency, and Appx. amount of transaction in a year
KYC for a legal person (Organization)
- Name, address, PAN, VAT
- Registration date, the office of the registrant’s and address
- Objectives, branches, location, audio report, AOA and MOA.
- License number, date of the license issue, name of the issuing office
- Annual income, Frequency, and Appx. amount of transaction in a year
- Minute of the bank account opening agenda
- Details of the power of attorney
- Authorized capital, paid-up capital
Q. Why KYC is important for banks?
Q. Why Bank and Financial Institutions should prepare KYC? What are the major information that individual, cooperative of any institution should provide?
Q. What are the positive and negative impact of the KYC in business?