Simplified Laws Guide to Taxation and Legal Concern
What is Know Your Customer (KYC)? Simple, this is a synonym for headache!
An activity such as opening a bank account, obtaining Directors Identification Number (DIN), Passport, PAN Card, Driving License, Demat account etc. is a headache! Once you open the account or obtain the document, then the subsequent activities are easy. Most people have this opinion and those who don’t agree with me can be called as ‘Lucky Person’
When we audit the banks, the higher authorities are very particular about auditing KYC documents. The banker appoints special auditors (other than regular auditors) to Test Check KYC documents of customers.
So, in this article let me briefly cover about KYC for opening bank account (Savings Bank or Fixed Deposit or Credit card or any other account in the bank)
Through the KYC process, the banker will make reasonable efforts to determine true identity and beneficial owners of accounts. The objective of the KYC guidelines is to prevent banks being used, intentionally or unintentionally by criminal elements for money laundering.
Two components of KYC
KYC has two components – Identity and Address. For establishing identity, the bank requires any authentic document carrying photo of the customer such as driving licence/ passport/ pan card/ voter’s card etc. Though these documents carry the residential address of the customer, it may not be the present address. Therefore, in order to establish the present address of the customer, in addition to passport/ driving licence / voter’s card / pan card, the bank may ask for utility bills such as Telephone / Electricity bill (which are not older than 3 months) etc.
(So, next time when your banker asks you for address proof other than your passport, don’t jump at them; they are doing their job as per RBI instructions!)
What can be done if the Utility Bill is in the name of spouse or in the name of any other family members?
In such cases, get their declaration in a sheet of paper that you are his/her relative and are staying with him/her.
Certificate from the employer as identity and address proof
Banks rely on such certification only from corporate and other entities of repute provided that they are aware of the competent authority designated by the concerned employer to issue such a certificate.
