Which of the following statements is true about Know Your Customer (KYC) regulations?

Question

Question

This question was previously asked in

RRB Clerk Mains Memory Based Paper (Held on:24th September 2022)

KYC means Know Your Customer
It was introduced under Prevention of Money Laundering Act
KYC process includes ID card verification, face verification, document verification such as utility bills as proof of address, and biometric verification.
Banks must comply with KYC regulations and anti-money laundering regulations to limit fraud.
All are true

Answer 1

The correct answer is All are true.

Key Points

The Reserve Bank of India introduced Know your customer (KYC) guidelines for all banks in 2002.
In 2004, RBI directed that all banks ensure that they are fully acquiescent with the KYC provisions before December 31, 2005.
The main aim of KYC was to prevent money laundering, terrorist financing, and theft.
Banks should frame their KYC policies incorporating the following four key elements:
- Customer Acceptance Policy,
- Customer Identification Procedures,
- Monitoring of Transactions and
- Risk Management.
Money laundering is the process of making large amounts of money generated by criminal activity, such as drug trafficking or terrorist funding, appear to have come from a legitimate source.
The Prevention of Money Laundering Act was introduced in 2002 and came into force with effect from 2005.