The Reserve Bank of India (RBI) has issued a letter to India’s payments banks, tightening the regulations around KYC, while on-boarding customers.
It has told payments banks to get their customers’ information verified by third parties. In a letter sent to chief executive officers of payments banks, RBI said: “reliance on KYC (know-your-customer) done by telecom companies is not permissible.”
The third party has to be‘regulated, supervised, monitored and should have steps in place for compliance with customer due diligence and record-keeping requirements, RBI added. As a result, the third parties have to comply with the Prevention of Money Laundering Act (PMLA).
The legislation seeks to combat money laundering in India by preventing cotoling money laundering, confiscating and seizing the property obtained from the laundered money; and deals with any other issue connected with money laundering in India.
RBI’s letter also states that payments banks will have to obey the RBI Master Direction on KYC, which is amended time to time, for all its customers, “including existing customers of telecom companies onboarded by the PB”.
“The letter stated: “This essentially means that all the KYC done for customers on-boarded by payments banks through their telecom operations and promoters is null and void, and a revised KYC needs to be done for these customers moving forward.”
The news comes as a blow to Bharti Airtel, which runs a payments bank with customer data verified by its own telecom business. Airtel was recently punished by the Unique Identification Authority of India (UIDAI) for allegedly opening payments bank accounts without the consent of users.
The telecom major was reportedly using Aadhaar-based SIM verification of customers to open payments bank accounts without their “informed consent”. As a result, Bharti Airtel and Airtel Payments Bank, the country’s first payments bank, were temporarily banned from conducting eKYC of customers using Aadhaar.
Copyright © 2018 RegTech Analyst
Copyright © 2018 RegTech Analyst
