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The Reserve Bank's Know Your Customer (KYC) directions require a bank to verify a…
Banking Law Easy
The Reserve Bank's Know Your Customer (KYC) directions require a bank to verify a customer's identity and address, and in many cases the beneficial owner behind a company or trust, before opening an account. These directions carry out the scheme of which Act?
Show answer and explanation
Answer: D. The Prevention of Money-laundering Act, 2002
Explanation
The KYC directions carry out the scheme of the Prevention of Money-laundering Act, 2002, and the verification they require before an account is opened is called customer due diligence. The Benami Transactions (Prohibition) Act, 1988 is tempting because it also deals with hidden ownership, but it concerns property held in another person's name and is not the source of the KYC scheme.
- Legal provision:
- Prevention of Money-laundering Act, 2002