Definition
The process by which banks verify the identity and background of their customers before providing financial services. Mandated by RBI guidelines under the Prevention of Money Laundering (Maintenance of Records) Rules, 2005, KYC involves verifying: identity documents, address proof, source of funds, and business purpose. KYC violations by banks can expose them to regulatory penalties.
Related Terms
PMLARBIAMLBanking Regulation
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Defined by Advocate Subodh Bajpai, Senior Partner, Unified Chambers and Associates