APIBM-ANANTHAPURAMU

KYC-AML

Comprehensive Policy on Know Your Customer (KYC) Standards and Anti Money Laundering (AML)
/Combating Financing of Terrorism (CFT) Measures.
Objectives:
* The primary objective of the policy is to prevent the Bank from being used, intentionally or unintentionally,
by criminal elements for money laundering or terrorist financing activities. Purposes proposed to be served
by the policy are:
I. To prevent criminal elements from using the Bank for money laundering activities.
II. To enable the Bank to know/understand the customers and their financial dealings better this, in
turn, would help the Bank to manage risks prudently.
III. To put in place appropriate controls for detection and reporting of suspicious activities in accordance
with applicable laws/laid down procedures.
IV. To comply with applicable laws and regulatory guidelines.
V. To ensure that the concerned staff are adequately trained in KYC/AML/CFT procedures.

Definition of Money Laundering

Section 3 of Prevention of Money Laundering Act has defined the “offence of money laundering” as under.

“Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is

actually involved in any process or activity connected with the proceeds of crime and projecting it as
untarnished property shall be guilty of offence of money laundering”.

Money launderers use the banking system for cleansing “dirty money” obtained from criminal activities with
the objective of hiding/disguising its source. The process of money laundering involves creating a web of
financial transactions so as to hide the origin and true nature of these funds.

For the purpose of this document, the term money laundering would also cover financial transactions where
the end use of funds goes for terrorist financing irrespective of the source of the funds.

Obligations under prevention of Money Laundering (PML) Act 2002.

Section 12 of PMLA places certain obligations on every banking company, financial institution and
intermediary, which include

I. Maintaining a record of prescribed transactions.

II. Furnishing information of prescribed transactions to the specified authority.
III. Verifying and maintaining the records of the identity of its clients.
IV. Preserving records in respect of (I), (II) and (III) above for a period of ten years from the date of
cessation of transactions with the clients.

These requirements have come in to effect from the 1st July, 2005 i.e. the date on which PMLA was notified
by the Government of India and rules framed there under.

Prevention of Money-Laundering (Maintenance of records of the Nature and value of transactions, the
procedure and manner of maintaining and time for furnishing information and verification and maintenance
of records of the identity of the clients of the banking companies-financial institutions and intermediaries)
Amendment rules 2009-Obligation of banks/financial institutions.

KYC-AML Page 1
 APIBM-ANANTHAPURAMU
Bank is required to:

(I) maintain proper record of all transactions involving receipts by non-profit organisations of value more
than rupees ten lakh or its equivalent in foreign currency and to forward a report to FIU-IND of all such
transactions in the prescribed format every month by the 15th of the succeeding month.

(II) in case of transactions carried out by a non-account based customer, that is a walk-in customer, where
the amount of transaction is equal to or exceeds rupees fifty thousand, whether conducted as a single
transaction or several transactions that appear to be connected, the customer’s identity and address should
be verified. Further, if Bank has a reason to believe that a customer is intentionally structuring a transaction
into a series of transactions below the threshold of Rs. 50000/-, the Bank should verify identity and address
of the customer and also consider filing a suspicious transaction report (STR) to FIU-IND.

Non compliance with KYC standards, use of portal of the Bank for money laundering/financing terrorism
activities expose the Bank to various risks such as, operational risk, reputation risk, compliance risk, legal risk
etc.

Definition of a customer:
A customer for the purpose of the policy is defined as:

a. a person or an entity that maintains an account and/ or has a business relationship with the Bank.
b. one on whose behalf the account is maintained (i.e. the beneficial owner)
c. beneficiaries of transactions conducted by professional intermediaries, such as stock brokers,
Chartered Accountants, solicitors etc. as permitted under the law, and
d. Any person or entity connected with a financial transaction which can pose significant reputation or
other risks to the Bank, say a wire transfer or issue of high value demand draft as a single transaction.

Key elements of the KYC Policy :

*KYC Policy includes the following nine key elements:

1. Customer Acceptance Policy (CAP)

2. Customer Identification Procedures. (CIP)
3. Monitoring of Transactions.
4. Risk Management.
5. Training Programme.
6. Internal Control Systems.
7. Record Keeping.
8. Evaluations of KYC guidelines by the internal audit and inspection systems.
9. Duties/Responsibilities and Accountability.
Customer Acceptance Policy (CAP)

Bank’s Customer Acceptance Policy (CAP) lays down the criteria for acceptance of customers. The guidelines
in respect of the customer relationship in the Bank broadly are:

I. No account is to be opened in anonymous or fictitious/Benami name(s)/entity(ies).

II. Accept customers only after verifying their identity, as laid down in CUSTOMER Identification
Procedures, Necessary checks before opening a new account are to be ensured so that the identity of

KYC-AML Page 2
 APIBM-ANANTHAPURAMU

the customer does not match with any person with known criminal background or with banned entities
such as individual terrorists or terrorist organisations available from circulars etc.
III. Classify customers into various risk categories and based on risk perception, apply the acceptance
criteria for each category of customers. Also, a profile of each customer will be prepared based on risk
categorization.
IV. Documentation requirements and other information to be collected, as per PMLA and RBI/NABARD
guidelines/instructions, to be complied with.
V. Not to open an account or close an existing account (except as provided in this Policy), where identity
of the account holder cannot be verified and /or documents/information required could not be
obtained/confirmed due to non-cooperation of the customer.
VI. Identity of a new customer to be checked so as to ensure that it does not match with any person with
known criminal background or banned entities such as individual terrorists or terrorist organizations
etc.
VII. Implementation of CAP should not become too restrictive and result in denial of banking services to
general public, especially those who are financially or socially disadvantaged.
VIII. The decision to open an account for Politically Exposed Person (PEP) should be taken at Region Office
level. It may, however, be necessary to have suitable built in safeguards to avoid harassment of the
customer. For example, decision to close an account may be taken at Regional Office level after giving
due notice to the customer explaining the reasons for such a decision.
IX. Circumstances, in which a customer is permitted to act on behalf of another person/entity, should be
strictly followed so as to avoid occasions when an account is operated by a mandate holder or where an
account may be opened by an intermediary in the fiduciary capacity.

Customer Identification Procedures (CIP):

Customer identification requires identifying the customer and verifying his/her identity by using reliable,
independent source documents, data or information. Thus, the first requirement of Customer Identification
Procedures (CIP) is to be satisfied that a prospective customer is actually who he/she claims to be. The
second requirement of CIP is to ensure that sufficient information is obtained on the identity and the
purpose of the intended nature of the banking relationship. This would enable risk profiling of the customer
and also to determine the expected or predictable pattern of transactions.

Identification data, as under, would be required to be obtained in respect of different classes of customers:

For customers who are natural persons:

a) Address/location details
b) Recent photograph

For customers that are legal persons:

a. Legal status of the legal person/entity through proper and relevant documents.
b. Verification that any person purporting to act on behalf of the legal person/entity is so authorized and
identity of that person/entity is established and verified.
c. Understand the ownership and control structure of the customer and determine who the natural persons
are who ultimately control the legal person.
Wherever applicable, information on the nature of business activity, location, mode of payments, volume of
turnover, social and financial status etc. will be collected for completing the profile of the customer.

KYC-AML Page 3
 APIBM-ANANTHAPURAMU

If the branch/office decides to accept such accounts in terms of the Customer Acceptance Policy, the bank
should take reasonable measures to identify the beneficial owner(s) and verify his/her/their identity in a
manner so that it is satisfied that it knows who the beneficial owner(s) is/are.
For New Accounts:

"Know Your Customer" (KYC) procedure should be the key principle for identification of an
individual/corporate opening an account. The customer identification should entail verification through an
introductory reference from an existing account holder/a person known to the Bank or on the basis of
documents provided by the customer.

Customer Identification:
The objectives of the KYC framework should be two fold

1. To ensure appropriate customer identification and

2. To monitor transactions of a suspicious nature.

Branches/offices should obtain all information necessary to establish the identity/legal existence of each
new customer, based preferably on disclosures by customers themselves. Easy means of establishing
identity would be documents such as passport, driving license, etc. Where such documents are not available,
verification by existing account holders or introduction by a person known to the bank may suffice.

Existing Accounts:

With a view to ensuring that existing small account holders are not inconvenienced and the KYC procedures
is completed in time, it has been decided that application of KYC procedures may be limited to the existing
accounts, where the credit or debit summation for the financial year ended March 31, 2003 is more than Rs.
10.00 lakh or where the branch or office suspects any unusual transaction. However, branches/offices
should fully implement the KYC norms in all existing accounts of trusts, companies/firms, religious/charitable
organizations and other institutions or where the accounts are opened through a mandate or power of
attorney.

Introduction
The customer identification will be through an introductory reference from an existing account
holder/person known to the Bank and or on the basis of documents provided by the customer.

Introduction in Rural and Semi-Urban branches:

The individuals in rural and semi urban branches can open deposit accounts by providing introduction from
a third person having satisfactory conduct of the account for six months (barring new branches) or by well
known local authorities or through staff members, against whom disciplinary proceedings are not pending,
knowing the potential customer.
Introduction in Urban and Metro centre branches:

In urban and metro centre branches, accounts to be opened on the basis of any one of the following:

An introduction from a third person having satisfactory conduct of the account for at least 12 months, or by
well-known local authorities or through staff members knowing the potential customer.

KYC-AML Page 4
 APIBM-ANANTHAPURAMU

Passport alone may be accepted, when the address on the passport is the same as the address in the
account opening form. Any other document from each of the undernoted two lists for a photo ID and proof
of residence.

Proof of identity Proof of residence

1 Passport where the address differs 1
Income/Wealth Tax Assessment Order
2 Election ID Card 2
Electricity Bill**
3 PAN Card 3
Telephone Bill
4 Govt/Defence ID Card 4
Credit Card Statement/PassBook duly
attested by Banker**
5 ID Cards of reputed employees. 5 Salary Slip duly attested by employer**
6 Driving licence 6 Proof of address issued by Tahasildar/Govt
Authorities
7 Aadhar Card 7 Aadhar Card
8 Job Card issued by NREGA duly signed by 8 Pension Payment Order issued by Govt
State Govt Officials. Departments
9 Consumer Gas connection card/Bill
Note: If Passport, Driving licence, Voters ID, 10 Registered lease/Sale agreement copy
Aadhar Card having current address is given as
proof of identity, there is no need to give
separate proof of address.
 With a self signed cheque drawn on ** latest/recent
existing bank
Latest Passport size photograph
* With a self-signed cheque drawn on existing bank. ** Latest/recent

Henceforth, customers may submit only one documentary proof of address (either current or permanent)
while opening a bank account or while undergoing periodic updation. In case the address mentioned as
per ‘proof of address’ undergoes a change, fresh proof of address may be submitted to the branch with in
a period of six months.
b) In case the proof of address furnished by the customer is not the local address or the address where the
customer is currently residing, the Branch may take a declaration of the local address on which all
correspondence will be made by the Bank with the customer. No proof is required to be submitted for
such address for correspondence / local address. This address may be verified by the Bank through ‘
positive confirmation’ such as acknowledgement of receipt of (i) letter, cheque books, ATM cards; (ii)
telephonic conversation; (iii) visits etc. In the event of change in this address due to relocation or any
other reason, customers may intimate the new address for correspondence to the Branch within two
weeks of such change.

Note:
A. If correspondence & permanent address are different then proof for the both has to be submitted.
B. Proprietor: In case of sole proprietors, sole proprietor must make the application in his individual name
& capacity. Proprietorship firm comes under the Individual Category. Deposit account application may
be in the name of his firm but the applicant has to give his/her own PAN. Other requirements remain
same as in case of Individual.
C. Non-Resident Indian: Submission of passport copy is mandatory. (Relevant pages of passport having
details of Name, Photo, Date of Birth, and Validity Date & Address should be submitted). Also in case of
NRI, overseas address is mandatory. (Out of permanent & correspondence address, one address must
be that of overseas)
D. In case of Merchant Navy NRIs, Mariner’s declaration or certified copy of CDC (Continuous Discharge
Certificate) is to be obtained.
E. Foreign nationals are not allowed to apply, except persons within the definition of “Resident” as per
FEMA rules or Persons of Indian Origin (PIO). In such cases appropriate proof must be obtained.

KYC-AML Page 5
 APIBM-ANANTHAPURAMU

F. In case of “Care of Address”, proper supporting documents must be obtained such as relationship
proof or lease/leave license agreement. Otherwise “Care of Address” in the name of third person /
company is not acceptable.

 Documents under List 1 will establish identity of the account holder and documents of List 2 will
give present address of the account opener.

While the above set of documents should normally suffice to establish both the identity and the correct
address of the applicant, wherever this is not so (e.g. PAN Card and Salary Slip together may not provide
proof of address) applicants to be asked to give additional documents e.g. a letter from the employer giving
the correct address, credit card statement etc. In case of joint account, applicants who are not closely
related to each other would require to establish their identity and address independently.

In respect of NRI accounts, introduction and authentication/ verification of signatures to be made by a

bank/Indian embassy/ High Commissioner/ Consulate/ Notary Public/ Persons known to the bank.

For establishing identity or proof of residence Ration Card should not be used as document. However, in the
event of non-availability of any other document, Ration Card may also be accepted as proof of residence
from minors/illiterate persons who are unable to produce other documents.

Other than individual accounts

Non-Individual: Additional documents to be obtained for non-individual accounts.
1. Corporate Bodies : - Mandatory self certified true documents to be submitted.
I. Certificate of Incorporation
II. Memorandum & Articles of Association
III. Authorized signatories list with specimen signatures
IV. Board resolution for investment in Mutual Fund .

2. Partnership Firm: - Mandatory certified documents to be submitted.

I. Certificate of Registration (for registered partnership firms only)
II. Partnership Deed.
III. Authorized signatories list with specimen signatures.

3. Hindu Undivided Family (HUF): - Proof of Identity: - Self attested copy of PAN card in HUF name is
mandatory. Mandatory certified documents to be submitted.
I. Deed of declaration of HUF or PAN in name of Karta AND Bank pass book / bank statement / DEMAT
statement in the name of HUF.
4. Trusts: - Mandatory certified documents to be submitted.
I. Certificate of registration (for registered trusts).
II. Trust deed.
III. Authorized signatories list with specimen signatures.

5. Unincorporated association or a body of individuals: - Mandatory certified documents to be submitted.

I. Proof of Existence/Constitution document {Resolution of the managing body & Power of Attorney
granted to transact business on its behalf are mentioned currently).
II. Authorized signatories list with specimen signatures.
6. Banks/Institutional: Mandatory certified documents to be submitted.
1. Copy of constitution/registration documents.
2. List of authorized signatories.

KYC-AML Page 6
 APIBM-ANANTHAPURAMU

7. Foreign Institutional: - Mandatory certified documents to be submitted.

I. Certificate of registration with SEBI.
II. Authorized signatories list with specimen signatures.
8. Army / Government Bodies: - Mandatory certified documents to be submitted.
I. List of authorized signatories.
II. Self-certification on letterhead. (It was copy of constitution/ registration documents earlier)

Letter of thanks:
In all instances of opening of new accounts letter of thanks to be sent by registered post at the recorded
addresses to all customers and introducers with dual purpose, thanking them for opening the account with
the Bank and for verification of genuineness of address furnished by the account holder. Undelivered
envelopes in this regard would be required to be followed up closely at branch levels.

The operating staff/ officers associated with opening of accounts would be required to exercise due
diligence and care at the time of opening of accounts. Care should, however, be taken that implementation
of KYC guidelines do not result in denial of opening of new accounts.

Customer Profile:
Care to be exercised that implementation of the KYC guidelines should not result in denial of opening of new
accounts at the branches. Nevertheless, customer profiles to be compiled without exception.

For the purpose of exercising due diligence on individual transactions in accounts, 'Customer Profile' of
individual account holders in the account should be incorporated in the opening forms, covering the
following information :-

TABLE: Mandatory and optional information

Mandatory Optional for better customer relationship
1) Occupation 1. Marital Status;
2) Source of funds 2. Educational Qualification;
3) Monthly Income 3. Educational Qualification of spouse;
4) Annual turnover 4. Details regarding children;
5) Date of Birth 5. Information like - a) Owns a car/two wheeler
6) Dealings with other banks b) Have credit card
7) Existing credit facilities c) Have insurance policy
d) Telephone/Mobile Number

General instructions:
 List of Entities Authorized To Attest the Documents: Public Notary, Gazzeted Officer, (Name,
Designation & Seal should be affixed on the copy).
 When the Present Address is other than the Current / correspondence address, proof is enquired for
both the addresses. In case the applicant has written the same address at both the places instead of
writing “SAME AS ABOVE’, only one proof for the address provided would be sufficient. The address
proof should not be more than six month old.
 When documents like Passport, Driving License carrying an expiry date is submitted as proof of address;
the document must be current on the date of acceptance.
 Affix most recent color photograph of size 30mm * 40mm & applicant has to sign across the photograph.
Applicant should sign the opening form/KAF in the specific space provided for. Authorized person and in
case of non-individual case should sign the opening form/KAF with proper stamp.

KYC-AML Page 7
 APIBM-ANANTHAPURAMU

Guidelines for verification of opening form/ KYC Application Form:

A: IDENTITY DETAILS:
Individual:
a. Name – The name in the application form should match with the name mentioned in the PAN card.
b. Father’s Name – Father’s name should be provided for married women also.
c. Date of Birth – DOB should be provided in dd/mm/yyyy format only.
d. Nationality – Nationality should be provided in the space provided. Foreign nationals are not allowed to
apply, unless they are Non-Resident Indian (NRI) or Person of Indian Origin (PIO). In such cases
appropriate proof must be obtain.
e. Status – The status of individual can be either Resident Indian (RI) or Non Resident Indian (NRI). PAN will
be mandatory document for all status of individuals (NRIs also need to submit PAN no. along with the
proof of PAN document & copy of passport & details of overseas address & proof for the same.)
2. Permanent Account Number (PAN) – As per the regulatory guidelines quoting Permanent Account
Number (PAN) is mandatory for all deposit accounts whose amount is Rs.50000/- and above. To comply
with the same PAN has been made mandatory for all categories of depositors. PAN field in the
application form is a mandatory field. The Branch Heads/Officers should ensure that PAN field in the
application form is not left blank by the Account holder and the name on the PAN card copy should tally
with that mentioned on the application/opening form/KAF If there is a major mismatch in the name
appearing in the PAN card and name mentioned in the KAF then the customer should submit one
additional document as proof of identity from the permissible list of document for proof of identity.
GENERAL:
1. Name in opening form/ KAF should exactly match with the name mentioned in the proof of identity.
2. All the mandatory fields are filled by the applicant.
3. In case of PAN, Passport, Voter ID card or UIN provided as proof of identity or address, the document
number is to be mentioned in the space provided.

B: ADDRESS DETAILS:
Guidelines for verification of Proof of Address (POA):
Self-attested copy of Proof of Address should be verified with the original. If original copy of documents has
not been submitted for verification then Notarized/ True copy of the same should be submitted in original &
not the photocopy/is. The proof of address should be on A4 paper size only and one-sided copy. If
correspondence & permanent address are different then proof for the both are required. Take care to
obtain all the relevant pages of POA where name & address are appearing on separate pages.

List of documents admissible as a Proof of Address:

a. Passport, b. Voter Identity Card, c. Ration Card, d. Registered Lease/ Sale Agreement of Residence
e. Driving License, f. Telephone Bill (Not Mobile Bill), g. Electricity bill, h. Bank Passbook, i.Gas bill
j. Proof of address issued by Gazetted Officer/ Notary public/ MLA/MP/Documents issued by any Govt. or
Statutory Authority.
OTHER DETAILS:
i. Annual Income – Annual income of the applicant shall be mentioned in the opening form/KAF.
ii. Occupation – Occupation of the account holder shall be written in the application/KAF.
iii. Signature has to be provided within the space specified in the application form in Black /Blue Ink.
iv. Photograph – One recent color photograph (30mmX40mm) should be pasted (not stapled) at the
specified region in the application form.

KYC-AML Page 8
 APIBM-ANANTHAPURAMU

Non-Individuals:
A: IDENTITY DETAILS:
1. Name - Name should match with the name mentioned in the document for Proof of Identity submitted.
2. Date of Registration/ Incorporation – The date of registration/ incorporation should match with the
date mentioned in the Memorandum and Article of Association.
3. Status – The best applicable choice should be selected from the list provided in the application form.

B: ADDRESS DETAILS:
i. Present and Permanent Address – Present address will be used for all correspondence. Address proofs
for both present and permanent address should be provided and it should be verified with the original.
ii. Authorized Signatures – In case of Joint/Partnership/Corporate customers, the persons signing opening
forms/KAF should be authorized persons by the Board’s Resolution to open an account and operate the
account in the Bank.
GUIDELINES TO FILL UP DEPOSIT APPLICATION FORM/KYC FORM
1. The Deposit Opening form/ KYC Application Form (KAF) or Change Request Form (CRF) should be filled as
per instructions – i.e. in legible letters in blue or black ink only.
2. Applicant has to fill in all the required information as per the Deposit Opening form/KAF Instructions.
3. There should not be overwriting in the Deposit Opening form/KAF. Any overwriting in the application
form is counter signed by the applicant.
4. In case any information is struck off, then the applicant has to sign the same and the signature matches
with the signature in the signature block.
5. PAN field is not to be left blank and copy of PAN card copy should be submitted.
6. If the applicant name as mentioned on the Deposit Opening form/KAF does not match with the PAN card
name then additional document for proof of identity should also be provided.
7. Applicant has to submit Proof of Identity & Proof of Address as per list of admissible documents – list
mentioned in this document and also available on the Deposit Opening form/KAF / CRF. In case of
change in name by the applicant, proof of identity should be submitted to that extant and the Branch
Head/Officer would be required to do so, if the applicant wishes to change any of the addresses.
8. Copies of all documents submitted should be legible and signed by the applicant.
9. There is no prima facie evidence to suspect tampering with the original documents or the copies
submitted by applicant.
10. When the applicant does not submit the original document for verification, the copies should be
properly attested by entities authorized to attest the copy as per the list of persons authorized for
attestation. In such case, the attested copy submitted should be original. Photocopy of attested
document would not be acceptable as Proof.
Caution is to be exercised with regard to introduction of large number of accounts by a single introducer
(either account holder or staff).
CHECK LIST
Features to be verified and documents that may be obtained from customers
Features Documents
Accounts of individuals Recent Photograph and (any one document which provides
customer information to the satisfaction of the branch)
Legal name and any Passport, PAN card, Voter’s Identity Card, Driving license,
other names used Identity card (subject to the bank’s satisfaction)
*Correct permanent address Letter from a recognized public authority or public servant
verifying the identity and residence of the customer to the
satisfaction of branch/office, Telephone bill, Bank account
statement, Letter from any recognized public Authority,
Electricity bill, Ration card,
Letter from employer (subject to satisfaction of the branch)
Accounts of companies Certificate of incorporation and Memorandum & Articles of
Association

KYC-AML Page 9
 APIBM-ANANTHAPURAMU
Name of the company Resolution of the Board of Directors to open an account and
identification of those who have authority to operate the
account
Mailing address of the company Copy of PAN allotment letter
Accounts of partnership firms Registration certificate, if registered
Legal name Partnership deed
Address Power of Attorney granted to a partner or an employee of
the firm to transact business on its behalf
Names of all partners and their Any officially valid document identifying the partners and the
addresses persons holding the Power of Attorney and their addresses
Telephone numbers of the firm and Telephone bill in the name of and partners
partners
Accounts of trusts & foundations
Names of trustees, settlers, Certificate of registration, if registered. Power of Attorney
beneficiaries and signatories granted to transact business on its behalf
Names and addresses of the Any officially valid document to identify settlers,
founder, the Managers/directors beneficiaries and those holding Power of Attorney,
and the beneficiaries founders/managers/directors’ addresses
Telephone/fax numbers Resolution of the managing body of foundation/association,
Telephone bill

Categorization of Customers depending upon the risks involved:

No financial institution has complete protection from the activities of criminal elements/people and in
particular to money laundering segment. The level of risk that Bank is exposed to by a customer relationship
depends on:
i. Type of the customer and nature of the business.
ii. Type of product/service availed by the customer.
iii. Country where the customer is domiciled.
Based on the risk perception, the Customers are classified into three risk categories called 1) Low Risk 2)
Medium Risk and 3) High Risk categories.
The categorization shall be done while establishing the relationship i.e., opening of new
accounts/sanctioning of credit facilities etc. Depending upon the categorization of customers on account of
the risk category, their profiles shall be up dated periodically after opening of accounts to ascertain the
status of risk involved. The profiles of the customers shall be updated as follows.

Low Risk category of Customers: All the customers who are not categorized as medium and high risk
category, comes under low risk category like salaried employees, low economic strata, Govt. owned
companies, customers with employment based or with regular source of income, customers having long
term active business relation with Bank, NGOs promoted by United Nations and its agencies etc. All the
above can be categorized as low risk category. In all these cases of low risk category, verification and
updating of profile shall be done once in ten years.

Medium category of Customers: All the customers who are dealing/involving in non-bank financial
institutions, Stock brokerage, import/export, Gas station, Automobile dealers, Electronic, telemarketers,
Pawn shops, Auctioneers, restaurants, retailers, Notaries etc. In all these cases of medium risk category,
verification and updating of profile shall be done once in eight years.

High Risk category of Customers: All the customers where accounts are opened in the names of Politically
exposed persons (PEP), relatives of PEP, accounts of which PEP is the ultimate beneficiary, Customers with
dubious reputation, individuals and entities in watch lists issued by Interpol, individuals and entities listed in
the schedule of to the order under Section 51A of Unlawful Activities Act 1967, High net worth individuals
etc. In all these cases of High Risk Category, verification and updating of profile shall be done every two
years or if possible once in six months so that it can keep the Bank free from exploitation and other Risks.

KYC-AML Page 10
 APIBM-ANANTHAPURAMU

The decision to open an account for PEP and to their family members or close relatives of PEPs should be
taken at Regional Office only and should be subjected to monitoring on an ongoing basis.

Threshold limit of transaction

At the time of opening of the account, based on customer's profile, a threshold limit of transaction is to be
determined. To begin with all transactions up to Rs. 10.00 lakh will be exempted from the purview of the
scrutiny. Further, it is proposed to have a threshold limit of Rs.50000/- in case of individuals; one month
turnover in the case of business enterprise (including business professionals) or Rs. 10.00 lakh wherever is
lower. These limits are to be reviewed and revised on yearly basis or as requested by the customer from
time to time and any transaction beyond this limit should be looked into with extra caution.
Activity monitoring to cover all accounts including existing accounts for which profile to be made over a
period of time. Branch Managers should use reasonable judgment in determining the suspiciousness of the
transaction and the accounts wherein the suspicious transactions were found are to be closely monitored at
the branches, so that the documentary evidence upon which a suspicion is aroused is not lost.
A courteous approach in the process is very essential to take care that the customers are not driven away
from the Bank.
Small Deposit (No Frills) Accounts:
With a view to ensuring financial inclusion such that persons, especially those belonging to low income
group both in urban and rural areas, who are not able to produce such documents required by Bank to
satisfy about their identity and address, are not denied banking services, branches may open Small Deposit
(No Frills) accounts, for natural persons only, with relaxed KYC standards, as detailed in the operating
guidelines. Persons desirous of opening such accounts can keep aggregate balances not exceeding Rs.
50,000/- (Rupees fifty thousand only) in all their accounts taken together and the total credit, again in all
accounts taken together, should not exceed Rs. 1,00,000/- (Rupees one lakh only) in a year.

If at any point, the balances in all his/her accounts with the Bank (taken together) exceeds Rs. 50,000/-
(Rupees fifty thousand only) or total credit in all accounts taken together exceeds Rs. 1,00,000/- (Rupees one
lakh only) in a year, no further transactions will be permitted until full KYC procedure is completed. Bank
would notify the customers when the balances reach Rs. 40,000/- (Rupees forty thousand only) or total
credit in a year reaches Rs. 80,000/- (Rupees eighty thousand only) so that appropriate documents, for
complying with full KYC requirements are submitted well in time to avoid blocking of transactions in the
account.
Monitoring and Reporting of Transactions
Monitoring of Transactions:
Ongoing monitoring is an essential element of effective KYC procedures. Branches can effectively control and
reduce their risk only if they have an understanding of the normal and reasonable activity of the customer so
that they have the means of identifying transactions that fall outside the regular pattern of activity.
However, the extent of monitoring will depend on the risk sensitivity of the account.

High-risk accounts:

Branches should pay special attention to all complex, unusually large transactions and all unusual patterns,
which have no apparent economic or visible lawful purpose.

The branch/office may prescribe threshold limits for a particular category of accounts and pay particular
attention to the transactions, which exceed these limits. Transactions that involve large amounts of cash
inconsistent with the normal and expected activity of the customer should particularly attract the attention

KYC-AML Page 11
 APIBM-ANANTHAPURAMU

of the Bank. Very high account turnover inconsistent with the size of the balance maintained may indicate
that funds are being 'washed' through the account.

High-risk accounts have to be subjected to intensified monitoring. Bank should set key indicators for such
accounts, taking note of the background of the customer, such as the country of origin, sources of funds, the
type of transactions involved and other risk factors.

Cash Transactions (Issue of DD/TT/MT/PO, etc.):

Banks are required to issue travelers cheques, demand drafts, mail transfers and telegraphic transfers for
Rs.50,000 and above only by debit to customers’ accounts or against cheques and not against cash.

Applicants (whether customers or not) should furnish permanent (income tax) account number (PAN) on the
application for issue of travelers cheques, demand drafts, mail transfers and telegraphic transfers if the
amount exceeds Rs.50,000.
In case customer/account holders not having PAN, since their income (from all sources) falls below the
income tax exemption limit, the procedures to be adopted is mentioned below.
For PAN – undernoted procedure to be followed:
Category of Customer Procedure adopted
1. Account holders having PAN and A suitable provision is available in the
recorded with bank draft/TT/Bankers’ order/RTC application form for
affixing PAN under the signature of the account
holder.
2. Account holders not having PAN since their income A declaration in Form No.60 of I.T. Rules to be
(from all sources) falls below the Income Tax obtained (form being obtained to open the new
exemption limit accounts from the customers not having the PAN).
The declaration is to be obtained along with the
application Form. The account holder should sign the
declaration to be printed on the reverse of the
application form.
3. Account holders not allotted PAN even though A declaration on Form No.60 of IT Rules be obtained.
applied for it (holding acknowledgement for The account holder should give a suitable
application) but their income is assessed for Income statement in the form. The official in charge of the
Tax and Assessment order issued by appropriate drafts business at the Branch should act diligently and
authority. satisfy himself about the genuineness of the
statement.
4.Account holders who have agricultural income and A declaration on Form No.61 of IT Rules be
is not in receipt of any other income chargeable to obtained (as this is the form permitted to open the
Income Tax New accounts for a person who has agricultural
income and is not in receipt of any other income
chargeable to Income Tax for not having the PAN).
The declaration is printed on the reverse of the
application form. The account holder should sign the
declaration printed on the reverse of the application
form.
5. Account holder whose income is neither assessed The account holders will be advised to obtain the PAN
for IT nor applied for PAN and not fall under any of and his application for purchase of DD/TT/BO/RTCs
the category (1) to (4) above for Rs.50,000/- and above be rejected politely
Further income tax Act and Rules require obtention of PAN only in cash purchase of bank drafts/pay
orders/bankers cheque aggregating Rs.50,000/- or more during any one day from a banking company
(branch).
Branches/Offices should ensure that a record of transactions in the accounts is preserved and maintained as
required in terms of section 12 of the Prevention of Money Laundering (PML) Act, 2002, wherein it is stated
that the Banking companies, financial institutions, intermediaries and their officers shall not be liable to any
civil proceedings against them for furnishing information under the Act.
It may also be ensured that transactions of suspicious nature and/ or any other type of transaction notified
under section 12 of the PML Act, 2002, is reported to the appropriate law enforcement authority.

KYC-AML Page 12
 APIBM-ANANTHAPURAMU

Branches are required to report all cash deposits and withdrawals of Rs.10 lakh and above as well as
transactions of suspicious nature with full details in fortnightly statements to their respective Regional
Offices. The Regional Offices are required to appraise the Head office regarding transactions of suspicious
nature.
PROCESS AND PROCEDURES TO MONITOR SUSPICIOUS TRANSACTIONS:

Branches are required to record and report all transactions of suspicious nature in deposit, loan and
remittance accounts etc., with full details to their Regional Offices.

Transactions of suspicious nature:

The procedure to be followed is as under –

The Principal officer/Officer -in charge, vested with the authority to open the account, is to ensure
compliance with the KYC guidelines. The employee/officer, who has interviewed the customer, to subscribe
his signature for having interviewed the prospective customer and the officer, before permitting opening of
the account, to satisfy that all aspects of KYC guidelines are complied with.

In cash transactions RBI/NABARD’s guidelines are required to be strictly complied with and a close watch of
individual/integrally connected cash withdrawals and deposit for Rs.10.00 lakh and above in deposit, cash
credit or overdraft accounts and recording of the transactions in a separate register is to be done.
Threshold limit of transaction
At the time of opening of the account, based on customer's profile, a threshold limit of transaction is to be
determined. To begin with all transactions up to Rs. 10.00 lakh will be exempted from the purview of the
scrutiny. Further; it is proposed to have a threshold limit of Rs.50000/- in case of individuals; one month
turnover in the case of business enterprise (including business professionals) or Rs.10.00 lakh wherever is
lower. These limits are to be reviewed and revised on yearly basis or as requested by the customer from
time to time and any transaction beyond this limit should be looked into with extra caution.
Activity monitoring to cover all accounts including existing accounts for which profile to be made over a
period of time. Branch Managers should use reasonable judgment in determining the suspiciousness of the
transaction and the accounts wherein the suspicious transactions were found are to be closely monitored at
the branches, so that the documentary evidence upon which a suspicion is aroused is not lost.
A courteous approach in the process is very essential to take care that the customers are not driven away
from the Bank.

Reporting system for high value cash/suspicious transaction

Cash transaction of Rs.10.00 lakh and above:

Branches are required to record and report all individual/integrally connected cash deposits and withdrawals
of Rs.10.00 lakh and above in deposits, cash credit and overdraft accounts etc., at fortnightly intervals to the
respective Regional Offices.
Suspicious Transactions:

To observe four eyes concept in reporting suspicious transactions at branch level, first dealing officer at the
branch will report to the Branch Manager (BM), who will get himself satisfied about existence of a suspicious
activity/nature and then report to the Regional office. Further course of action is to be recommended by the
Regional officer in consultation with Law Department to H.O. The designated officer at H.O has to take up

KYC-AML Page 13
 APIBM-ANANTHAPURAMU

the matter with appropriate law enforcing authorities designated under the relevant laws governing such
activities.

The Regional Managers, during their visit/surprise inspection to Branch, have to verify the account opening
forms/transactions recorded in the register for the purpose at random.

Terrorist finance

In case the name of any banned organization is noticed as payee/ endorsee/applicant, the first dealing
officer shall report the same to the Principal Officer. Reporting of such transactions as and when detected is
to be done as under:

Reporting by Reporting to
1. Branch 1. Regional office
2. Regional office 2. Principal Officer (PO). H.O.
3 .PO. H.O 3.RBI (till RBI/Govt. Identifies
appropriate authority)

Transactions which are of suspicious nature and required to be reported to FIU-IND are given in Annexure I.

Monitoring of transactions will be conducted taking into consideration the risk profile of the account. Special
attention will be paid to all complex, unusually large transactions and all unusual patterns, which have no
apparent economic or visible lawful purpose.
Transactions that involve large amounts of cash inconsistent with the normal and expected activity of the
customer will be subjected to detailed scrutiny.

System supported monitoring of transactions will be done by the AML team under the Principal Officer,
based on alerts thrown up by the AML software acquired/to be acquired by the Cooperative/Regional Rural
Bank and on the basis of feedback/inputs from the controlling offices and respective relationship points.
Simultaneously, however, relationship points will maintain oversight over the transactions with a view to
identifying suspicious transactions and bringing them to the notice of the Principal Officer.

After due diligence at the appropriate level in the Bank, transactions of suspicious nature and/or any other
type of transaction notified under PMLA will be reported by the Principal Officer to Financial Intelligence
Unit – India (FIU-IND), the appropriate authority. A record of such transactions will be preserved and
maintained for the period as prescribed in PMLA.
Transactions in the accounts will also be monitored with a view to timely submitting, the Cash Transaction
Report (CTR) in respect of cash transactions of Rs. 10,00,000/- (Rupees ten lakh only) and above undertaken
in an account either singly or in an integrally connected manner.
All cash transactions, where forged or counterfeit Indian currency notes have been used, shall also be
reported immediately by the branches, by way of Counterfeit Currency Reports (CCRs) to the Principal
Officer, through proper channel, for onward reporting to FIU-IND.
Closure of Accounts:

Where the appropriate KYC measures could not be applied due to non-furnishing of information and/or non-
cooperation by the customer, the account can be considered for closure or terminating the banking/
business relationship. Before exercising this option, all efforts will be made to obtain the desired information
and, in the event of failure, due notice, will be given to the customer explaining the reasons for taking such a

KYC-AML Page 14
 APIBM-ANANTHAPURAMU

decision. In all cases, the controlling authority at the respective Regional office/Head office shall be the
competent authority to permit closure of such accounts.

Risk Management:

The bank has put in place an effective KYC program by establishing appropriate procedures and ensuring
their effective implementation covering proper management oversight, systems and controls, segregation of
duties, training and other related matters. Responsibility has also been explicitly allocated within the bank
for ensuring that the Bank’s policies and procedures are implemented effectively.
The nature and extent of due diligence will depend on the risk perceived by the branch/bank. However,
while preparing customer profile branches should take care to seek only such information from the
customer which is relevant to the risk category and is not intrusive. The customer profile will be a
confidential document and details contained therein shall not be divulged for cross selling or any other
purposes.

Bank’s internal audit and compliance functions have an important role in evaluating and ensuring adherence
to the KYC policies and procedures. The compliance function should provide an independent evaluation of
the bank’s own policies and procedures, including legal and regulatory requirements. It would be ensured
that the audit machinery is staffed adequately with individuals who are well versed in such policies and
procedures.

Internal Inspectors should specifically check and verify the application of KYC procedures at the
branches/offices and comment on the lapses observed in this regard. The compliance in this regard may be
put up before the Audit Committee of the Board by HO (Inspection) on quarterly intervals.

The Principal Officer designated by the Bank in this regard will have overall responsibility for maintaining
oversight and coordinating with various functionaries in the implementation of KYC/AML/CFT policy.
However, primary responsibility of ensuring implementation of KYC/AML/CFT Policy and related guidelines
will be vested with the respective Regional Office. Suitable checks and balances in this regard will be put in
place at the time of introducing new products/procedures as also at the time of review of existing products/
procedures for overall risk and compliance management. For this purpose, Head Office will designate an
official as Money Laundering Reporting Officer (MLRO) at Regional Office level, who would ensure proper
implementation and reporting, as per provisions of this Policy, to the Principal Officer.

Employee Training:

All employee training programmes, of 6 days’ duration or more, will have a module on KYC
Standards/AML/CFT Measures so that members of the staff are adequately trained in KYC/AML/CFT
procedures.

Recruitment/Hiring of Employees:

KYC norms/AML standards/CFT measures have been prescribed to ensure that criminals are not allowed to
misuse channels of the Bank. The bank will put in place necessary and adequate screening mechanism as an
integral part of its recruitment/hiring process of personnel.

KYC-AML Page 15
 APIBM-ANANTHAPURAMU

Customer Education
The Bank recognizes the need to spread awareness on KYC, Anti Money Laundering measures and the
rationale behind them amongst the customers and shall take suitable steps for the purpose. The front desk
staff would be specially trained to educate the customers regarding the objectives of the KYC programme.

Introduction of New technologies:

The bank will pay special attention to the money laundering threats arising from new or developing
technologies and take necessary steps to prevent its misuse for money laundering activities. The bank will
ensure that appropriate KYC procedures are duly applied to the customers using new technology driven
products.

KYC for the existing accounts

While the KYC guidelines will apply to all new customers, the same would be applied to the existing
customers on the basis of materiality and risk. However, transactions in existing accounts would be
continuously monitored for any unusual pattern in the operation of the accounts. On the basis of materiality
and risk the existing accounts of companies, firms, trusts, charities, religious organizations and other
institutions are subjected to minimum KYC standards which would establish the identity of the natural /legal
person and those of the ‘ beneficial owners’. Similarly, the Branches/Offices will also ensure that term /
recurring deposit accounts are subject to revised KYC procedures at the time of renewal of the deposits on
the basis of materiality and risk.

Record Keeping
Branches/offices should prepare and maintain documentation on their customer relationships and
transactions to meet the requirements of relevant laws and regulations, to enable any transaction effected
through them to be reconstructed.

Retention of Records
In terms of the Banking Regulation Act, records such as Account Opening Forms, vouchers, ledgers, registers
etc., pertaining to Banking Transactions for specified periods are required to be maintained. In addition, the
following documents in respect of accounts, which have been reported for suspicious activities, are required
to be retained at the end of business relationship with the customer, which in any case shall not be less than
10 years.
1. Customer Profiles

2. Reports made to government authorities concerning suspicious customer activities relating to possible
money laundering or other criminal conduct together with supporting documentation.

3. Records of all formal anti money laundering training conducted which include the names and business
units of attendees and dates and locations of the training; and
4. Any other document required to be retained under applicable money laundering laws/regulations.

All financial transactions records are to be retained at least for 10 years after the transaction has taken place
and to be made available for scrutiny of Law enforcing agencies, Audit functionaries as well as Regulators as
and when required.

KYC-AML Page 16
 APIBM-ANANTHAPURAMU

Correspondent Banking

This policy will apply to our dealings with correspondent banks. For correspondent banking relationship an
appropriate due diligence procedure will be laid down keeping in view KYC standards existing in the country
where the correspondent bank is located and the track record of the correspondent bank in the fight against
money laundering and terrorist financing.

Miscellaneous:

* Information collected from the customers for KYC Compliance should be relevant to the perceived risk, not
intrusive and should be treated as confidential. The same is not to be used/divulged for cross selling or any
other such purpose.

* Any remittance of funds by way of demand drafts, mail/telegraphic transfer or any other mode like
RTGS/NEFT and issue of payment orders for value Rs. 50,000 and above is effected only by the debit to the
customer’s account or against cheques/drafts and not against cash.

* Provisions of foreign contribution (Regulation) Act, 1976, as amended from time to time, wherever
applicable, should be strictly adhered to.

Principal Officer.

The Chief Manager/in-charge of Planning and Development Department at Head Office shall be the
Principal Officer for KYC/AML/CFT matters who shall be responsible for implementation of and compliance
with the policy. His illustrative duties, in this regard, will be as follows.

* Overall monitoring of the implementation of the Bank’s KYC/AML/CFT policy.

* Monitoring and reporting of transactions and sharing of information, as required under the law.

* Interaction with the Regional Managers of the Regional Offices for ensuring full compliance with the policy.

* Timely submission of Cash Transaction Reports (CTRs), Suspicious Transaction Reports (STRs) and
Counterfeit Currency Reports (CCRs) to FIU IND.

* Maintaining liaison with the law enforcement agencies, Banks and other institutions which are involved in
the fight against money laundering and combating financing of terrorism.
* Ensuring submission of periodical reports to the Top Management/Board.
18. Review of the Policy.
The Policy will be reviewed as and when considered necessary by the Board. An independent evaluation of
KYC guidelines for identifying high value transactions is required to be carried out by the concurrent/internal
Auditors. They are required to comment on the effectiveness of measures taken by Branch level
implementation of KYC guidelines and prevention of money laundering at Branches/Offices.

KYC-AML Page 17
 APIBM-ANANTHAPURAMU

Illustrative list of Risk categories

Low Risk Medium Risk High Risk

1. Cooperative Bank 1. Gas Station 1. Individuals and entities in various
2. Ex-staff, Govt./ Semi 2. Car / Boat / Plane Dealership United Nations’ Security Council
Govt. Employees 3. Electronics (wholesale) Resolutions (UNSCRs) such as UN 1267
3. Illiterate 4. Travel agency etc.
4. Individual 5. Used car sales 2. Individuals or entities listed in the
5. Local Authority 6. Telemarketers schedule to the order under Section 51A
6. Other Banks 7. Providers of tele of the Unlawful Activities (Prevention)
7. Pensioner communications service, Act, 1967 relating to the purposes of
8. Public Ltd. internet café, IDD call service, prevention of, and for coping with
9. Public Sector phone cards, phone center terrorist activities
10.Public Sector Bank 8. Dot-com company or internet 3. Individuals and entities in watch lists
11.Staff business issued by Interpol and other similar
12.Regional Rural Banks 9. Pawnshops international organizations
13.Govt./SemiGovt. Local 10.Auctioneers 4. Customers with dubious reputation as
Body 11.Cash-Intensive Businesses per public information available or
14.Senior Citizens such as restaurants, retail commercially available watch lists
15.Self Help Groups shops, parking garages, fast 5. Individuals and entities specifically
food stores, movie theaters, identified by regulators, FIU and other
etc. competent authorities as high-risk
12.Sole Practitioners or Law 6. Customers conducting their business
Firms (small, little known) relationship or transactions in unusual
13.Notaries (small, little known) circumstances, such as significant and
14. Secretarial Firms (small, unexplained geographic distance
little known) between the institution and the location
15.Accountants (small, little of the Customer, frequent and
known firms unexplained movement of accounts to
16.Venture capital companies different institutions, frequent and
17.Blind unexplained movement of funds between
18.Purdanashin institutions in various geographic
19.Registered Body locations etc.
20.Corporate Body 7. Customers based in high risk
21.Joint Sector countries/jurisdictions or locations (refer
22.Partnership Appendix C)
23.Private Bank 8. Politically exposed persons (PEPs) of
24.Private Limited Company foreign origin, Customers who are close
25.Unregistered body relatives of PEPs and accounts of which a
26.Proprietorship PEP is the ultimate beneficial owner;
9. Non-resident Customers
10. Embassies / Consulates
11. Off-shore (foreign) corporation/
business
12. Non face-to-face Customers
13. High net worth individuals
14. Firms with ‘sleeping partners’
15. Companies having close family
shareholding or beneficial ownership
16. Complex business ownership
structures, which can make it easier to

KYC-AML Page 18
 APIBM-ANANTHAPURAMU

Low Risk Medium Risk High Risk

conceal underlying beneficiaries, where
there is no legitimate commercial
rationale
17. Shell companies which have no
physical presence in the country in which
it is incorporated. The existence simply of
a local agent or low level staff does not
constitute physical presence
18. Investment Management / Money
Management Company/ Personal
Investment Company
19. Client Accounts managed by
professional service providers such as law
firms, accountants, agents, brokers, fund
managers, trustees, custodians etc.
20. Trusts, charities, NGOs/NPOs
(especially those operating on a ―cross-
border basis) unregulated clubs and
organizations receiving donations
(excluding NPOs/NGOs promoted by
United Nations or its agencies)
21. Money Service Business: including
seller of: Money Orders / Travelers’
Cheques / Money Transmission / Cheque
Cashing / Currency Dealing or Exchange
22. Business accepting third party
cheques (except supermarkets or retail
stores that accept payroll cheques/cash
payroll cheques)
23. Gambling/gaming including ―Junket
Operators arranging gambling tours
24. Dealers in high value or precious
goods (e.g. jewel, gem and precious
metals dealers, art and antique dealers
and auction houses, estate agents and
real estate brokers)
25. Customers engaged in a business
which is associated with higher levels of
corruption (e.g., Arms manufacturers,
dealers and intermediaries)
26. Customers engaged in industries that
might relate to nuclear proliferation
activities or explosives
27. Customers that may appear to be
Multi level marketing companies etc.
28. Customers dealing in Real Estate
business (transactions need to be
monitored with enhanced due diligence)
29. Associations/Clubs
30. Foreign Nationals

KYC-AML Page 19
 APIBM-ANANTHAPURAMU

Low Risk Medium Risk High Risk

31. NGO
32. Overseas Corporate Bodies
33. Bullion dealers and Jewelers (subject
to enhanced due diligence)
34. Pooled accounts
35. Other Cash Intensive business
36. Shell Banks – Transactions in
corresponding banking
37. Non-Bank Financial Institution
38. Stock brokerage
39. Import / Export
40. Executors/Administrators
41. HUF
42. Minor
43. Accounts under Foreign Contribution
Regulation Act

KYC-AML Page 20