Banking · KYC and Customer Due Diligence Guidelines

Statement 1: The operational process of Customer Due Diligence (CDD) involves identifying the customer and verifying their identity using reliable, independent source documents, data, or information, and for legal persons, it also includes understanding the nature of the customer's business and its ownership and control structure. This process is mandatory at the time of establishing a business relationship, while carrying out any occasional transaction above fifty thousand rupees, or when there is a suspicion of money laundering or terrorist financing. Statement 2: In a scenario where a customer is unable to provide the original Officially Valid Documents for verification, the bank may rely on a digitally signed copy of the OVD issued to the DigiLocker of the customer, provided the bank can validate the digital signature and the authenticity of the document through the respective issuing authority's portal. This digital verification is considered equivalent to a physical sight of the original document and must be recorded in the bank's system with a timestamp to maintain a valid audit trail for regulatory inspections. Statement 3: When a bank relies on a third party to carry out the operational aspects of CDD, the ultimate responsibility for the identification and verification of the customer remains with the bank, and the third party must be regulated, supervised, or monitored by a statutory authority. The bank must ensure that the third party provides the KYC data immediately upon request and does not have any relationship with countries that are categorized as high risk by the Financial Action Task Force. Based on the provided statements regarding the operational aspects of KYC, which statement accurately reflects the bank's responsibility when outsourcing CDD to a third party?