Banking · KYC and AML

Statement 1: The RBI's Master Direction on KYC requires all regulated entities to maintain a record of all transactions for at least five years from the date of the transaction between the bank and the customer. Statement 2: In the context of 'Shell Banks,' which are banks incorporated in a jurisdiction where they have no physical presence and which are unaffiliated with a regulated financial group, Indian banks are strictly prohibited from entering into or continuing a correspondent banking relationship with them. Statement 3: The concept of 'Simplified Due Diligence' (SDD) is permitted for certain categories of customers who are deemed to be at very low risk of money laundering, such as public sector undertakings and government departments. Which statement correctly identifies the regulatory stance and preventative measures against the risks associated with 'Shell Banks' in international correspondent banking?