RBI Updates Definition Of Politically-exposed Persons In KYC Guidelines
The Reserve Bank of India (RBI) has revised the definition of Politically-Exposed Persons (PEPs) within its norms, streamlining banking transactions, including loan accessibility, for these individuals.
The alterations in the RBI's Know Your Customer (KYC) regulations aim to provide clarity. Previously, the definition of PEPs was ambiguous, causing challenges for bankers, parliamentarians and others. There were concerns that PEPs faced obstacles in securing loans or opening bank accounts.
Under the updated KYC master direction, the central bank specifies PEPs as "individuals entrusted with significant public roles by a foreign nation." This includes heads of states/governments, senior politicians, government, judicial or military officers, executives of state-owned corporations and key political party officials.
The revised rules now encompass individuals entrusted with a public function by a foreign country.
Bank accounts held by PEPs are subject to additional KYC norms, requiring special due diligence by senior bank officials.
The recent modifications involve the removal of a sub-clause in the KYC norms' master direction issued in a circular dated 25 February 2016.
The RBI has urged bank chairpersons and chief executives engaged in lending activities to implement these changes immediately.
Last year, the Centre amended the Prevention of Money Laundering Act (PMLA), mandating increased disclosures for non-governmental organisations by reporting entities.
