With digital transactions increasing in India, businesses must prioritize KYC compliance to verify their customer’s identities and prevent financial crime. One crucial aspect of KYC compliance is proof of identity, which involves obtaining valid documents from customers to confirm their identity.
This is a critical component of KYC compliance as it helps businesses to verify the identity of their customers and prevent financial crime. Financial institutions, in particular, are required to comply with KYC regulations to prevent money laundering and terrorist financing.
This also plays an important role in preventing identity theft. Fraudsters make illegitimate use of stolen IDs and use them to open bank accounts, apply for credit cards, and conduct other financial transactions. By requiring this, financial institutions can help prevent identity theft by ensuring that the person conducting the transaction is the legitimate owner of the identity they are using.
In India, several documents are accepted for KYC compliance. Businesses must verify the authenticity of these documents, which may include checking for security features unique to the document and conducting electronic verification services. Find the list of acceptable verification methods mentioned below:
- Passport Verification
- Voter ID Verification
- Aadhaar Verification
- Driver’s License Verification
- PAN Verification
- NREGA Job Card
- Identity Card Issued by Central or State Government Departments
- Pensioner Card
- Aadhaar Enrollment Number
- Certificate of Identity Issued by Consulate or Embassy of India
Other documents that may be accepted include:
- Ration card
- Senior citizen card
- Disability ID card
- Freedom fighter card
- Kisan passbook
- CGHS/ECHS card
- Bank passbook with photograph
When accepting documents, financial institutions must be diligent in verifying their authenticity. This may include checking for watermarks, holograms, or other security features that are unique to the document. Electronic verification services must also be utilised to check the document’s validity and ensure that it has not been tampered with.
To ensure that documents are valid, businesses must follow best practices for verifying the identity of their customers. These practices include checking for security features such as holograms and watermarks, verifying the document’s expiration date, and conducting background checks to ensure that the customer is not on any watchlists or sanctions lists. Businesses may also use biometric authentication or facial recognition technology to verify the customer’s identity. Best practices include:
Check the document for signs of tampering or forgery, and ensure that it is not expired.
Compare the information on the document with other information provided by the customer, such as their name, address, and date of birth.
Conduct background checks on customers to ensure that they have no criminal history or ties to terrorism or other illicit activities.
Use electronic verification services to verify the authenticity of the document and ensure that it has not been tampered with.
It’s important for financial institutions to have clear policies and procedures in place, and to provide regular training to staff to ensure that they understand these policies and procedures.
