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KYC AML Policy

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1. PREAMBLE

This Know Your Customer (“KYC”) / Anti Money Laundering (“AML”) Policy has been framed in accordance with:

  • Reserve Bank of India Master Direction – Know Your Customer (KYC) Direction, 2016, as amended from time to time
  • Prevention of Money Laundering Act, 2002 (“PMLA”);
  • Prevention of Money Laundering (Maintenance of Records) Rules, 2005;
  • RBI Digital Lending Guidelines;
  • Applicable RBI circulars, notiϐications and guidelines.

This Policy shall apply to all branches, business operations, employees, digital platforms, field executives and customer onboarding channels of:

2. OBJECTIVE OF THE POLIC

The objective of this Policy is to:

  • prevent misuse of the Company for money laundering, terrorist financing or unlawful activities;
  • establish proper customer identiϐication procedures;
  • ensure compliance with RBI and FIU-IND requirements;
  • establish risk-based customer due diligence measures;
  • ensure monitoring and reporting of suspicious transactions;
  • maintain customer transparency and regulatory compliance.

3. APPLICABILITY

This Policy shall apply to:

  • all employees,
  • directors,
  • agents,
  • Field executives,
  • digital onboarding teams,
  • service providers,
  • and all persons acting on behalf of the Compan,
  • physical onboarding,
  • digital onboarding,
  • website-based onboarding,
  • app-based onboarding,
  • and field-based customer acquisition.

4. DEFINITIONS

4.1 Customer

Customer means:

  • a person or entity availing financial services from the Company;
  • borrower/co-borrower;
  • guarantor;
  • authorized signatory;
  • beneficial owner;
  • beneficial interest holde

4.2 Officially Valid Document (OVD)

OVD shall include:

  • Passport;
  • Driving License;
  • Proof of possession of Aadhaar Number;
  • Voter ID;
  • NREGA Job Card;
  • Letter issued by National Population Register.

4.3 Beneficial Owner / Ultimate Beneficial Owner (UBO)

Beneficial Owner means the natural person(s) who ultimately own(s), control(s) or benefit(s) from a customer or legal entity, whether directly or indirectly.

5. CUSTOMER ACCEPTANCE POLICY (CAP)

The Company shall:

  • not open anonymous or fictitious accounts;
  • not deal with shell banks/entities
  • identify and verify customers before onboarding;
  • undertake risk categorization of customers;
  • reject customers where KYC requirements cannot be completed. ;

The Company reserves the right to reject customer onboarding where:

  • customer identity cannot be verified;
  • documents appear forged/suspicious;
  • customer fails risk assessment;
  • transaction purpose appears unlawful.

6. CUSTOMER IDENTIFICATION PROCEDURE (CIP)

The Company shall undertake Customer Identiϐication Procedure (“CIP”) before establishing any lending relationship.

The Company may obtain:

  • PAN
  • Aadhaar
  • address proof
  • photograph
  • bank account details
  • employment proof
  • income proof
  • and such other documents as may be required.

7. MODES OF CUSTOMER ONBOARDING

The Company may onboard customers through:

  • physical onboarding
  • website
  • mobile application
  • digital platform
  • field executives
  • document collection process

The Company presently follows:

Aadhaar / PAN / document-based onboarding process.

VIDEO KYC (V-CIP) WILL BE ADOPTED IN FUTURE

8. INDIVIDUAL CUSTOMER KYC

The following documents may be obtained from individual borrowers:

  • PAN Card;
  • Aadhaar
  • Photograph
  • Address Proof
  • Bank Statement
  • Salary Slip / Income Proof
  • Employment Proof
  • Mobile Number and Email ID
  • Live Photograph / Selfie (where applicable)

The Company presently follows:

Aadhaar / PAN / document-based onboarding process.

VIDEO KYC (V-CIP) WILL BE ADOPTED IN FUTURE

9. NON-INDIVIDUAL CUSTOMER KYC

For companies, LLPs, partnerships and other entities, the Company may obtain:

  • Certiϐicate of Incorporation;
  • PAN;
  • GST Certiϐicate;
  • Address ProofPartnership Deed / LLP Agreement;
  • MOA & AOA
  • Board Resolution / Authorization;
  • UBO Declaration;
  • KYC of Directors/Partners/Authorized Signatories.

10. BENEFICIAL OWNERSHIP (UBO)

The Company shall identify Ultimate Beneϐicial Owner(s) in accordance with RBI and PMLA requirements.

UBO identiϐication shall be undertaken for

  • companies
  • LLPs
  • partnerships;
  • trusts
  • legal entities

The Company may obtain:

  • ownership structure;
  • shareholding pattern;
  • control structure;
  • UBO declarations;
  • identity documents.

11. CUSTOMER RISK CATEGORIZATIO

Customers shall be categorized into:

  • Low Risk;
  • Medium Risk;
  • High Risk.

Risk categorization may depend upon:

  • customer profile
  • occupation
  • geography
  • transaction pattern
  • politically exposed status
  • repayment behavior
  • source of income.

12. SANCTIONS SCREENING

The Company may screen customers against:

  • RBI alerts
  • FIU alerts
  • sanctions lists
  • regulatory watchlists
  • negative databases

13. CKYCR COMPLIANCE

The Company shall upload customer KYC records to: Central KYC Records Registry (CKYCR) in accordance with applicable law.

14. ONGOING DUE DILIGENC

The Company shall undertake ongoing monitoring of:

  • customer transactions
  • repayment patterns
  • suspicious behavior
  • unusual activities

The Company may seek additional documents or updated KYC from customers whenever required.

15. PERIODIC UPDATION OF KYC

Customer KYC shall be periodically updated in accordance with RBI guidelines and internal risk classification framework.

  • seek updated KYC documents;
  • reverify customer information;
  • suspend/restrict services in case of non-compliance.

16. ANTI-MONEY LAUNDERING (AML) MEASURES

The Company shall establish AML controls to:

  • detect suspicious transactions;
  • prevent money laundering;
  • identify unusual activities;
  • comply with FIU-IND reporting obligations.

17. SUSPICIOUS TRANSACTION REPORTING (STR)

The Company shall report suspicious transactions to: Financial Intelligence Unit – India (FIU-IND) where required under applicable law.

Suspicious activities may include:

  • unusual repayment behavior;
  • identity mismatch;
  • forged documents;
  • high-risk transaction patterns;
  • fraudulent activities

18. CASH TRANSACTION REPORTING (CTR)

The Company shall maintain and report cash transaction records as required under PMLA and FIU requirements.

19. RECORD RETENTION

The Company shall maintain:

  • KYC records;
  • transaction records;
  • customer identiϐication records;
  • account files; for the period prescribed under applicable law.

20. DIGITAL LENDING AND CUSTOMER CONSEN

The Company shall ensure:

  • customer consent before data collection;
  • lawful use of customer information;
  • data privacy safeguards
  • transparent disclosures.

Customer data shall be used only for lawful business and regulatory purposes.

21. FIELD VERIFICATION

The Company may undertake:

  • residence veriϐication;
  • office verification;
  • employment verification;
  • tele-verification, through authorized personnel.

Customer data shall be used only for lawful business and regulatory purposes.

22. EMPLOYEE RESPONSIBILITY

Employees shall:

  • comply with this Policy;
  • verify customer documents properly;
  • report suspicious activities;
  • maintain conϐidentiality;
  • avoid fraudulent onboarding.

Any violation may result in disciplinary action

23. PRINCIPAL OFFICER

The Company shall appoint a Principal Ofϐicer responsible for:

  • AML compliance;
  • FIU reporting;
  • regulatory coordination.

Mr. Nishant Singhal- First Floor D Mall, Plot No. A1, Netaji Subash Palace, Saraswati Vihar, North West Delhi, India, 110034

24. DESIGNATED DIRECTO

The Company shall appoint a Designated Director in accordance with PMLA requirements.

Mr. Kamal Kumar Agrawal- First Floor D Mall, Plot No. A1, Netaji Subash Palace, Saraswati Vihar, North West Delhi, India, 110034

25. INTERNAL CONTROL AND AUDIT

The Company shall establish:

  • internal controls;
  • compliance monitoring;
  • periodic audits;
  • employee training mechanisms.

Internal audits may review:

  • KYC compliance;
  • onboarding quality;
  • AML controls;
  • record maintenance.

26. EMPLOYEE TRAINING

The Company shall periodically train employees regarding:

  • KYC procedures;
  • AML requirements
  • fraud prevention;
  • suspicious transaction identiϐication;
  • customer handling.

27. CONFIDENTIALITY

Customer information shall be kept confidential and shared only:

  • with regulators;
  • statutory authorities;
  • credit bureaus;
  • service providers;
  • or as permitted by law

28. POLICY REVIEW

This Policy shall be reviewed periodically and updated in accordance with:

  • RBI guidelines;
  • operational changes;
  • regulatory amendments;
  • service providers;
  • business requirements.

30. BOARD APPROVAL

This Policy has been approved by the Board of Directors of: Karn Securities Private Limited

ANNEXURE – CUSTOMER DOCUMENT CHECKLIST

INDIVIDUAL BORROWER

  • PAN Card
  • Aadhaar
  • Photograph
  • Address Proof
  • Bank Statement
  • Salary Slip
  • Employment Proof
  • Mobile Number
  • Email ID

INDIVIDUAL BORROWER

  • PAN Card
  • Incorporation Certiϐicate
  • GST Certiϐicate
  • Partnership Deed / LLP Agreement
  • Board Resolution
  • UBO Declaration
  • KYC of Authorized Signatories