RBI · KYC and Customer Due Diligence

19–22: Customer Identification Procedure and third-party reliance

Paragraph-level professional implementation page for KYC and Customer Due Diligence.

KYC and Customer Due Diligence19–22BR Act/RBI Act with PMLA and PML Rules

Finin2min Summary — in 2 Minutes

19–22 — Customer Identification Procedure and third-party reliance. Trigger CIP at account commencement, qualifying occasional transactions, suspicion and structuring; ultimate responsibility remains with the RE.

Official source and legal ownership

Instrument ownerBR Act/RBI Act with PMLA and PML Rules

Source statusCURRENT OFFICIAL SOURCE GATEWAY

Review date2026-07-19

Primary sourceCommercial Banks KYC Directions, 2025 and NBFC KYC Directions, 2025

Paragraph-wise Finin2min interpretation

Legal trigger

Trigger CIP at account commencement, qualifying occasional transactions, suspicion and structuring; ultimate responsibility remains with the RE.

Control owner

Business identifies the event; Compliance confirms law; Operations/Technology executes; Independent review tests evidence.

Evidence

Official source snapshot, policy/SOP, system rule, customer/transaction record, maker-checker log, exception approval and regulatory acknowledgement.

Failure consequence

Customer harm, reporting defect, prudential misstatement, supervisory observation, monetary penalty, restriction or remediation.

Practical example

Scenario: An exception arises under Customer Identification Procedure and third-party reliance. The owner records the trigger, regulated entity, paragraph/reference 19–22, affected customer or exposure, applicable threshold, approval and system evidence. Compliance then tests the result against the official source rather than relying on a generic policy statement.

Implementation and evidence controls

Freeze the applicable entity class, product, transaction date and official instrument version.
Map every control to its legal owner, enabling provision, responsible function, evidence and escalation route.
Retain Board/committee approval, policy version, system configuration, maker-checker evidence, exception approval and regulatory filing acknowledgement.
Re-test the control after an amendment, product change, outsourcing change, merger, customer-risk reclassification or supervisory observation.

Practical Q&A

What is the first test for Customer Identification Procedure and third-party reliance?

Confirm entity, product, event date, official paragraph and any stated exception.

Can a portal or system acceptance cure a legal defect?

No. Technical processing does not override the substantive Direction.

What should be retained for review?

The official source version, legal mapping, calculation or decision record, approvals, communications and filing evidence.