Periodically Updating CDD Profile under IFSCA Guidelines

Periodic monitoring and review of the customer information is crucial as the customer’s profile may change over time, exposing the business to different degrees and nature of financial crime risk. The IFSCA (AML, CFT, and KYC) Guidelines, 2022, provide that the regulated entities must review the Customer Due Diligence file of every customer depending upon the risk classification of the customer.

The Guidelines provide that the profile of a high-risk customer must be reviewed once a year, while that of a low-risk customer can be done once every five years. The CDD information must be checked every three years for the customer classified as medium risk.

Apart from this, if the changes are identified in the customer’s address, or the identity documents have expired, the regulated entities must immediately take the necessary action. For all the customers, the CDD process must be conducted afresh in case of ID expiry. For an address change, in the case of a natural person, the new address details must be obtained along with documentary evidence and verified using the positive confirmation method. In case of address change for a corporate customer, the CDD process must be reperformed.

If there is no change in the original CDD information, then a self-declaration (individual) or a confirmation letter from the authorized signatory (corporate) must be obtained. The regulated entities must always ensure that the beneficial ownership details are up-to-date and relevant to the customer’s risk profile.

Here is a visual chart depicting the requirement to update the CDD files periodically by the IFSCA-regulated entities in accordance with the IFSCA (AML, CFT, and KYC) Guidelines.

To help you manage your AML compliance for your IFSC operations, AML India offers end-to-end AML consultancy support, starting from assessing the business exposure to financial crimes, tailoring the AML policies and procedures in line with the IFSCA AML Guidelines and training the team to implement the robust AML measures effectively.