The Department of Posts has issued a circular on May 25, 2023, where it has revised the KYC norms for investing in small savings schemes for investors. The new KYC norms have been made stricter for those making large value transactions in the post office schemes. The proof of source of funds is needed along with the common KYC documents i.e., PAN, Aadhaar.
The government has now made it mandatory for those investing over Rs 10 lakh in post office schemes to provide proof of source of funds. It has also brought all investments in post office schemes under stricter KYC/PMLA compliance rules to prevent misuse for terrorist financing/money laundering activities.
The Department of Posts has directed post office officials to collect income proofs from certain categories of small savings schemes' investors. The department made this announcement via a circular issued on May 25, 2023. The circular has been issued due to the revision of Know Your Customer (KYC)/Anti Money Laundering (AML)/Combating the Financing of Terrorism (CFT) norms, the department stated.
As per the circular issued, customers are being categorised with the perspective of risk involved. High-risk customers are required to provide proof of money that is being invested apart from the commonly followed KYC norms.
The circular has divided customers on the basis of risk perception as follows:
Low risk- Where the customer opens an account or applies for purchase of certificates or applies for credit of maturity/prematurity value of any existing savings instruments with an amount of up to Rs 50,000 and balances in all accounts and savings certificates does not exceed Rs 50,000.
Medium risk - Where the customer opens account or applies for purchase of certificates or applies for credit of maturity/prematurity value of any existing savings instrument with an amount exceeding Rs 50,000 but up to Rs 10 lakh and balances in all accounts and savings certificates does not exceed Rs 10 lakh
High risk - Where the customer opens an account or applies for purchase of certificates or applies for credit of maturity/prematurity value of any existing savings instrument with an amount exceeding Rs 10 lakh and balance in all accounts and certificates does not exceeds Rs 10 lakhs
The accounts relating to Politically Exposed Persons (PEPS) residing outside India shall fall under High-Risk Category. PEPs are those individuals who are or have been entrusted with prominent public functions by a foreign country, including the Heads of States/Governments, senior politicians, senior government or judicial or military officers, senior executives of state-owned corporations and important political party officials.
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