August 25, 2004
TO ALL REGISTERED HOUSING FINANCE COMPANIES
In terms of the existing provisions of the Housing Finance Companies (NHB) Directions, 2001, every housing finance company is required to obtain proper introduction of new depositors before opening their accounts and accepting the deposits and maintaining necessary records of the documents relied upon for the purpose of such introduction.In the context of the provisions of the Prevention of Money Laundering Act, 2002 and the need to put in place systems and procedures to help mitigate and control incidence of financial frauds, identify money laundering and other suspicious activities and to safeguard HFCs from being unwittingly used for transfer of deposit funds derived from criminal activity or for financing of terrorism, it is proposed to introduce “Know Your Customer” Guidelines for the HFCs. These guidelines are also applicable to the deposits accepted from non resident Indians.
The KYC guidelines are enclosed as Annexure and come in to effect from October 1, 2004 in respect of all new customers. However, in respect of the existing customers, the HFCs are required to ensure compliance before December 31, 2004.
HFCs are advised to send a copy of the instructions issued to their branch offices on this subject to NHB for perusal.
Please acknowledge receipt.
Assistant General Manager
Department of Regulation & Supervision