RBI amends Master Direction on KYC to include Politically Exposed Persons

The Reserve Bank of India (RBI) has amended the Master Direction on KYC to include Politically Exposed Persons via issuing Notification.

Referring to the Master Direction (MD) on KYC dated February 25, 2016, as amended from time to time, in terms of which Regulated Entities (REs) have to undertake Customer Due Diligence (CDD), as per the process laid out therein, for their customers.

Politically Exposed Persons (PEPs) are defined in the existing Direction in sub-clause (xvii) of clause (a) of Section 3 of the MD on KYC. However, in order to provide better clarity, it has been decided to include the definition of PEPs as an explanation to Section 41 of the Master Direction as under:

“Explanation: “Politically Exposed Persons” (PEPs) are individuals who are or have been entrusted with prominent public functions by a foreign country, such as Heads of State/ Governments, senior politicians, senior government or judicial or military officers, senior executives of state-owned corporations, and important political party officials.”

As a result, sub-section (xvii) of clause (a) of Section 3 of the aforementioned Master Direction has been deleted. The relevant sections of the MD on KYC are updated to reflect the aforementioned changes.