KYC Reforms Under PMLA: Risk-Based Framework and CKYCRR
Why in the news
The government is preparing to change Know Your Customer (KYC) rules through amendments to the Prevention of Money Laundering Act (PMLA), moving from a one-size-fits-all approach to one based on customer risk.
Key facts
- Today the same compliance applies to every customer type; the plan allows differentiated KYC by risk profile.
- Simpler procedures for low-risk customers, tougher checks for high-risk accounts.
- The amendment will align PMLA with RBI KYC regulations, smoothing onboarding across institutions.
- KYC refresh intervals for low-risk accounts may be lengthened, lowering costs for institutions.
- OTP or face authentication keeps data use consent-based.
Revamped CKYCRR
| Feature | Purpose |
|---|---|
| Verification with issuing authorities | Confirms data and documents |
| AI and facial recognition | Removes duplicates, keeps a golden record |
| View-only customer access | Customers can request corrections |
| DigiLocker integration | Seamless onboarding |
| Shared metadata, no-fee model | Interoperable records, wider adoption |
Background
The Central KYC Records Registry (CKYCRR) stores digital KYC data. It has already digitised 990 million records, with 1,360 million accessible across institutions, and turnaround for KYC updates has fallen.
Significance
- Balances financial integrity with ease of doing business.
- Less manual collection and faster, more accurate verification.
- Supports inclusive and secure access to finance.
Exam angle
- Law to be amended: PMLA.
- Registry: CKYCRR, linked to DigiLocker.
- Concept: risk-based KYC and golden record.