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KYC/AML risk categorisation of customers

Key Points as per the RBI’s Directions on Risk Management under the KYC and PML Regime

-Anita Baid | Vice President | anita@vinodkothari.com

In line with the Reserve Bank of India’s (RBI) directions on risk management under the Know Your Customer (KYC) norms and Anti-Money Laundering (AML) standards, Non-Banking Financial Companies (NBFCs) are required to categorize their customers into low, medium, and high-risk categories. This risk categorization plays a crucial role in determining the level of due diligence to be undertaken by the NBFC while establishing and maintaining relationships with customers. Here are some key points to consider regarding the risk categorization process for legal entities (corporate borrowers, LLPs, trust, etc.) as well for individual borrowers:

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