Introduction

As per the latest notification issued by the Govt of India, the following changes have been proposed to digital onboarding process to align itself with the amended PMLA guidelines and rules, 2019:-

  • Digital KYC – the definition of Digital KYC has been enhanced to mean capture of live customer photo and officially valid documents (OVD) or proof of possession of Aadhaar, where offline verification cannot be carried out, along with capture of lat-long coordinates of the live photo taken by an authorised officer of the reporting entity
  • Digital Signature – means of authentication of any electronic record by a subscriber by means of an electronic method or procedure in accordance with the provisions of section 3 of IT Act, 2000, in this case, possession of a certified digital signature certificate from a signing authority
  • e-Document – means an electronic equivalent of a document, issued by the issuing authority of such document with its valid digital signature including documents issued to the digital locker account of the client as per rule 9 of the Information Technology – effectively, Digitally signed and certified Aadhaar documents or similar OVD documents as availed by customer through DigiLocker facility.

Digital KYC process

  1. Post mobile and PAN validation, ask customer purpose of opening account:-
    1. If DBT mode selected, Aadhaar use becomes mandatory – show Aadhaar data field immediately upon selection of this option
    2. Open account through online verification process – If this option is selected, show
      1. Voluntary Aadhaar clause stating “I wish to use Aadhaar for online verification to open account”
      2. e-Document clause stating “I wish to use signed e-Document for online verification to open account”
    3. Open account through offline verification process – If this option is selected, show Aadhaar QR code scan or OVD document capture mechanism
  2. Next, customer’s live photo is captured. Once, live photo is captured, a full-screen customer image with the following should be displayed in-app as a watermark on the image:-
    1. CAF (Customer Application Form) number – This can either be a random CAF ID generated at the start of the application process or added post-facto upon submission of form when CAF ID is generated
    2. GPS Coordinates – Show lat-long stamp
    3. Name of Sourcing agent
    4. Sourcing Agent employee ID
    5. Date (DD:MM:YYYY) and time stamp (HH:MM:SS)
  3. Live photo needs to be captured and hence, liveness test of image should be carried out to ensure customer is physically present and using a printed or videographed image is not allowed. Background image of customer should be white.
  4. For section 1. (c) with offline data capture, all documents captured digitally through application camera will have the same watermark as explained above in section 2.
  5. Once the above mentioned process is completed, a One Time Password (OTP) message containing the text that ‘Please verify the details filled in form before sharing OTP’ shall be sent to client’s own mobile number. Upon successful validation of the OTP, it will be treated as client signature on CAF.
  6. The authorized officer/agent shall provide a declaration about the capturing of the live photograph of client and the original document. For this purpose, the authorized official shall be verified with One Time Password (OTP) which will be sent to his mobile number registered with the Reporting Entity. Upon successful OTP validation, it shall be treated as authorized officer’s signature on the declaration. The live photograph of the authorized official shall also be captured in this authorized officer’s declaration.
  7. Once entire AOF is completed and submitted, a PDF output of the entire AOF shall be triggered to the customer for reference along with Reference ID and a copy of the same shall be submitted to bank’s backend services for further processing.

Sample Application Journey

  1. With the latest notification, govt has made it easier for fintechs and non-banking firms to digitally on-boarding customers using digital KYC measures that drastically reduce the on-boarding costs. Using technology-driven on-boarding techniques to digitally validate and verify customer identity will help firms onboard customers quickly and rapidly reducing overheads. Decimal Technologies award-winning Customer Onboarding Platform onboards over 50000 customers daily across the country.  To know more about how we can enable Digital KYC to onboard customers on your platform, get in touch.

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