Cholamandalam Investment and Finance
Company Limited may be used unwittingly as
intermediaries for the transfer or
deposit of monies derived from criminal
activity. In order to be able to
identify any such activity,
Cholamandalam Investment and Finance
Company Limited must know its
customers and the kinds of activity in
which they would reasonably be expected
to engage.
An effective Customer Identification
Program (“CIP”) is an important part of
the effort by Cholamandalam Investment
and Finance Company Limited to know
its customers. The Cholamandalam
Investment and Finance Company Limited CIP
is integrated into the AML (Anti Money
Laundering) program for the company in
terms of the Prevention of Money
Laundering Act, 2002 and the relevant
rules notified thereunder, which
contains provisions requiring the
Business processes to:
verify the identity of any Person
transacting with the Company to the
extent reasonable and practicable
maintain records of the information
used to verify a customer’s identity,
including name, address and other
identifying information; and
consult lists of known or suspected
terrorists or terrorist
organizations provided to Cholamandalam
Investment and Finance Company Limited by any applicable government agency
to determine whether a Person opening an
account appears on any such list.
Cholamandalam Investment and Finance
Company Limited will perform
appropriate, specific, and where
necessary, Enhanced Due Diligence on its
customers that is reasonably designed to
know and verify the true identity of its
Customers and to detect and report
instances of criminal activity,
including money laundering or terrorist
financing. The procedures,
documentation, types of information
obtained and levels of KYC due diligence
to be performed will be based on the
level of risk associated with the
relationship (products, services,
Business processes, geographic
locations) between Cholamandalam
Investment and Finance Company Limited and
the Customer and the risk profile of the
Customer. Each Business Process shall
establish standards and procedures for
performing KYC due diligence and
Enhanced Due Diligence that are
appropriate given the associated risks
of their business and their particular
Customers. Such standards and procedures
shall comply with the requirements of
law applicable to such business and the
jurisdiction in which it operates and
shall incorporate the components
detailed below, except to the extent
that compliance would conflict with
requirements of law of a particular
jurisdiction.
Cholamandalam Investment and
Finance Company Limited shall take
reasonable measures to ascertain
and verify the true identity of
all Customers who transact with
Cholamandalam Investment and
Finance Company Limited. Each Business
Process shall design and
implement specific due diligence
standards and procedures that
are appropriate given the nature
of the respective businesses,
Customers, and the associated
risks. Such standards and
procedures shall include, at a
minimum, the following elements:
Each Business Process shall
implement procedures to obtain from
each Customer, prior to transacting,
the following information as may be
relevant, to that business:
1) Name; (procedures should require
Business processes to use reasonable
efforts to ensure that the name
recorded on Cholamandalam Investment
and Finance Company Limited
systems as the customer will be
exactly the same as (and not merely
similar to, or a variation of) the
name that appears on any identifying
documentation reviewed in connection
with the loan);
2) For individuals, date of birth;
3) Address including the documentary
proof there of;
For an individual, a residential
or business street address;
For an individual who does not
have a residential or business
street address, an Army Post
Office (“APO”) or Fleet Post
Office (“FPO”) box number, or
the residential or business
street address of next of kin or
of another contact individual;
or
For a Person other than an
individual (such as a
corporation, partnership, or
trust) a principal place of
business, local office, or other
physical location
Other than as set forth in ii)
above, mailing addresses
(including post office boxes)
are not sufficient to satisfy
this requirement.
4) Telephone/Fax number:
5) Identification number;
A taxpayer identification
number; passport number and
country of issuance; alien
identification card number; or
number and country of issuance
of any other government-issued
document evidencing nationality
or residence and bearing a
photograph or similar safeguard.
When opening an account for a
Person (other than an
individual) that does not have
an identification number, the
Business Process must request
alternative government-issued
documentation certifying the
existence of the business or
enterprise;
For a Customer who has applied
for, but has not received a
taxpayer identification number,
an Account may be opened, but
each Business Process shall
implement procedures to confirm
that the application was filed
before the Customer opens the
Account and to obtain the
taxpayer identification number
within a reasonable period of
time after the Account is
opened.
The list of documents that can be
accepted as proof of identity and
address from customers across
various products offered by the
Company is given as annexure 2 to
this policy. These should be
appropriately covered in the credit
policies of the respective
businesses and communicated to the
credit approving authorities. Any
deviations to the approved list of
documents can be approved by the
Credit Head of that business with an
appropriate justification.
Each Business Process as a part of
the credit policy shall document and
implement appropriate risk-based
procedures designed to verify that
it can form a reasonable belief that
it knows the true identity of its
Customers. Verification of Customer
identity should occur before
transacting with the customer.
Procedures for each Business Process
shall describe acceptable methods of
verification of Customer identity,
which may include verification
through documents or non-documentary
verification methods that are
appropriate given the nature of the
Business Process, the products and
services provided and the associated
risks.
i) Verification through documents.
These documents may include, but are
not limited to:
For an individual, an unexpired
government-issued identification
evidencing nationality or
residence and bearing a
photograph or similar safeguard,
such as a driver’s license or
passport; or
For a Person other than an
individual (such as a
corporation, partnership, or
trust), documents showing the
existence of the entity, such as
certified articles of
incorporation, a
government-issued business
license, a partnership
agreement, or trust instrument.
The list of documents that can be
accepted as proof of identity and
address from customers across
various products offered by the
Company is given as annexure 2 to
this policy. These should be
appropriately covered in the credit
policies of the respective
businesses. The customer
verification processes will be
covered in detail in the credit
policies of every business.
ii) Verification through
non-documentary methods. These
methods may include, but are not
limited to:
Contacting or visiting a
Customer;
Independently verifying the
Customer’s identity through the
comparison of information
provided by the Customer with
information obtained from a
consumer reporting agency,
public database, or other
source;
Checking references with other
financial institutions; or
Obtaining a financial statement.
iii) Additional verification
procedures. If applicable, the
Business Process verification
procedures should address situations
where:
A person is unable to present an
unexpired government-issued
identification document that
bears a photograph or similar
safeguard;
The Business Process associate
is not familiar with the
documents presented;
The Account is opened without
obtaining documents;
Where the Business Process is
otherwise presented with
circumstances that increase the
risk that it will be unable to
verify the true identity of a
Customer through documents; and
If the Business Process cannot
verify the identity of a
Customer that is other than an
individual, it may be necessary
to obtain information about
Persons with authority or
control over such Account,
including signatories, in order
to verify the Customer’s
identity.
Each Business Process shall document
and implement procedures to resolve
information discrepancies and to
decline or cease to do business with
a Customer when it cannot form a
reasonable belief that it knows the
true identity of such Customer or
cannot adequately complete necessary
due diligence. These procedures
should include identification of
responsible decision makers and
escalation paths and detailed
standards relating to what actions
will be taken if a Customer's
identity cannot be adequately
verified.
The Company does not accept
deposits. The Company’s policies
also does not permit cash
transactions greater than Rs.10 lacs.
Nevertheless, if there were to be
any such transactions in future, the
business processes shall have a
system of internal reporting of
suspicious transactions and cash
transactions greater than Rs.10
lakhs, whether such transactions
comprise of a single transaction or
a series of transactions integrally
connected to each other, and where
such series of transactions take
place within a month;
Further, the Compliance officer
shall furnish information of the
above mentioned transactions to the
Director, Financial Intelligence
Unit – India (FIU-IND) at the
prescribed address in the formats
prescribed in this regard including
the electronic filing of reports.
Provided that where the principal
officer, has reason to believe that
a single transaction or series of
transactions integrally connected to
each other have been valued greater
than Rs.10 lakhs so as to defeat the
provisions of the PMLA regulations,
such officer shall furnish
information in respect of such
transactions to the Director within
the prescribed time.
Each Business Process shall document
and implement appropriate procedures
to retain records of KYC due
diligence and anti money laundering
measures. The Business Process shall
implement, at a minimum, the
following procedures for retaining
records
a. Transactions for which records
need to be maintained:
All cash transactions of the
value of more than Rs.10 lakh or
its equivalent in foreign
currency.
All series of cash transactions
integrally connected to each
other which have taken place in
a single month and where the
aggregate value of these
transactions exceeds Rs.10 lakhs
or its equivalent foreign
currency.
All cash transactions where
forged or counterfeit currency
notes or bank notes have been
used as genuine and where any
forgery of a valuable security
has taken place.
All suspicious transactions
whether or not made in cash
b. Information to be preserved:
The information required to be
preserved with respect to the above
transactions are the nature of
transactions, amount and the
currency in which it was
denominated, date of transaction and
the parties to the transaction.
c. Periodicity of retention:
The following records shall be
retained for a minimum period of ten
years after the related account is
closed:
The Customer identification
information and residence
identification information
including the documentary
evidence there of
All other necessary records
pertaining to the transactions
that could be produced as
evidence for prosecution of
persons involved in criminal
activity
Further, a description of the
methods used to verify Customer
identity as well as a
description of the resolution of
any discrepancies in
verification shall be maintained
for a period of at least Ten
(10) years after such record was
created.
The above records shall be made
available to the competent
authorities upon request.
Each Business Process shall
implement procedures for providing
Customers with adequate notice that
Cholamandalam Investment and Finance
Company Limited is requesting
information and taking actions in
order to verify their identity. Each
Business Process shall determine the
appropriate manner to deliver the
notice, which shall be reasonably
designed to ensure that the Customer
is able to view or is otherwise
given such notice prior to Account
opening.
The requirements of the earlier
sections are not applicable to
Accounts opened prior to, on or
after the effective date of this
Manual by existing Customers,
provided that the Business Process
has previously verified the identity
of the Customer and the Business
Process continues to have a
reasonable belief that it knows the
true identity of the Customer.
Further, transactions in existing
accounts should be continuously
monitored and any unusual pattern in
the operation of the account should
trigger a review of the due
diligence measures
Cholamandalam Investment and Finance
Company Limited is primarily
engaged in retail finance. It does
not deal with such category of
customers who could pose a potential
high risk of money laundering,
terrorist financing or political
corruption and are determined to
warrant enhanced scrutiny. The
existing credit policies of the
Company in respect of its various
businesses ensure that the Company
is not transacting with such high
risk customers. The Company shall
conduct Enhanced Due Diligence in
connection with all Customers or
Accounts that are determined to pose
a potential high risk and are
determined to warrant enhanced
scrutiny. Each Business Process
shall establish appropriate
standards and procedures for
conducting Enhanced Due Diligence,
which shall involve conducting
appropriate additional due diligence
or investigative actions beyond what
is required by standard KYC due
diligence. Enhanced Due Diligence
shall be coordinated and performed
by Cholamandalam Investment and
Finance Company Limited, who may engage
appropriate outside investigative
services or consult appropriate
vendor sold databases when
necessary. Each Business Process
shall establish procedures to
decline to do business with or
discontinue relationships with any
Customer when Cholamandalam
Investment and Finance Company
Limited
cannot adequately complete necessary
Enhanced Due Diligence or when the
information received is deemed to
have a significant adverse impact on reputational risk.
Ongoing monitoring is an essential
element of effective KYC procedures.
Cholamandalam Investment and Finance
Company Limited can effectively
control and reduce the risk only if
it has an understanding of the
normal and reasonable activity of
the customer so that they have the
means of identifying transactions
that fall outside the regular
pattern of activity. However, the
extent of monitoring will depend on
the risk sensitivity of the account.
The different business divisions
should pay special attention to all
complex, unusually large
transactions and all unusual
patterns which have no apparent
economic or visible lawful purpose.
High-risk accounts have to be
subjected to intensified monitoring.
Company should put in place a system
of periodical review of risk
categorization of accounts and the
need for applying enhanced due
diligence measures.
The Company should establish
appropriate procedures and ensure
effective implementation of KYC
guidelines. The implementation
procedure should cover proper
management oversight, systems and
controls, segregation of duties,
training and other related matters.
Company’s internal audit and
compliance functions will play a
role in evaluating and ensuring
adherence to the KYC policies and
procedures.
As a general rule, the compliance
function should provide an
independent evaluation of the
company’s own policies and
procedures, including legal and
regulatory requirements.
Internal Auditors should
specifically check and verify the
application of KYC procedures at the
branches and comment on the lapses
observed in this regard.
The compliance in this regard may be
put up before the Audit Committee of
the Board on quarterly intervals.
There shall be an ongoing employee
training programme so that the
members of the staff are adequately
trained in KYC procedures. Training
requirements should have different
focuses for frontline staff,
compliance staff and staff dealing
with new customers. It is crucial
that all those concerned fully
understand the rationale behind the
KYC policies and implement them
consistently.
If required the Company may prepare
specific literature/ pamphlets etc.
so as to educate the customer of the
objectives of the KYC programme. The
Company on an ongoing basis will
educate the front desk staff, the
branch staff and the new joinees on
the elements of KYC through various
training programmes and e-mails.
The above guidelines shall also
apply to the branches.
Appointment of Principal Officer
Ms. P Sujatha is designated as Principal
Officer who shall be responsible for
monitoring and reporting of all
transactions and sharing of information
as required under the law.
In the case of any applications from
trust/nominee or fiduciary accounts
the Company should determine whether
the customer is acting on behalf of
another person as trustee/nominee or
any other intermediary.
If in doubt of the persons behind
the customer, the Company may insist
on receipt of satisfactory evidence
of the identity of the
intermediaries and of the persons on
whose behalf they are acting, as
also obtain details of the nature of
the trust or other arrangements in
place. Company should take
reasonable precautions to verify the
identity of the trustees and the
settlors of trust (including any
person settling assets into the
trust), grantors, protectors,
beneficiaries and signatories.
Beneficiaries should be identified
when they are defined. In the case
of a 'foundation', steps should be
taken to verify the founder
managers/ directors and the
beneficiaries, if defined.
Accounts of companies and firms
Company needs to be vigilant against
business entities being used by
individuals as a ‘front’ for
transactions. Company should examine
the control structure of the entity
and identify the natural persons who
have a controlling interest and who
comprise the management.
These requirements may be moderated
according to the risk perception
e.g. in the case of a public
company.
Client accounts opened by
professional intermediaries
Where the transaction is with a
professional intermediary who in
turn is on behalf of a single
client, that client must be
identified.
Accounts of Politically Exposed
Persons (PEPs) resident outside
India
Politically exposed persons are
individuals who are or have been
entrusted with prominent public
functions in a foreign country,
e.g., Heads of States or of
Governments, senior politicians,
senior government/judicial/military
officers, senior executives of
state-owned corporations, important
political party officials, etc.
The Company offers products
primarily to Indian residents only.
The Company if extending any finance
to non residents should check if he
is a PEP and check all the
information available on the person
in the public domain. The decision
to transact with the PEP should be
taken only by the Head of credit of
the respective businesses supported
by appropriate verification.
Businesses should also subject such
accounts to enhanced monitoring on
an ongoing basis. The above norms
may also be applied to the contracts
of the family members or close
relatives of PEPs.
In an event of an existing customer
or the beneficial owner of an
existing account, subsequently
becomes a PEP, the Company shall
obtain the approval of Management
Committee to continue the business
relationship and subject the account
to the KYC due diligence measures as
applicable to the customers of PEP
category including enhanced
monitoring on an ongoing basis.
Accounts of non-face-to-face
customers
The Business shall not do any
transactions with non-face-to-face
customers.
Customer Identification Procedure
Features to be verified and
documents that may be obtained from
customers
KYC Documents for Identification and
verification
Identity
Proof
Individual:
- Valid Passport
- Valid PAN card
- Valid driving license
- ration card with photo
- bank pass book with photo
attested and latest
statement,
- pensioner ID Copy,
- HSC/SSC certificate with
photo
- employee photo ID card
issued by Govt
- ESIC medical cards with
photo,
- property registered deed
with applicant photos.
Note: Any deviations to
the above documents that can be
accepted can be approved by the
Credit head of the respective
businesses with appropriate
justification
