The government has now made it mandatory for those investing over Rs 10 lakh in post office schemes to provide proof of source of funds. It has also brought all investments in post office schemes under stricter KYC/PMLA compliance rules to prevent misuse for terrorist financing/money laundering activities.
The Department of Posts has directed post office officials to collect income proofs from certain categories of small savings schemes’ investors. The department made this announcement via a circular issued on May 25, 2023. The circular has been issued due to the revision of Know Your Customer (KYC)/Anti Money Laundering (AML)/Combating the Financing of Terrorism (CFT) norms, the department stated.
As per the circular issued, customers are being categorised with the perspective of risk involved. High-risk customers are required to provide proof of money that is being invested apart from the commonly followed KYC norms.
The circular has divided customers on the basis of risk perception as follows:
- Low risk- Where the customer opens an account or applies for purchase of certificates or applies for credit of maturity/prematurity value of any existing savings instruments with an amount of up to Rs 50,000 and balances in all accounts and savings certificates does not exceed Rs 50,000.
- Medium risk - Where the customer opens account or applies for purchase of certificates or applies for credit of maturity/prematurity value of any existing savings instrument with an amount exceeding Rs 50,000 but up to Rs 10 lakh and balances in all accounts and savings certificates does not exceed Rs 10 lakh
- High risk - Where the customer opens an account or applies for purchase of certificates or applies for credit of maturity/prematurity value of any existing savings instrument with an amount exceeding Rs 10 lakh and balance in all accounts and certificates does not exceed Rs 10 lakh.
The accounts relating to Politically Exposed Persons (PEPs) residing outside India shall fall under High-Risk Category. PEPs are those individuals who are or have been entrusted with prominent public functions by a foreign country, including the Heads of States/Governments, senior politicians, senior government or judicial or military officers, senior executives of state-owned corporations and important political party officials.
As per the circular, the customer has to submit a copy of a document showing the source of receipts of funds for making investments. Any of the following documents can be submitted as proof of the source of funds:
- Bank/Post Office Account statement, which reflects the source of funds
- Any one of the income tax returns filed during the last three financial years, which co-relates the investment in the gross income
- Sale deed/Gift deed/Will/Letter of Administration/succession certificate
- Any other document which reflects the income/source of fund
Apart from asking for proof of money source for certain investors, all categories of customers/investors (irrespective of their risk categories) are required to produce the following documents to do the investment:
- Photograph: Two recent passport size photographs, three in the case of BO. In the case of joint account, photograph of all joint holders should be given
- ID proof: Aadhaar and PAN
- Address proof: Any one of the following - Aadhaar number or PAN. If these two documents do not mention the present address and any officially valid document such as passport, driving license, Voter’s ID Card, Utility bills (not older than two months) etc.
Do note that the documents must be self-attested by the investor. In the case of a joint account, ID and address proof of all joint depositors are required. For basic savings accounts, the document proving that the depositor is a beneficiary of any government scheme is mandatory.
The circular further specifies that re-KYC must be done depending on the risk of the customer. For high-risk, medium risk and low-risk customers, the re-KYC must be done every two, five and seven years, respectively.
When any depositor or certificate holder requests for credit of maturity value into an existing savings account, it should be allowed only after ensuring that the concerned savings account was opened with due KYC documents applying risk category as per balance in the account after the credit of maturity value. In case a new savings account is opened to credit maturity value, it should be ensured that due KYC documents of appropriate risk category are taken based on the maturity value being credited into the account, said the circular.
Official copy of the circular has been attached below
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