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With digital banking and fintech transforming financial services, Know Your Customer (KYC) processes have evolved from a one-time requirement to a continuous compliance obligation. Regulatory bodies like RBI, SEBI, and FATF emphasize real-time customer due diligence to mitigate financial fraud, money laundering, and terrorist financing risks.

This article explores RE-KYC and Perpetual KYC, their necessity, impact, and India’s regulatory stance in alignment with FATF recommendations.

What is RE-KYC?

RE-KYC (Re-Know Your Customer) is the periodic process of updating and revalidating customer identity details in banks, NBFCs, and financial institutions

Why is RE-KYC Necessary?
  • Regulatory Compliance: Ensures adherence to RBI, SEBI, and FATF AML/CFT guidelines
  • Fraud Prevention: Protects against identity theft, money laundering, and unauthorized transactions
  • Risk-Based Monitoring: Enables financial institutions to assess customer risk profiles dynamically
How is RE-KYC Done?
  • Online RE-KYC: Aadhaar-based, OTP, or video KYC verification
  • Offline RE-KYC: Document submission at banks/NBFC branches
  • CKYC (Central KYC Registry): Centralized compliance using government-linked KYC databases

RBI RE-KYC Guidelines (2024 Update): Reserve Bank of India

What is Perpetual KYC?

Unlike RE-KYC, Perpetual KYC (P-KYC) automates and continuously updates customer information in real-time. AI-driven analytics, blockchain-based identity verification, and API integrations eliminate manual periodic KYC renewals

Benefits of Perpetual KYC
  • Real-Time Compliance: Continuous monitoring of customer behavior and financial transactions
  • Automated Risk Scoring: AI classifies customers into low, medium, and high-risk categories dynamically
  • Fraud Detection: Detects suspicious transactions, money laundering, and identity fraud proactively

FATF Digital Identity & KYC Compliance (2024): Financial Action Task Force

Key Differences: RE-KYC vs. Perpetual KYC
FeatureRE-KYCPerpetual KYC
ProcessManual, periodic updatesAI-driven, real-time updates
TechnologyDocument-based verificationAPI, AI, and blockchain-based
Fraud DetectionReactiveProactive
ComplianceRBI-mandated scheduled updatesEmerging global best practice

CKYC Registry India: Central KYC Registry

Why Are These KYC Models Becoming Mandatory?

The shift from traditional RE-KYC to Perpetual KYC is driven by:

  • Increased Financial Crime & Cyber Fraud: India reported a 150% rise in digital frauds (2023-24)
  • Regulatory Push for Continuous Monitoring: FATF requires real-time risk-based KYC for AML compliance
  • Growth of Digital Banking & Open Finance: More transactions demand instant, automated compliance mechanisms

FATF AML/CFT Risk-Based Approach (2024): FATF Official Guidelines

India’s Regulatory Framework for RE-KYC & Perpetual KYC
1. RBI Regulations
  • Banks & NBFCs must conduct RE-KYC at set intervals (1-10 years)
  • Video-KYC & Aadhaar-based verification now permitted for faster compliance
  • High-risk customers require annual KYC updates

RBI RE-KYC Circular (2024): Reserve Bank of India

2. SEBI Regulations for Investment & Trading Accounts
  • Mandatory Perpetual KYC for stockbrokers, mutual funds, and fintech platforms
  • AI-based monitoring for high-frequency traders and digital investment apps

SEBI KYC Compliance (2024): SEBI Official Site

3. CKYC Registry & Perpetual KYC
  • CKYC enables cross-platform KYC verification for banks, NBFCs, and payment wallets
  • Government API integration eliminates redundant KYC updates

India’s Central KYC System: CKYC India

How Financial Institutions Can Implement Perpetual KYC
ActionImplementation Strategy
AI-Based Risk ProfilingAutomates customer categorization
Blockchain Identity VerificationEnsures tamper-proof KYC records
API-Driven KYC UpdatesSeamless Aadhaar, PAN, UPI integration
Continuous Transaction MonitoringDetects fraud before regulatory violations occur

FATF’s Future of Digital KYC (2024): FATF Report

RE-KYC and Perpetual KYC are reshaping financial compliance in India. With growing AML/CFT risks and RBI/FATF regulations tightening, financial institutions must transition from periodic KYC updates to AI-driven, real-time compliance models

By leveraging digital identity verification, AI-based fraud detection, and automated risk profiling, financial firms can ensure seamless compliance, improved security, and better customer experience in 2024 and beyond