1. What is the primary objective of KYC norms in banks?
- A. To increase bank deposits
- B. To offer personalized products
- C. To improve customer service
- D. To prevent money laundering and terrorist financing
KYC norms are implemented to prevent misuse of banking channels for money laundering and terrorist financing activities.
2. Which Act in India provides the legal basis for KYC norms and Anti-Money Laundering regulations?
- A. Companies Act, 2013
- B. Prevention of Money Laundering Act, 2002
- C. Banking Regulation Act, 1949
- D. Negotiable Instruments Act, 1881
The Prevention of Money Laundering Act (PMLA) 2002 provides the legal framework for KYC and AML compliance in India.
3. As per RBI guidelines, what is the periodic KYC update requirement for a 'low risk' customer?
- A. Every 2 years
- B. Every 4 years
- C. Every 10 years
- D. Only once at account opening
Low risk customers must update their KYC once every 10 years as per RBI KYC Master Directions.
4. In wire transfers, which information is mandatory to be included to comply with KYC/AML norms?
- A. Name and account number of the originator
- B. Only beneficiary details
- C. Branch manager’s approval
- D. Cheque details
Wire transfers must include originator’s name and account number to ensure traceability and compliance with FATF guidelines.
5. Which organization issues guidelines for combating money laundering and terrorist financing globally?
- A. RBI
- B. SEBI
- C. IMF
- D. FATF
The Financial Action Task Force (FATF) sets international standards for AML and CFT compliance.
6. Enhanced Due Diligence (EDD) is required for which category of customers?
- A. Low risk customers
- B. High risk customers
- C. Existing savings account holders
- D. Senior citizens
High-risk customers like PEPs or NRIs require Enhanced Due Diligence, which involves stricter monitoring and verification.
7. What is the maximum cash deposit allowed in a savings account without quoting PAN under current RBI rules?
- A. ₹50,000
- B. ₹1,00,000
- C. ₹2,00,000
- D. ₹25,000
As per RBI and Income Tax rules, cash deposits above ₹50,000 require PAN to be quoted.
8. Which of the following is an example of a Politically Exposed Person (PEP)?
- A. Bank employee
- B. Small business owner
- C. Member of Parliament
- D. School teacher
Politically Exposed Persons (PEPs) include MPs, MLAs, judges, and other high public officials, requiring enhanced KYC.
9. Suspicious Transaction Reports (STR) are to be filed by banks with:
- A. RBI
- B. SEBI
- C. IRDAI
- D. FIU-IND
Suspicious Transaction Reports are filed with Financial Intelligence Unit – India (FIU-IND).
10. Which of the following is NOT a valid Officially Valid Document (OVD) under KYC norms?
- A. Passport
- B. College ID Card
- C. Aadhaar Card
- D. Voter ID
Only documents like Aadhaar, Passport, Voter ID, Driving Licence, and NREGA card are considered OVDs. A college ID card is not acceptable.
11. What is the main objective of the Central KYC Records Registry (CKYCR)?
- A. To maintain loan records of customers
- B. To monitor credit scores of borrowers
- C. To provide a single KYC repository for financial institutions
- D. To track customer insurance details
CKYCR stores KYC records centrally so that customers need not submit KYC documents repeatedly to different financial institutions.
12. Which regulator oversees the operations of the Central KYC Records Registry (CKYCR)?
- A. Central Registry of Securitisation Asset Reconstruction and Security Interest (CERSAI)
- B. RBI
- C. SEBI
- D. Ministry of Finance
CKYCR is operated and maintained by CERSAI as per Government of India notification.
13. Once a customer is registered in CKYCR, which document is issued to them?
- A. Aadhaar Number
- B. KYC Identifier (KIN)
- C. PAN Card
- D. UPI ID
CKYCR issues a unique KYC Identifier (KIN) that can be used across banks and financial institutions for verification.
14. Which of the following is NOT a benefit of CKYCR?
- A. Eliminates duplication of KYC
- B. Reduces compliance burden on banks
- C. Helps in better monitoring of customer profiles
- D. Provides loan eligibility score to customers
CKYCR deals only with centralized storage of KYC documents, not loan eligibility scoring.
15. Banks must upload KYC records to CKYCR within how many days of account opening?
- A. 30 days
- B. 10 days
- C. 3 days
- D. 7 days
Banks are required to upload KYC records to CKYCR within 3 days of account opening.
16. Monitoring of transactions is primarily carried out to identify:
- A. Suspicious or unusual activities
- B. Loan defaults
- C. Customer preferences
- D. Profitability of branches
Monitoring transactions helps banks detect suspicious or unusual activities that may indicate money laundering or fraud.
17. A customer deposits ₹15 lakh in cash in a single day. The bank should:
- A. Ignore the transaction
- B. Close the account immediately
- C. Inform the branch manager only
- D. Report the transaction to FIU-IND as a Cash Transaction Report (CTR)
Cash deposits above ₹10 lakh in a month must be reported as Cash Transaction Reports (CTR) to FIU-IND.
18. Suspicious Transaction Reports (STR) should be filed by banks within how many days of detection?
- A. 15 days
- B. 7 days
- C. 30 days
- D. 45 days
STR must be filed within 7 days of identifying a suspicious transaction.
19. Which of the following is an example of a suspicious transaction?
- A. Salary credited monthly by employer
- B. Utility bill payment through ECS
- C. Frequent cash deposits just below the reporting threshold
- D. Regular loan EMI payment
Structuring transactions to avoid reporting thresholds is a classic suspicious activity under AML guidelines.
20. Banks must preserve records of transactions reported to FIU-IND for a minimum of how many years?
- A. 5 years
- B. 3 years
- C. 7 years
- D. 10 years
As per PMLA guidelines, banks must preserve transaction records for 5 years after the business relationship ends.
