Additional KYC Instructions in Respect of Business Connections

24 May 2024
  • DMD Advocates
  • Blog

On May 20, 2024, Ministry of Communications, Department of Telecommunications (Access Services Wing) (DoT) issued a notification regarding additional Know Your Customer (KYC) instructions in respect of business connections (Additional KYC Instructions).

This is in continuation of instructions issued vide letter dated August 31, 2023, pursuant to which “bulk connections” were discontinued and replaced with “business connections”. To issue business connections, the telecom companies were, from the customers, required to obtain inter alia: (i) the corporate identity numbers (CIN)/ business license/ trade registrations of the customer; (ii) address of the customer; (iii) the goods and services tax (GST) registration certificate (if applicable); and (iv) list of end-users who would be using those business connections which list would include the end users’ name, designation and document details for proof of identity.

The key points in the Additional KYC Instructions are:

1. In scenarios where end-users are not identifiable in a business connection, such as SIMs obtained for research & development and testing activities for a specified purpose, the requirement of end user KYC is optional. However, for this category of customers, business connections shall be issued directly by the telecom companies’ employees.

2. Before issuing such business connections, the telecom companies shall obtain an undertaking from the customer detailing the use case scenarios having no end users of the business connections and the telecom companies should be reasonably satisfied that the undertaking from the customers detailing the end use is realistic.

3. The telecom company, during the physical verification of the customer’s address and premises before issuing the business connection, shall verify that the proposed use case scenarios are realistic. Further, the bonafide use of such business connections by the customer should also be monitored. The responsibility of the bonafide usage of the business connections lies with the customer and the same shall be communicated to the customer expressly in writing. If the misuse of such business connections by the customers comes to the notice of the telecom companies, then such business connections shall be discontinued immediately without prejudice to any other action that may be taken.

4. The telecom companies shall provide such connections with limited call/ SMS/ data facility with definite validity up to a maximum of 1 (one) year at a time as per the use case scenarios of the customers. During the renewal of validity, the telecom companies shall satisfy themselves by usage patterns from the past as well as proposed usage for the upcoming year.

5. The telecom companies shall issue up to a maximum of 100 (one hundred) business connections to a customer at a given time. Such business connections cannot be used for M2M communication services.

6. Re-sale of such SIM cards is prohibited, and telecom companies are expected to ensure that customers are obtaining such business connections for their own use and not for use by any third-party.

To access the notification, click here.

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