KNOW YOUR CUSTOMER (KYC) & ANTI-MONEY LAUNDERING (AML) POLICY

1. Preface

Finlix Capital Private Limited (“Finlix” or the “Company“) is a Non-Banking Financial Company (NBFC) committed to maintaining the highest standards of integrity, transparency, and regulatory compliance in all its business operations.

In accordance with the Reserve Bank of India (RBI) Master Direction – Know Your Customer (KYC) Direction, 2016, as amended from time to time, and the applicable provisions of the Prevention of Money Laundering Act, 2002 (PMLA), the Company has established this Know Your Customer (KYC) & Anti-Money Laundering (AML) Policy, duly approved by the Board of Directors.

The primary objective of this Policy is to prevent the Company from being used, intentionally or unintentionally, for money laundering, terrorist financing, fraud, identity theft, or other financial crimes. The Policy also enables the Company to identify and verify its customers, understand the nature of their financial activities, determine the source of funds, identify beneficial ownership, and effectively manage associated risks.

This Policy applies to all products, services, business relationships, digital channels, and lending activities undertaken by the Company.

2. Scope and Objectives

This Policy has been formulated to establish a comprehensive framework for:

• Customer acceptance and onboarding.
• Customer identification and verification.
• Risk-based customer due diligence.
• Ongoing monitoring of customer transactions and relationships.
• Detection and reporting of suspicious transactions.
• Compliance with RBI, PMLA, FIU-IND, and other applicable regulatory requirements.
• Prevention of money laundering and terrorist financing activities.

The Company’s KYC & AML framework is built upon the following four fundamental pillars:

• Customer Acceptance Policy (CAP)
• Customer Identification Procedures (CIP)
• Transaction Monitoring
• Risk Management Framework

3. Customer Definition

For the purposes of this Policy, a Customer includes:

• Any individual or entity maintaining or seeking to establish a business relationship with the Company.
• A beneficial owner on whose behalf a transaction is conducted.
• Beneficiaries of transactions carried out through intermediaries.
• Any person or entity connected with a financial transaction that may expose the Company to legal, regulatory, financial, or reputational risks.

The term “Person” shall have the meaning assigned under the RBI KYC Master Direction and shall include:

• An Individual
• Hindu Undivided Family (HUF)
• Company
• Partnership Firm
• Trust
• Association of Persons (AOP)
• Body of Individuals (BOI)
• Artificial Juridical Person
• Any branch, office, or agency controlled by the above entities

4. Customer Acceptance Policy

The Company shall establish business relationships only after completing appropriate Customer Due Diligence (CDD) and satisfying itself regarding the identity and legitimacy of the customer.

Accordingly:

• Anonymous, fictitious, benami, or impersonated accounts shall not be opened.
• Every customer shall provide satisfactory proof of identity and address before loan processing.
• Where a customer acts on behalf of another person or legal entity, appropriate authority and legal documentation shall be verified.
• The Company reserves the right to decline or discontinue any business relationship where:
  
  • Customer identity cannot be satisfactorily established.
  • Required KYC documents are not submitted.
  • Information provided appears false, misleading, inconsistent, or unverifiable.
  • The customer or beneficial owner appears in sanctions lists, terrorist databases, or prohibited entities notified by competent authorities.
  • The Company is unable to complete Customer Due Diligence as required under applicable law.

While implementing these procedures, the Company shall ensure that genuine customers are treated fairly and without unnecessary inconvenience.

5. Customer Identification

Before establishing any lending relationship, the Company shall verify the customer’s identity using officially valid documents and other permissible methods prescribed by RBI.

Verification may include:

• Proof of Identity
• Proof of Address
• PAN
• Aadhaar (where permitted)
• Business Constitution Documents
• Income Documents
• Bank Statements
• Beneficial Ownership Verification
• Digital KYC
• Video KYC (where applicable)

For co-lending arrangements, KYC conducted by the regulated lending partner may be relied upon in accordance with applicable RBI guidelines, while maintaining appropriate records within the Company.

6. Risk Categorisation

The Company shall adopt a Risk-Based Approach for categorising customers based on the level of money laundering and terrorist financing risks.

Customers may be classified into:

• Low Risk
• Medium Risk
• High Risk

The risk categorisation shall consider factors including:

• Nature of business
• Industry sector
• Geographic location
• Shareholding pattern
• Source of funds
• Nature of transactions
• Customer profile
• Expected account behaviour
• Regulatory exposure.

Customer Profile

Appropriate customer profiling shall include:

• Identity verification
• Occupation and business activity
• Financial standing
• Source of income
• Nature of business relationships
• Geographic location
• Expected transaction pattern

The extent of information collected shall be proportionate to the customer’s assessed risk profile.

Low-Risk Customers

Typically, the following may qualify as Low-Risk customers:

• Government departments
• Public Sector Undertakings
• Statutory Authorities
• Well-regulated corporate entities
• Salaried individuals with regular income
• Individuals with established banking relationships and satisfactory repayment history
• Self-employed professionals with stable and verifiable income.

Medium and High-Risk Customers

Enhanced Due Diligence (EDD) shall be applied to customers presenting elevated risk, including but not limited to:

• Politically Exposed Persons (PEPs)
• Non-Resident Indians (NRIs)
• High Net Worth Individuals (HNIs)
• Trusts and charitable organisations
• Non-Governmental Organisations (NGOs)
• Closely held companies
• Partnership firms with dormant partners
• Customers with complex ownership structures
• Businesses operating in high-risk sectors
• Customers with unclear or unverifiable sources of funds
• Non-face-to-face customers
• Persons with adverse media reports or questionable reputations

The Company shall conduct enhanced scrutiny of such relationships, including obtaining additional documentation, senior management approval where required, and continuous monitoring throughout the business relationship.

7. Enhanced Due Diligence

Customers assessed as High Risk shall be subject to enhanced due diligence measures, including additional verification of identity, beneficial ownership, source of funds, source of wealth, business activities, and transaction monitoring.

Special attention shall be given to Politically Exposed Persons (PEPs), customers from high-risk jurisdictions, and customers whose transactions appear inconsistent with their known profile or business activities.

The Company shall periodically review customer risk classifications and update customer information to ensure continued compliance with RBI KYC and AML requirements.