V-CIP
Also written Video based Customer Identification Process · Video-based Customer Identification Process
Video based Customer Identification Process: identifying a customer through a live, secure, consent-based audio-visual interaction with facial recognition — treated on par with face-to-face identification.
In plain language
A regulated entity in the IFSC often has customers who live far away. V-CIP lets it identify an Indian national without either side travelling. And it does not have to accept a weaker check to do so.
The Guidelines call V-CIP an alternate method of customer identification. An authorised official of the regulated entity talks with the customer over a live audio-visual link, much like a video call. The talk must be seamless, secure, live, informed and consent-based. The official uses facial recognition. The official collects the identity details needed for customer due diligence (CDD). Then the official checks independently that what the customer said is true. An audit trail of the whole process is kept.
If V-CIP meets the set standards, it counts as face-to-face. If it does not, the result is a non-face-to-face relationship without proper safeguards. The Guidelines treat that as a high-risk factor.
How it works
The definition (Chapter 6, section 6.3.3.3). "Video based Customer Identification Process" or "V-CIP" means an alternate method of customer identification with facial recognition and customer due diligence, by an authorised official of the regulated entity, by undertaking seamless, secure, live, informed and consent based audio-visual interaction with the customer to obtain identification information required for CDD, and to ascertain the veracity of the information through independent verification and maintaining an audit trail.
Status. Such processes, complying with the prescribed standards and procedures, shall be treated on par with face-to-face customer identification for the purposes of the Guidelines.
What V-CIP may be used for.
| Use | Who |
|---|---|
| (a) CDD for new customer onboarding | Individual customers; the proprietor of a proprietorship firm; authorised signatories and beneficial owners of customers that are non-natural persons |
| (b) Updation / periodic updation of KYC | Eligible customers |
Standards. Regulated entities opting for V-CIP must adhere to the minimum standards and procedure in Annexure II, clauses 1.2 and 1.3 of the IFSCA (AML, CTF and KYC) Guidelines.
Why the standards matter. Among the product, service, transaction or delivery channel factors that may indicate high ML/TF risk is a situation involving non-face-to-face business relationships or transactions, without adequate safeguards. V-CIP to standard is the adequate safeguard.
Where it sits. V-CIP is headed in the workbook as a process for onboarding Indian nationals, alongside the digital KYC process for Indian nationals in section 6.3.3.4.
A worked example
Illustrative.
Godavari Asset Managers (IFSC) wants to onboard Veda Holdings LLP, whose 2 designated partners and 1 beneficial owner are Indian nationals living in Pune, Chennai and Bengaluru.
Who goes on video. Under V-CIP use (a), the authorised signatories and beneficial owners of a non-natural person can be identified by V-CIP. 3 sessions are scheduled.
Session with the beneficial owner, Ms Anjali Rao.
| Element of the definition | What happened |
|---|---|
| Informed and consent based | She was told the purpose and recorded her consent at the start |
| Live and secure | Real-time encrypted session from the entity's platform |
| Facial recognition | Her face matched against her identity document |
| Obtain CDD information | Identity, address, nationality, source of her interest in the LLP |
| Independent verification | PAN verified against the issuing authority's database; LLP registration checked independently |
| Audit trail | Session log, officer's credentials and timestamps retained |
Because the process met the standards in Annexure II, clauses 1.2 and 1.3, Godavari treats her identification on par with face-to-face, and the non-face-to-face high-risk indicator does not apply to it.
24 months later. The LLP is medium risk, so its KYC is due for updation once in every 3 years. Ms Rao's updation can be done by V-CIP again under use (b).
What would have gone wrong. A recorded selfie video emailed by Ms Rao is not V-CIP — it is not live, not an interaction and has no audit trail. Accepting it would leave a non-face-to-face relationship without adequate safeguards.
Why NISM asks about it
Chapter 6 (IFSCA Guidelines for KYC Norms), section 6.3.3.3, "V-CIP Process for Onboarding Indian Nationals", carries the definition, the two permitted uses and the on-par-with-face-to-face footnote; section 6.1.2(c) makes non-face-to-face relationships without adequate safeguards a high-risk factor. Expect a definition question built on its adjectives (seamless, secure, live, informed, consent based) and a question on who may be onboarded by V-CIP.
Common exam traps
- V-CIP to standard is on par with face-to-face — it is not a lower tier of identification.
- Live and interactive. A recording is not V-CIP.
- Independent verification and an audit trail are part of the definition, not optional extras.
- Two uses: new-customer CDD, and updation or periodic updation for eligible customers.
- For non-natural persons it covers authorised signatories and beneficial owners, not the entity as such; for proprietorships, the proprietor.
- The standards are in Annexure II, clauses 1.2 and 1.3.
- Do not confuse V-CIP under the IFSCA Guidelines with VIPV, the video in-person verification process in SEBI's KYC norms. They are different frameworks with different requirements.
Check yourself
1.For which of the following may a Regulated Entity undertake V-CIP under the chapter?
- a)Only for periodic updation of KYC, never for onboarding
- b)Only for onboarding individual customers, not for signatories or beneficial owners
- c)Only for customers who are non-resident Indians
- d)CDD at new customer onboarding for individuals, proprietors of proprietorship firms, and authorised signatories and Beneficial Owners of non-natural persons, and updation or periodic updation of KYC for eligible customers
Show the answer
Answer: (d) CDD at new customer onboarding for individuals, proprietors of proprietorship firms, and authorised signatories and Beneficial Owners of non-natural persons, and updation or periodic updation of KYC for eligible customers
The Regulated Entities may undertake V-CIP to carry out:
- (a) CDD in case of new customer on-boarding for individual customers, proprietor in case of proprietorship firm, authorised signatories and Beneficial Owners (BOs) in case of customers which are non-natural persons.
- (b) Updation/Periodic updation of KYC for eligible customers.
Options A and B each keep one half of this rule and drop the other. Option C adds a residence limit that the chapter does not contain. The heading reads V-CIP Process for Onboarding Indian Nationals.
What V-CIP is: an alternate method of customer identification with facial recognition and customer due diligence, by an authorised official of the Regulated Entity, by undertaking seamless, secure, live, informed & consent based audio-visual interaction with the customer. It is used to obtain identification information and to ascertain the veracity of the information furnished by the customer through independent verification and maintaining audit trail of the process.
Its status: such processes complying with prescribed standards and procedures shall be treated on par with face-to-face customer identification procedure. Regulated Entities that use V-CIP must follow the minimum standards and procedure in Annexure II, clauses 1.2 and 1.3 of the Guidelines.
Where this is taught
Free preparation for NISM Series IFSCA-01Related terms
- Customer risk assessmentThe IFSCA requirement to assess every customer and give it a high, medium or low ML/TF risk rating before CDD begins — the rating that decides simplified, standard or enhanced due diligence.
- Digital KYCKYC done by an authorised officer capturing a live photo of the customer and of the original OVD or Aadhaar proof, with the latitude and longitude of the place, through the entity's own authenticated app.
- Regulated EntityIFSCA's term for a unit that holds its licence, recognition, registration or authorisation — the entity the IFSCA (AML, CFT and KYC) Guidelines, 2022 place their duties on.
- Know Your CustomerThe identity and address check every investor must clear before a bank, broker or depository participant will open an account — mandatory under the Prevention of Money Laundering Act, 2002.
- Video In-Person VerificationIPV conducted over a live, recorded video interaction through the intermediary's own app — with informed consent, random questions, a liveliness check and a tamper-proof time-stamped recording.
- Equivalent e-documentAn electronic version of a document issued by the issuing authority itself with its valid digital signature, including one issued to the client's digital locker account — accepted wherever the original is.