Q21: What is the rule regarding the outsourcing of Know Your Customer (KYC) norms?

All KYC processes, including decision-making, can be fully outsourced to third-party vendors.

Regulated Entities (REs) shall ensure that decision-making functions of determining compliance with KYC norms are not outsourced.

Only the concurrent audit of KYC compliance can be outsourced.

Outsourcing of KYC decision-making is permitted if the vendor is also a Regulated Entity (RE).

✅ Correct Answer: B

Regulated Entities (REs) must ensure that the decision-making functions related to determining compliance with KYC norms are not outsourced.

This safeguards the integrity of the process, a crucial point in RBI KYC Guidelines MCQs.

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