Based on our understanding, this directive seems to be a part of a set of directives to establish a clear separation between group companies and the AA company. While KYC is a necessary procedure, it is specifically highlighted as one of the directives, along with other points, to emphasize the need for individual processes and independence between entities within the group.
In our interpretation, this directive does not obligate AAs to perform KYC for individual citizens who use AA’s services. Our understanding, having consulted with various AAs, is that AAs are not expected to carry out KYC on citizens who use their services. The term “client” could encompass the beneficiaries of the AA’s services, i.e., citizens and the FIUs.
Given that some AAs have group companies functioning as TSPs, one possible implication of this directive could be to ensure that the due diligence performed by TSPs on FIUs as “clients” is not directly used by AAs while establishing a contract with the same FIUs.
Please note that this is a broad interpretation, and for precise guidance, it’s advisable to consult legal or regulatory experts familiar with the RBI’s directives and the AA framework.