KYC exists to prevent fraud and not to make people miserable

livemint.com:

Also read: KYC Maze: Investors, distributors face updating hurdles with NDML & DotEx KRAs In the Reserve Bank of India’s (RBI) KYC norms through the Master Directive in 2016 and subsequent updates, banks were mandated to ensure: that any new bank account applicant is who they say they are (proof of identity); they live where they say they live (proof of address); banks had to also conduct a physical verification for the documents (OSV, or Original Seen and Verified and CPV, or Contact Point Verification) The reason for this type of verification is to ensure that no fraudster enters the system, specifically, the government was worried about terrorism and money laundering. Along the way, RBI introduced anti-money laundering checks to enhance security. The new fraudsters found that they could use minimum KYC compliance norms using stolen IDs to open ‘burner’ accounts or mule accounts.

These mule accounts were used to launder the proceeds of crime to several different accounts before withdrawing the cash from ATMs. While KYC norms have been around for a long time and have protected the citizens of our country from fraud for many years, they are not without loopholes. For example, a KYC initiated through CKYC or central KYC (recall the Amitabh Bachchan ad that said let’s make sure your KYC is easy and you don’t have to collect your documents) has significant limitations.

The bank that submits the data takes no liability for the accuracy of the data and the bank that pulls the data might not conduct their own diligence. It often ends up being a garbage in/garbage out problem. Perhaps people forget the reason why KYC exists.