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The Securities and Exchange Board of India (SEBI) has issued new guidelines for KYC Registration Agencies

The Securities and Exchange Board of India (SEBI) has issued new guidelines for KYC Registration Agencies

The capital markets regulator SEBI announced new guidelines for KYC Registration Agencies (KRAs) on Wednesday, stating that such agencies will be required to independently authenticate the KYC data of all clients beginning on July 1.

The decision comes after the Securities and Exchange Board of India (SEBI) published new guidelines in January requiring KRAs to carry out independent validation of KYC records submitted onto their systems by Registered Intermediaries (RIs).

According to the stated guidelines, such agencies would be required to maintain an audit trail of all uploads, modifications, and downloads of KYC records pertaining to their clients.

KRAs shall independently authenticate records of clients (both existing and new) whose KYC has been completed using Aadhaar as an Officially Valid Document, according to a circular from the Securities and Exchange Board of India (OVD).

The records of those clients who have completed KYC using an OVD other than an Aadhaar number will be authenticated only after the Aadhaar number is received.

On July 1, 2022, the Securities and Exchange Board of India (SEBI) announced that it would begin validating all Know Your Customer (KYC) data (both new and old).

According to the regulator, clients whose KYC records are not determined to be valid by KRA after the validation process will be permitted to deal in the securities market only after their KYC records have been validated by the regulatory body.

The extra recommendations on KRAs have been put in place by the regulator in order to ensure that the regulations are implemented efficiently.

To maintain their role as repository of KYC data in the securities market, KRAs will be responsible for maintaining, preserving, and retrieving the KYC documents as well as ensuring that they are up to date.

When it comes to Aadhaar authentication, KRAs will use the Unique Identification Authority of India (UIDAI) database, PAN using the Income Tax database, and cellphone number and e-mail ID using a one-time password validation mechanism during the validation process.

This is applicable only in circumstances when the client’s mobile number and e-mail ID are not seeded with Aadhaar before the transaction is completed.

In consultation with SEBI and in coordination with one another, the KRAs will design systems and mechanisms to be used in the market.

It will adhere to standardized internal rules that define parts of the identification of KYC attributes as well as methods for KYC verification and validation.

The systems of the RIs and the KRAs will be connected in order to support the seamless transfer of KYC papers throughout the system.

KRAs will promptly notify the respective RIs of any deficiencies or inadequacies in a client’s KYC documents that are discovered throughout the validation process.

SEBI stated that upon completion of KYC validation, a unique client identification number (KRA identifier) will be provided to the customer by the KYC and AML regulatory authority (KRA).

A KRA identity of this type can be used by the customer to open an account with any other intermediary, without having to go through the KYC procedure again.

When KRAs receive KYC records from new clients who have utilized Aadhaar as an officially valid identification document, the records will be authenticated within two days of the KRAs receiving the records.

The records of all existing clients will be validated within 180 days after the start of the new fiscal year on July 1.

Following receipt of KYC records, KRA is required to notify the client of the KRA identification within two working days of receiving the documents.

Postal or electronic delivery is required, with the proof of delivery being kept on file by the KRA in question at all times.

Written by morningnewshindi

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