Kyc circular
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The document summarizes changes to Know Your Client (KYC) verification processes outlined in a SEBI circular, allowing for electronic signatures, digital documents through Digilocker, and video verification in some cases to streamline the KYC process while maintaining anti-money laundering standards. Key changes include accepting e-signatures, scanned documents through eSign or Digilocker, verifying details through APIs without physical documents in some cases, and conducting video verification with random questions.
Kyc circular
- 1. CHANGES IN THE SCENARIO OF KNOW YOUR CLIENT MECHANISM Date of issue April 24, 2020 Circular Number SEBI/HO/MIRSD/DOP/CIR/P/2020/73 Applicability All the intermediaries (Regulated by the SEBI) Subject of Circular Clarification on KYC process and Use of technology for KYC Highlights and understanding - KYC and CDD are important for anti- money laundering process. - eSign services (Online electronic signature services) applicable. - The electronic signature (including digital signature), subject to approval, eSign mechanism of Aadhar shall be accepted in lieu of wet signature. - Cropped Signature affixed on the online KYC form under eSign shall also be accepted as valid signature. - The Client filled KYC from website/App/digital platform of the RI with submission of requisite docs. - OVD/PAN/Signed cancel cheque – JPG/ Scan of the original under eSing. - Mobile Number & Mail – verified by the OTP. - RI shall not store/Save the Aadhar number of investors in their system. - As per the previous circular of SEBI, the usage of aadhar is optional and purely on a voluntary basis by the investor. - PAN should we verified with Income Tax authority. ‘ - Bank account details are verified by penny drop mechanism or any other mechanism using API of the bank. - Aadhar verification file – only 3 days. - If the OVD, the updated address is not mentioned, then that document shall be deemed to be OVD for the limited purpose. - The KYC Form is competed by the investor i) Take print out the KYC form and affixing the Photo and wet signature, and send scan copy/ photograph to RI. ii) Affix online the cropped signature on the filled KYC Form & submit the same to the RI Under RI. - RI should sent KYC Completion letter through registered post/speed post or courier to address of investor. If in the case of incorrect/wrong address and addresses is not available then inform to Stock exchange and depository. No transaction shall be allowed in such account. - The investor provides the OVD in the following manner: i) As a clear photograph or scanned copy of original OVD – eSign Mechanism or ii) Digitally signed document of the OVD, Issued by Digilocker - In person verification: -
- 2. i) Not required when the KYC is completed using the Aadhar authentication/verification of UIDAI. ii) Not required, when the KYC submitted online, documents have been provided through digilocker or any other sources. - Video in person verification:- i) VIPV after the consent of investor ii) Shall be in a live environment iii) Shall be clear and still. Easily recongnisable and shall not be covering their face. iv) The VIPV process shall include random questions and response of investor. v) Photograph should match with the VIPV. - Features of own KYC Application: - i) Shall facilitate taking photograph, scanning, acceptance of OVD through Digilocker, and video capturing. ii) Usage of the App by only authorised person of RI. iii) Time stamping, geo- location tagging iv) Process should be seamless, real – time, secured, end to end encrypted audiovisual interaction. v) Guard against spoofing and other manipulation Terminology:- CDD Customer Due Diligence PoI Proof of Identity PoA Proof of Address OVD Officially Valid Documents:- 1. Passport 2. Driving Licence 3. Proof of possession of Aadhar Card 4. Voter ID Card 5. JOB Card – NREGA (Seal and signed by officer of state government) 6. Letter issued by the National Population Register eSign eSign Service is an online electronic signature that can facilitate an Aadhar holder to digitally sign a document. Digilocker Is a flagship initiative of Ministry of Electronic & IT (MeitY) under digital India programme and aim at Digital empowerment of citizen by providing access to authentic digital documents to citizen’s digital documents wallet. This is only idea aboyt the circular. For full and further study, please read the circular. The writer have no legal responsibility or liability. Vibhu Sharma (ACS, LL.B)