SEBI Simplifies KYC Process To Ease Client Onboarding

SEBI said the records of all existing clients, whose KYC has been completed based on officially valid documents other than Aadhaar, would be verified within a period of 90 days from September 1

SEBI said, "The client shall be allowed to open an account with intermediaries and transact in the securities market as soon as the KYC process is completed."

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To ease the onboarding of clients for dealing in the securities market, SEBI on Friday simplified the KYC process and rationalised the risk management framework at KYC registration agencies (KRAs). In a circular, the market regulator said, the records of all existing clients, whose KYC has been completed based on officially valid documents other than Aadhaar, would be verified within a period of 90 days from September 1, 2023. 

SEBI said, "In the interest of investors and for ease of transacting in securities market, the client shall be allowed to open an account with intermediaries and transact in the securities market as soon as the KYC process is completed."

Know Your Customer (KYC) is a mandatory verification procedure carried out by financial institutions with the goal of minimising illegal activities. For the securities market, the KYC process means obtaining the Proof of Identity (PoI) and Proof of Address (PoA) of the client, the circular said on Friday. 

 

Further, the market regulator has said that as a part of the risk management framework, the KRAs will verify attributes such as the PAN, name, and address of all clients within two days of receipt of KYC records. The KRAs will verify the client's mobile number and e-mail ID.

 

Clients whose record attributes cannot be verified won't be permitted to continue trading in the securities market until the attributes are verified, the circular said. Adding verified records will offer portability, meaning clients won't need to repeat the KYC process when working with different intermediaries. The intermediaries can retrieve validated records from the KRA database.

SEBI directed KRAs to collaborate in creating mechanisms and consistent internal guidelines for identifying attributes and verification procedures. This collaboration should occur under SEBI's guidance.

"Further, the systems of intermediaries and the KRAs shall be integrated to facilitate seamless movement of documents/information to and from the intermediary to the KRAs for verification/validation of attributes under risk management framework," SEBI said.