The Securities and Exchange Board (SEBI) of India on 5th November 2019 has issued a detailed circular regarding the process to be followed for Aadhar-based electronic KYC for investors (resident) in the securities market.
SEBI has earlier issued various circulars on requirement of KYC and to admit Aadhar as a proof of identity and now through this circular it has decided to permit entity registered with SEBI to carry out authentication of the Aadhar number of clients using e-KYC authentication facility.
The Aadhaar and Other Laws (Amendment) Ordinance, 2019, promulgated on March 02, 2019 through which a new Section 11A was inserted in chapter IV of the Prevention of Money-Laundering Act, 2002 enables entities in the securities market, for reasons such as online on-boarding of clients, customer convenience, increased efficiency and reduced time, can undertake Aadhar authentication.
SEBI registered intermediaries and mutual fund distributors, who want to undertake Aadhaar authentication services through KUAs (KYC User Agency), should enter into an agreement with any one KUA in format prescribed by UIDAI. They should also get themselves registered with UIDAI as sub-KUAs.
SEBI has also mentioned about the requirements to be fulfilled by entities registered with the UIDAI as KYC User Agency (KUA) as well as for sub-KUA.
The KUAs and sub-KUAs shall adopt any of the following process for Aadhar-KYC of domestic investors:
- online portal based investor
- assisted investor e-KYC processes
KUAs and Sub-KUA shall also comply with the Aadhaar Act Regulations, circulars, guidelines etc. issued by UIDAI from time to time. In case of any non-compliance on the part of KUAs/sub KUAs, SEBI may take necessary action.
Click here to read the Circular
