SEBI issues e-KYC Authentication facility for resident investors

Nov 08, 2019 | by Avantis RegTech Legal Research Team

The Securities Exchange Board of India (SEBI) on November 05, 2019, has issued a Circular on the subject e-KYC Authentication facility under Section 11A of the Prevention of Money Laundering Act, 2002 (PMLA) by entities in the securities market for Resident Investors. SEBI had issued guidelines for uniform KYC requirements for investors while opening accounts with any intermediary in the securities market. The Ministry of Finance had issued a Circular dated May 09, 2019 on procedure for processing of applications for use of Aadhaar authentication services by entities other than the Banking companies where the Regulator and Unique Identification Authority of India (“UIDAI”) and reporting entity complies permit such entity to carry out authentication of the Aadhaar number of clients using e-KYC authentication facility.

This Circular specifies the followings:-

1.The applications by the concerned entities under Section 11A of the PMLA for use of Aadhaar authentication services shall be filed before the Regulator, who after scrutiny shall forward the applications to UIDAI along with its recommendation.

2.UIDAI shall scrutinize the applications received and send its recommendation to the Department of Revenue

3.The Central Government, if satisfied with the recommendations of the Regulator and the UIDAI that the applicant fulfils all conditions under Section 11A, will permit such applicant to perform authentication.

4.The entities in the securities market shall be allowed to undertake Aadhaar Authentication.

5.These entities would be registered with UIDAI as KYC user agency (“KUA”) and shall allow all the SEBI registered intermediaries / mutual fund distributors to undertake Aadhaar Authentication.

6.The SEBI registered intermediaries / mutual fund distributors, who want to undertake Aadhaar authentication services through KUAs, shall enter into an agreement with any one KUA and get themselves registered with UIDAI as sub-KUAs.

7.The KUAs and sub-KUAs shall adopt the process for Aadhaar e-KYC of investors (resident) in the securities market through Online Portal based Investor (Resident) e-KYC Process (Aadhaar as an OVD) and Assisted Investor (Resident) e-KYC process.

Upon notification by the Central Government permitting the entities recommended by SEBI to undertake Aadhaar based authentication, the Circulars issued in the past by SEBI for e-KYC using Aadhaar based authentication shall stand modified or revised in compliance with this Circular.

[SEBI Circular No. SEBI/HO/MIRSD/DOP/CIR/P/2019/123]


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