To prevent duplication in customer identification process, market regulator SEBI today issued guidelines for KYC Registration Agencies and said wholly-owned subsidiaries of stock exchanges and depositories would be eligible able to act in such a role.

The Securities and Exchange Board of India (KYC (Know Your Customer) Registration Agency) Regulations, 2011, comes into effect from today.

In August, SEBI had simplified the account opening process for investors. It had issued guidelines for uniform KYC requirements for investors while opening accounts with any intermediary in the securities market.

"To avoid duplication of KYC process with every intermediary, a mechanism for centralisation of KYC records in the securities market has been developed. An intermediary shall perform the initial KYC of its clients and upload the details on the system of the KRA," it said in a circular.

When the client approaches another intermediary, the intermediary can verify and download the client's details from the system of the KRA (KYC Registration Agency).

As a result, once the client has done KYC with a SEBI registered intermediary, he need not undergo the same process again with another intermediary.

"The board shall not consider an application, unless the applicant is a fit and proper person to the satisfaction of the Board and (is)...a wholly owned subsidiary of a recognised stock exchange, having nation-wide network of trading terminals...," SEBI said in a circular.

Besides, wholly owned subsidiaries of depositories, other market intermediaries and Self Regulatory Organisations would also be able to secure certificate for initial registration as KRA.

"The KRA shall obtain the KYC documents of the client from the intermediary as prescribed by the Board and in terms of the rules, regulations, guidelines and circulars issued by the Board or any other authority for Prevention of Money Laundering, from time to time," the regulator said.

The KRAs can, in coordination with each other, prepare operating instructions for implementing requirements under the guidelines and share data on KYC documents.

"KRA shall be responsible for storing, safeguarding and retrieving the KYC documents and submit to the Board or any other statutory authority as and when required.

"KRA shall retain the original KYC documents of the client, in both physical and electronic form... as well as ensuring that retrieval of KYC information is facilitated within stipulated time period," SEBI said.

Such agencies will also have to a compliance officer who shall be responsible for monitoring the compliance of rules and regulations issued by SEBI and the central government for redressal of client's grievances.

Market intermediaries have been directed to upload KYC information of clients on the KRA system and send the original data to them.

An applicant for KRA status must also have a net worth of Rs 25 crore and have expertise for technology and systems and safeguards for maintaining data privacy and preventing unauthorised sharing of data.

"The Board, on being satisfied that the applicant is eligible, shall send intimation to that effect to the applicant, for the grant of certificate of initial registration...," SEBI said, adding that an initial registration would be valid for a period of five years.

KRAs would be eligible for applying for permanent registration three months before the expiry of the period of certificate of initial registration.

SEBI has also made provisions for inspections of KRA regarding books of accounts, records, infrastructure, documents and procedures. (Economic Times)