Introduction: SEBI, in its recent circular, has expanded the list of entities permitted to use e-KYC Aadhaar Authentication services of UIDAI in the securities market. This development, aimed at enhancing KYC norms and preventing money laundering, carries significant implications for market intermediaries and investors alike.
Detailed Analysis:
1. Expansion of e-KYC Aadhaar Authentication Services: The circular highlights the addition of 4 new entities permitted to utilize Aadhaar authentication services under Section 11A of the Prevention of Money Laundering Act, 2002. This expansion aims to streamline KYC processes and enhance the efficiency of authentication in the securities market.
2. Regulatory Framework: SEBI’s circular is issued under Section 11(1) of the Securities and Exchange Board of India Act, 1992, demonstrating its regulatory authority in safeguarding investor interests and regulating securities markets. The circular mandates compliance with prescribed processes outlined in previous circulars and UIDAI guidelines.
3. Implications for Market Intermediaries: Registered intermediaries under SEBI are required to adhere to the updated KYC norms and facilitate the onboarding of newly permitted entities as sub-KUAs. This entails ensuring compliance with UIDAI guidelines and incorporating necessary procedures for Aadhaar authentication.
4. Enhanced Security Measures: The inclusion of additional entities for e-KYC Aadhaar Authentication signifies a commitment to bolstering security measures within the securities market. By leveraging Aadhaar-based authentication, regulators aim to enhance the accuracy and reliability of KYC processes while mitigating the risk of identity fraud and money laundering.
Conclusion: SEBI’s circular announcing the inclusion of 4 new entities for e-KYC Aadhaar Authentication reflects the regulator’s proactive approach towards strengthening KYC norms and enhancing security measures in the securities market. Market intermediaries must adapt to these regulatory changes, ensuring seamless compliance and continued safeguarding of investor interests. This development marks a significant step towards fostering trust and integrity within India’s financial ecosystem.
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Securities and Exchange Board of India
Circular No. SEBI/HO/MIRSD/SECFATF/P/CIR/2024/17 Dated: March 19, 2024
To,
1. All Intermediaries registered with SEBI under Section 12 of the Securities and Exchange Board of India Act, 1992
2. Stock Exchanges
Dear Sir/Madam,
Subject: Entities allowed to use e-KYC Aadhaar Authentication services of UIDAI in Securities Market as sub-KUA
1. The Master Circular on Know Your Client (KYC) norms for the securities market SEBI/HO/MIRSD/SECFATF/P/CIR/2023/169 dated Oct 12, 2023 inter alia has detailed the provision for ‘the adaptation of Aadhaar based e-KYC process and eKYC Authentication facility for Resident Investors under section 11A of the Prevention of Money Laundering Act, 2002, entities permitted to undertake e-KYC Aadhaar Authentication service of UIDAI in Securities Market as sub-KUA, and on-boarding process of sub-KUA by UIDAI’.
2. Department of Revenue, Ministry of Finance vide gazette notification S.O. 3187(E) dated July 13, 2022 and S.O. 446(E) dated Jan 30, 2023 has notified 155 and 39 entities respectively, to undertake Aadhaar authentication service of UIDAI under Section 11A of the Prevention of Money Laundering Act, 2002. These notified entities have been annexed in para 68 of the said SEBI Master Circular.
3. Now, vide Gazette Notification S.O. 1339(E) dated March 14, 2024, Department of Revenue-Ministry of Finance has notified another 4 entities which are permitted to use Aadhaar authentication services of UIDAI under section 11A of the Prevention of Money-laundering Act, 2002. A copy of the notification is attached at Annexure A.
4. The above mentioned entities shall follow the process as detailed in SEBI circular dated Oct 12, 2023 and as may be prescribed by UIDAI from time to time. The KUAs shall facilitate the on-boarding of these entities as sub-KUAs to provide the services of Aadhaar authentication with respect to KYC.
5. This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities markets.
Yours faithfully,
Sapna Sinha
Deputy General Manager
Market Intermediaries Regulation and Supervision Department
Tel. no.:022 2644 9748
email id: sapnas@sebi.gov.in
