The purpose of this article is to get an overlook about the direction by Board to Registered intermediaries (RI) to upload the KYC records with Central KYC Records Registry (CKYCR) as well as to get deep understanding about the entity details and documents need to be submitted on Central KYC Records Registry (CKYCR) by Legal Entities to get update their KYC.

With the object of further Operationalization of Central KYC Records Registry (CKYCR) SEBI vide its Circular no. SEBI/HO/MIRSD/DOP/CIR/P/2021/31 dated March 10, 2021 has directed to Registered Intermediaries (RI) to upload ‘Know Your Customer’ data pertaining to accounts of legal entities/ Other than Individual opened on or after April 1, onto the Central KYC Registry.

The regulator has also come out with a template for legal entities in this regard.

Rule 9 (1A) of the Prevention of Money Laundering (Maintenance of Records) Rules, 2005 requires that- Every reporting entity shall at the time of commencement of an account-based relationship-

(i) Identify its clients, verify their identity, obtain information on the purpose and intended nature of the business relationship; and

(ii) Determine whether a client is acting on behalf of a beneficial owner, and identify the beneficial owner and take all steps to verify the identity of the beneficial owner

where the Regulator is of the view that money laundering and terrorist financing risks are effectively managed and where this is essential not to interrupt the normal conduct of business, the Regulator may permit the reporting entity to complete the verification as soon as reasonably practicable following the establishment of the relationship.

In all other cases, verify identity while carrying out-

(iii) Transaction of an amount equal to or exceeding rupees fifty thousand, whether conducted as a single transaction or several transactions that appear to be connected, or

(iv) Any international money transfer operations.

In the circular the term Legal Entity denotes:

  • Sole Proprietorship
  • Partnership Firm
  • HUF
  • Private Limited Company
  • Public Limited Company
  • Society
  • Association of persons (AOP)/ Body of individuals (BOI)
  • Trust
  • Liquidator
  • Limited Liability Partnership
  • Artificial Liability Partnership
  • Public Sector Banks
  • Central/ State Government Department or Agency
  • Section 8 Companies
  • Artificial Judicial Person
  • International Organization or agency/ Foreign Embassy or Consular office
  • Not categorized
  • Others

While updating KYC, Legal Entities (LES) have to submit Proof of Identity (POI) Here the term Proof of Identity (POI) denotes:

  • Officially valid document in respect of person authorised to transact
  • Certificate of incorporation (COI)/ Registration certificate
  • Memorandum and Articles of Association
  • Resolution of Board/ Managing Committee
  • Partnership Deed/ Trust Deed
  • Power of attorney granted
  • Activity Proof (For sole proprietorship only)

Next, SEBI directed to RIs to ensure that in case legal entity accounts opened prior to April 1, 2021, the KYC records are uploaded on to CKYCR when the updated KYC information is obtained/received from the client and during such receipt of updated information, clients’ KYC details are migrated to current Client Due Diligence (CDD) standards.

Where a client, for the purpose of establishing an account based relationship, submits a KYC Identifier to a RI, with an explicit consent to download records from CKYCR, then such RI shall retrieve the KYC records online from CKYCR using the KYC Identifier and the client shall not be required to submit the same KYC records or information or any other additional identification documents or details, unless there is a change in the information of the client as existing in the records of CKYCR.

Once a KYC identifier is generated by CKYCR, the RIs would ensure that the same is communicated to the legal entity.

“Know Your Client (KYC) Identifier” means the unique number or code assigned to a customer by the Central KYC Records Registry.

Note: The provisions of this circular are not applicable to Foreign Portfolio Investors (FPIs).

“It always seems impossible until it is done.”-Nelson Mandela

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DISCLAIMER: Views expressed are that of the author based on the information/data as on the date of compilation by author for general informational use of the reader and should not be basis for action. For any actions expert opinion must be sought separately, author shan’t be liable for any actions/omission opinions framed by the user on the basis of this article in any circumstances.

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