SEBI seeks major changes to new KYC process

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The Securities and Exchange Board of India (Sebi) has sought major changes in the newly implemented central Know Your Customer (KYC) process. The regulator has written that several market intermediaries such as mutual funds (MFs), brokerages and even banks were facing issues adhering to the new central KYC process.

Starting August 1, the government has shifted to the central KYC process, to enable common and one-time KYC for all financial market intermediaries. Central KYC is being implemented through the Central Registry of Secularisation and Asset Reconstruction and Security Interest of India (CERSAI), an online registry promoted by the central government.

In a recent letter, the capital market regulator has demanded a slew of changes, including more time between opening a new account and making an electronic entry with the central KYC registry.

KEY SEBI DEMANDS FROM FINMIN ON KYC
Extend time-period for compliance

Make Sebi-registered know your customer (KYC) agencies a pass-through link between market intermediaries and CERSAI

Exempt existing individual clients from fresh KYC process

Use UIDAI to enable e-KYC

Allow KRAs to do KYC on behalf of mutual funds

According to the norms, every financial institution needs to file an electronic copy of a client’s KYC records with the central registry within three days of an account being opened.

In a circular in July, Sebi had mandated all market intermediaries, including brokers and MFs, to make new KYC submissions to CERSAI. Several market players made representations to Sebi, highlighting the operational difficulties under the new system.

“It is a cumbersome job, right from disclosure to verification. We have sought extension in the timeline as deadline is not sufficient to meet the requirements,” said Nilesh Shah, managing director, Kotak AMC.

To sync the new system with the earlier common KYC, Sebi has also suggested to accept KYC Registration Agencies (KRAs) as a pass-through entity between registered intermediaries and CERSAI. Under the previous KYC regime, KRAs were the most important part of the system.

To avoid duplication of work, Sebi also wants to exempt individual clients whose accounts are opened before August 1 from undergoing KYC process all again. According to Sebi, KYC details of these clients are already with the KRAs and can be used even when they approach other registered intermediary for entering into account-based relationship, Sebi said in a letter to ministry.

Sebi had allowed interportability among KRAs, to enable sharing of information among them based on client’s permanent account number (PAN). To enable online KYC, Sebi has recognition of the Unique Identification Authority of India (UIDAI). The same would leverage the Aadhaar database and ease the process of doing business, said Sebi.

Apart from this, the regulator has also asked the ministry to allow share transfer agents to do KYC on behalf of mutual funds. However, the responsibility of KYC will continue to remain with the mutual fund on whose behalf the registrar carries out the KYC, noted Sebi.

 

Source: http://www.business-standard.com/article/markets/sebi-seeks-major-changes-to-new-kyc-process-116090300579_1.html

Govt allows Aadhaar e-KYC for new mobile connections

by | posted in: Corporate Updates, Economy, Business Updates, Corporate Affairs, Income Tax,e-Filing- Individuals, Firms, Companies | 0
Forget the bulky paperwork, you can now apply, validate and activate new pre-paid and post-paid mobile connections using your Aadhaar card and fingerprint at the point of sale.

 

The government today issued e-KYC guidelines to make the online process of application and authentication faster and simpler for subscribers. In contrast to the existing document-based process, the move is intended to cut down time for SIM activation as KYC is verified instantly.

 

In e-KYC, a customer through her Aadhaar number and biometrics will online authorise UIDAI to provide demographic details such as name, address, date of birth and gender, along with the digitally-signed photograph, to the mobile operator.

 

“Digitally-signed electronic KYC data provided by UIDAI is machine readable, making it possible for licensees to directly store it as customer record in their database for the purpose of issuing a mobile connection,” a DoT notification said. COAI Director General Rajan Mathews felt that the move will be helpful for all stakeholders as it simplifies activation, eases verification process and enhances security.

 

“Earlier, the entire verification process would last 8-10 hours and it will now be greatly reduced,” he hoped. Bharti Airtel plans to start rolling out Aadhaar-based e-KYC solutions this week, MD and CEO (India and South Asia) Gopal Vittal said.

 

Vodafone India termed the e-KYC solution as “an instant, secure and green mobile subscriber verification project” and said all stakeholders will benefit from it. Customers will soon be able to walk in with their Aadhaar card in any of the Vodafone stores and walk out connected within minutes, the company statement read.

 

“For the consumer, instant activation means better experience and security of personal confidential information. For Vodafone, it will improve quality of sales as well as regulatory compliance. For the regulator, it not only means a green initiative, but hassle-free governance and accurate audit results,” said Sunil Sood, MD and CEO, Vodafone India.

 

According to Hemant Joshi, Partner, Deloitte Haskins & Sells, the move will bring down the cost of subscriber acquisition significantly as telecom companies will not have to spend on physical transportation of forms, verification, scanning and storage. “Also, it would help easier compliance and reduction in litigation on account of audit carried out by term cell,” Joshi said.

Source: http://www.moneycontrol.com/news/business/govt-allows-aadhaar-e-kyc-for-new-mobile-connections_7288301.html

Bank of Baroda scam: RBI tells banks to conduct internal audit

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All public sector and private banks have been asked by the Reserve Bank of India to conduct a “thorough internal audit” and put the report before their respective audit committees, as part of the central bank’s efforts to check fraudulent foreign exchange transactions. The move comes in the wake of irregularities that came to light last year in Rs 6,100-crore import remittances effected by Bank of Baroda’s Ashok Vihar branch in New Delhi.

A circular has been issued to all scheduled commercial banks, advising them to conduct a thorough internal audit and place the report before audit committee of the board of the respective banks and to forward the summary of findings to RBI, the central bank said in reply to an RTI query filed by PTI. The RBI was asked to provide details of action being taken by it to check fraudulent forex transactions by banks. “We are in the process of receiving the internal audit report from various banks,”it said.

The RBI has asked Bank of Baroda to conduct a bank-wide review of the outward remittances to rule out similar wrong doings at other domestic branches and submit a report thereof to it. The bank has since completed the internal audit and placed the report before its audit committee for directions. The Bank of Baroda has also selected a consultant to review its Know Your Customer (KYC), Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) policy and practices, to set up robust systems, the central bank said.

“They have also framed a policy for advance import remittance which covers system check points like cooling period of six months in respect of newly opened account, multiple transactions in a day for $100,000 and below, etc,” the RBI said.

Both the Central Bureau of Investigation and Enforcement Directorate (ED) are probing remittances of Rs 6,100 crore to Hong Kong from the Bank of Baroda’s Ashok Vihar branch.

The huge transaction is believed to be trade-based money laundering as the amount was transferred in the garb of payments for imports that never took place, investigators say.

Source: http://www.business-standard.com/article/pti-stories/bob-forex-scam-rbi-tells-all-banks-to-conduct-internal-audit-116013100149_1.html