Realizing the importance of KYC details of the clients, SEBI has advised exchanges and depositories to make it mandatory for all the existing participants to update their clients' six KYC attributes
Realizing the importance of KYC details of the clients, SEBI has advised exchanges and depositories to make it mandatory for all the existing participants to update their clients’ six KYC attributes before 30th September 2021. Depositories and exchanges have released a deadline for all the participants to ensure the instructions are complied with without any delay. Since the earlier deadlines have already been extended two times we do not expect the deadline to be extended further. For new clients these KYC details are to be collected before the account is opened. The six details required for KYC are PAN, name, address, mobile number, email id and financial details. If KYC is not updated the broker will have to mark the account as dormant till the KYC is updated.
A long time back, these 6 KYC details were not mandatory as part of KYC. After witnessing the financial frauds and considering the “prevention of money laundering act”, SEBI and exchanges made all these 6KYC attributes mandatory one by one at different time intervals.
It is also advisable to ensure the PAN and Aadhaar are linked for all the existing clients as early as possible because at some point of time the linking will become mandatory. As a matter of fact the deadline for the linking of PAN with Aadhaar had been set as 30th September. But now the deadline has been extended till March 2022. If the linking is not done in the stipulated time the PAN will be deactivated resulting in the clients’ account becoming dormant.
The importance of the nomination facility for trading and demat account holders is also being recognized by the regulator SEBI. Therefore, it has been made mandatory for the broker to take in writing from the new and existing clients their consent for their desire to avail the facility of nomination. If the client opts for availing the nomination facility the details of the nominee should be obtained from the clients and the details obtained should be captured in the records maintained by the broker. Participants have to collect the nomination consent mandatorily with effect from 1st October 2021 for new accounts whereas for existing clients the deadline is 31st March 2022.
The regulator has also realized the inconvenience a client may have to go through in getting the KYC updated physically. Keeping this in consideration the regulator has allowed the digitalization of KYC with a certain set of guidelines. Participants are developing digital KYC systems by following the guidelines issued by SEBI. This will facilitate the clients to update the details without visiting the Broker. Most of the brokers have already provided digital KYC platforms to their clients to facilitate the updation of their KYC digitally.
We should all appreciate the initiative taken by the regulator SEBIi because the above steps are ultimately for the benefit for all the clients. These steps will go a long way in minimizing the clients’ risk and save them from any sort of fraud in their account.
(Mayank Kaushik, Lead Digital Marketing, Trustline Securities. Views expressed are the author’s own.)