What is KYC?

Know Your Client (KYC) means identifying and verifying the client's identity and the identity of the beneficial owner through documents submitted for Proof of Identity (PoI) and Proof of Address (PoA) and compliance with rules, regulations, guidelines and circulars issued by the Board or any other authority for Prevention of Money Laundering from time to time.

Who is considered a ‘beneficial owner’?

Beneficial owner is the natural person or persons who ultimately own, control or influence a client and / or persons on whose behalf a transaction is being conducted. It also incorporates those persons who exercise ultimate effective control over a legal person or arrangement.

When is KYC done?

KYC is to be carried out at the time of commencement of an account based relationship. Existing clients are required to update their KYC documents from time to time.

Why is KYC compulsory?

The Prevention of Money Laundering Act, 2002 (PMLA) along with the Prevention of Money Laundering (Maintenance of Records) Rules, 2005 (PML Rules) are the principal laws enacted to prevent money laundering activities in India. As per PMLA and Rules framed thereunder, intermediaries in securities market are required to perform Client Due Diligence. KYC records including details submitted for account opening of the client play a crucial role in ensuring Client Due Diligence.

What are the benefits of KYC?

The main aim of conducting KYC is to verify the identity of clients / beneficial owners, nature and purpose of client relationships and examine the probabilities of any illegal wrongdoings. Additionally, KYC helps to make sure that all transactions are legitimate and transparent.

Can intermediaries seek additional KYC information?

Yes, client needs to furnish additional KYC Information as required under the law.

What is Part I and Part II of the account opening form (AOF)?

Client needs to fill the account opening form at the time of commencement of an account based relationship. Part I of the AOF is the KYC form in which the basic details about the client is captured.Part II of the form pertains to the additional KYC information as may be sought separately by the financial intermediary such as asset management company, stock broker, depository participant opening the client's account.

Is there a uniform KYC form to be used for account opening?

Yes. KYC templates provided by Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) for individuals and for legal entities are used for capturing the KYC information. The CKYCR templates - Individual and Legal Entity provided by CERSAI is available at https://www.ckycindia.in/ckyc/?r=download.

What are the different modes of KYC verification available to clients?

Clients can complete their KYC verification through physical mode / online or app based mode.

Is Permanent Account Number (PAN) card considered as an identity proof for the purpose of KYC?

No. PAN is not included under the list of officially valid document for the purpose of identity under the rule 2(d) of the PML rules.

Is it mandatory to provide PAN details, if it is not considered as proof of identity?

Yes. PAN is the key identification number and part of KYC requirements for all transactions in the securities market.

Is PAN-Aadhaar seeding mandatory for transactions in securities market?

No. The Indian government has made it mandatory for everyone to link their PAN to their Aadhaar, with certain exceptions for NRIs, non-citizens, those over 80, and residents of the states of Assam, Jammu and Kashmir and Meghalaya.Clients in whose case, PAN Aadhaar linkage are not found to be verified, shall be allowed to transact with the existing intermediary subject to valid PAN, however the client's KYC shall not be allowed portability in securities market.

A client has recently completed PAN-Aadhaar seeding. What is the next step?

The client has to inform the respective intermediary about completion of PAN-Aadhaar seeding. The client can also update this information on the KRA port

What is the difference between masked and unmasked Aadhaar?

The only significant difference between masked Aadhaar and regular Aadhaar is the visibility of the Aadhaar number. Where masked Aadhaar has only the last 4- digits of Aadhaar visible, a regular Aadhaar will display the complete 12-digit Aadhaar number.

What is meant by OVD?

Officially valid documents (OVDs) are government issued documents that can be accepted as identity and address proof and defined as per Rule 2 (d) of PML Rules.

Which documents are acceptable as Proof of Identity (PoI) and Proof of Address (PoA)?

The following documents are acceptable as PoI and PoA:i. the passport;ii. the driving licence;iii. proof of possession of Aadhaar number;iv. the Voter's Identity Card issued by Election Commission of India;v. job card issued by NREGA duly signed by an officer of the State Government;vi. the letter issued by the National Population Register containing details of name address; orvii. any other document as notified by the Central Government in consultation with the Regulator.

Which documents are acceptable as deemed OVD for POA?

In case the document furnished by the client does not contain updated address, the following documents (or their equivalent e-documents thereof) are acceptable for the limited purpose of proof of address, provided that the client submits updated officially valid document (or their equivalent e-documents thereof) with current address within a period of three months of submitting the following documents:i. utility bill which is not more than two months old of any service provider (electricity, telephone, post-paid mobile phone, piped gas, water bill);ii. property or municipal tax receipt;iii. pension or family pension payment orders (PPOs) issued to retired employees by Government Departments or Public Sector Undertakings, if they contain the address;iv. letter of allotment of accommodation from employer issued by state or central government departments, statutory or regulatory bodies, public sector undertakings, scheduled commercial banks, financial institutions and listed companies and leave and license agreements with such employers allotting official accommodation.

Is the client required to update KYC records?

Yes. Clients are required to update KYC records as and when there is any change / modification in the KYC information submitted.

Is the client required to intimate change in name?

Yes. Client intending to change his / her name is required to submit the modification form along with the self-attested copy of the documentary proof bearing the new name.

If correspondence and permanent address are different, documentary proof for which address is to be submitted?

If correspondence and permanent address is different, then proof for both is to be provided. However, if a client has provided Aadhaar / Aadhaar number for identification and wants to provide a current address, which is different from the address indicated in the Aadhaar, the client may give a self-declaration to that effect to the respective intermediary.

What is SARAL account?

SARAL is a simplified account opening form wherein the client can submit one documentary proof of address (either residence / correspondence or permanent). It is provided for individual clients participating only in the cash segment without obtaining other facilities such as internet trading, margin trading, derivative trading and use of power of attorney.