Executive Summary:
This circular from the Securities and Exchange Board of India (SEBI) announces the rollout of the Legal Entity (LE) Template for the Central KYC Records Registry (CKYCR). Registered Intermediaries (RIs) must upload KYC records of LE accounts opened on or after April 1, 2021, to CKYCR. The circular also mandates the upload of KYC records for older accounts when updated information is received.
Key Points / Main Content:
CKYCR Extension to Legal Entities:
* CKYCR, already operational for individual clients, is now extended to Legal Entities (LE).
* RIs must upload KYC records of LE accounts opened on or after April 1, 2021, to CKYCR, complying with Rule 9(1A) of the Prevention of Money Laundering (Maintenance of Records) Rules, 2005.
* The LE Template and Annexure are provided in Annexure A and Annexure B of the circular.
Implementation for Existing Accounts:
* For LE accounts opened before April 1, 2021, KYC records must be uploaded to CKYCR when updated KYC information is received, ensuring the updated information adheres to current Client Due Diligence (CDD) standards.
* KYC records of individual accounts opened before August 1, 2016, must also be uploaded incrementally when updated KYC information is obtained.
KYC Identifier Usage:
* When a client provides a KYC Identifier and consent, RIs must retrieve KYC records online from CKYCR and should not request duplicate KYC information unless there are changes.
* RIs must communicate the KYC Identifier generated by CKYCR to the individual/legal entity.
Exemption:
* The provisions of this circular do not apply to Foreign Portfolio Investors (FPIs).
Impact Analysis:
Recognized Stock Exchanges, Recognized Depositories, Stock Brokers, Depository Participants, Association of Mutual Funds in India, Mutual funds and AMCs, Portfolio Managers, KYC Registration Agencies (KRAs), Qualified Registrar to an Issue and Share Transfer Agents (QRTAs), Alternative Investment Funds (AIFs), Collective Investment Schemes (CIS), Custodians, Investment Advisors:
* Impact: These entities, as Registered Intermediaries (RIs), are required to comply with the new CKYCR requirements for Legal Entities.
* Action Required: RIs must update their systems and processes to incorporate the LE Template, upload KYC records for new and existing LE accounts as specified, and ensure compliance with CKYCR guidelines. They must also develop necessary infrastructure by utilizing the CERSAI test environment.
Legal Entities:
* Impact: Legal Entities establishing an account-based relationship with a RI will have their KYC information uploaded to and managed by CKYCR. They may experience a streamlined KYC process if they provide their KYC Identifier.
* Action Required: Legal Entities should be prepared to provide necessary KYC information according to the LE Template and understand the benefits of using a KYC Identifier.
Individual Clients:
* Impact: Individual clients will continue to have their KYC records uploaded to CKYCR. The circular reinforces the need to upload records for older accounts when updated information is received.
* Action Required: Individual clients should be aware that their KYC information will be uploaded when they provide updated details to RIs.
Key Entities Referenced
Securities and Exchange Board of India (SEBI): A regulatory body for securities markets in India, responsible for protecting investors and promoting market development.
Central KYC Records Registry (CKYCR): A centralized repository for KYC records, aimed at simplifying the KYC process for financial institutions and customers.
Registered Intermediaries (RI): Entities registered with regulatory bodies, such as SEBI, and required to comply with KYC norms.
KYC Registration Agencies (KRAs): Agencies registered with SEBI to maintain KYC records of investors.
Prevention of Money Laundering (Maintenance of Records) Rules, 2005: Rules established to prevent money laundering and to maintain records.
Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI): A central registry that maintains records of security interests created on assets.
Foreign Portfolio Investors (FPIs): Investors who invest in financial assets of a country from outside of that country.
Association of Mutual Funds in India (AMFI): An association of all the Asset Management Companies (AMC) of Mutual Funds in India
CIRCULAR
SEBI/HO/MIRSD/DOP/CIR/P/2021/31 March 10, 2021
To,
All Recognized Stock Exchanges
All Recognized Depositories
Stock Brokers through Recognized Stock Exchanges
Depository Participants through Depositories
Association of Mutual Funds in India
All Mutual funds and AMCs through AMFI
Portfolio Managers
KYC Registration Agencies (KRAs)
Qualified Registrar to an Issue and Share Transfer Agents (QRTAs)
Alternative Investment Funds (AIFs)
Collective Investment Schemes (CIS)
Custodians
Investment Advisors
Dear Sir/Madam,
Subject: Rollout of Legal Entity Template
1. SEBI vide circular no. CIR/MIRSD/66/2016 dated July 21, 2016 on
Operationalization of Central KYC Records Registry (CKYCR) directed the
Registered Intermediaries (RI) to upload the KYC records with CKYCR, in respect
of all individual accounts opened on or after August 01, 2016. Changes to the
template, as and when required are released by CERSAI.
2. CKYCR, in its communication no. CKYC/2020/11 dated January 04, 2021 has
specified that since CKYCR is fully operational for individual clients, it has been
decided to extend CKYCR to Legal Entities (LE) as well. Accordingly, RIs shall
upload the KYC records of LE accounts opened on or after April 01, 2021 on to
CKYCR in terms of Rule 9 (1A) of the Prevention of Money Laundering
(Maintenance of Records) Rules, 2005.
The LE Template and the Annexure thereof are attached as Annexure “A” and
Annexure “B” respectively to this circular.
Page 1 of 23. The LE template is made available by CERSAI in the CKYCR test environment
(https://testbed.ckycindia.in/ckyc/index.php) enabling RIs to develop necessary
infrastructure.
4. RIs shall ensure that in case of LE 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. RIs shall ensure that during such receipt of
updated information, the clients’ KYC details are migrated to current Client Due
Diligence (CDD) standards.
5. Further, to ensure that all existing KYC records of individual clients are
incrementally uploaded on to CKYCR, RIs shall upload the KYC records pertaining
to accounts of individuals opened prior to August 01, 2016, as and when updated
KYC information is obtained/received from the client.
6. 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.
7. Once KYC Identifier is generated by CKYCR, the RIs shall ensure that the same
is communicated to the individual/legal entity.
8. The provisions of this circular are not applicable to Foreign Portfolio Investors
(FPIs).
9. 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,
Narendra Rawat
General Manager
Market Intermediaries Regulation and Supervision Department
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