SEBI issued norms for sharing KYC details with financial regulators

The Securities and Exchange Board of India (SEBI) on 30 August 2014 allowed sharing of Know-your-Client details with entities regulated by other financial sector watchdogs.

According to the new norms, the system of KRA may be connected with any central KYC registry authorized by the Union Government for the purpose of collation and sharing of the KYC information in the financial sector. These new norms are called as the Securities and Exchange Board of India KYC Registration Agency.

Under SEBI system, a client who has already done the KYC with any SEBI registered intermediary need not undergo the same process again when he approaches another intermediary.

Earlier, the facility of sharing of KYC information was available only among SEBI-registered intermediaries.  Now the KYC information of investors in the capital markets is available on the centralised KRA (KYC registration agency) system of SEBI.

Know Your Customer

Know your Customer is a term used for customer identification process. KYC involves making reasonable efforts to determine true identity and beneficial ownership of accounts, source of funds, the nature of customer’s business, reasonableness of operations in the account in relation to the customer’s business, etc which in turn helps the banks to manage their risks prudently.

The objective of the KYC guidelines is to prevent banks being used, intentionally or unintentionally by criminal elements for money laundering.
KYC has two components - Identity and Address. While identity remains the same, the address may change and hence the banks are required to periodically update their records.

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