How to get registered with CKYC Registry?

One of the compliance requirements for SEBI RIAs is to follow the KYC procedure for their clients, at all times.

On May 23, 2019, all RIAs got an email from SEBI seeking information about their registration status with CKYC. Surprisingly, most Advisers were not even aware about KYC.

“What is CKYC?” “Is it mandatory?” “Am I, as an Individual, required to get registered with CERSAI?” were some of common queries I received from my advisor clients.

Now, SEBI has not detailed the compliance requirements in the IA Regulations. Hence, all investment advisers are following the norms as per their understanding and convenience. Well, since there are prescribed norms now, it is better to follow them and be compliant.

So, here’s a touchdown on the KYC norms as issued by SEBI and what should advisors do to comply?

Why is KYC required for your investor clients?

Specified SEBI registered intermediaries like mutual funds, stock brokers, portfolio managers (PMS), Alternative Investment Funds (AIFs) have to ‘know their clients’ before they start their service. For this, they have to follow the KYC procedure by SEBI.

KYC is nothing but ‘Client Due Diligence’. As an intermediary, you are expected to do the due diligence of your clients. This is basically to identify persons who beneficially  own or control  the  securities account and if there are any suspicious transactions to be reported to SEBI.

Background of compliance requirements

Before 2011, there was no uniform procedure for KYC of clients and all intermediaries were following their own version.

In October 2011, SEBI introduced a uniform KYC form [also known as Account Opening Form (AOF)].  It was directed by SEBI that the same KYC form should be used by all SEBI registered intermediaries. The intermediaries were required to collect basic information of the client using this form as also obtain supporting documents such as identity proof and address proof for their records.

The form was further modified in December 2013 to capture additional data.

Introduction of CKYC Registry

With so many financial institutions regulated by various regulators, each doing their own thing and causing a lot of friction for customers as well as institutions, there was a need to have a common platform or a central KYC (CKYC) system.

In 2016, SEBI issued one more circular introducing Central KYC Records Registry (CKYCR) – a system for receiving, storing, safeguarding and retrieving the KYC records of a client, digitally.

Central KYC Registry is a centralized repository of KYC records of customers in the financial sector with uniform KYC norms and inter-usability of the KYC records across the sector with an objective to reduce the burden of producing KYC documents and getting those verified every time when the customer creates a new relationship with a financial entity.

In simple words – one customer, one KYC.

Government of India authorized the Central Registry of Securitization and Asset Reconstruction and Security interest of India (CERSAI) to act as, and to perform the functions of the Central KYC Records Registry.

Which intermediaries need to do the CKYC?

The following intermediaries regulated by SEBI are required to upload information on the portal of CKYCR:

1. All Recognized Stock Exchanges
2. Stock Brokers through Recognized Stock Exchanges
3. All recognised Depositories
4. Depository Participants through Depositories
5. Association of Mutual Funds in India
6. Mutual funds through AMFI
7. Portfolio Managers (PMS)
8. KYC Registration Agencies (KRAs)
9. Alternative Investment Funds (AIFs)
10. Collective Investment Schemes (CIS)
11. Custodians
12. Investment Advisors

The intermediaries like insurance agents, NBFCs, etc registered either with IRDA, RBI and PFRDA also have to follow the CKYC process.

What needs to be done?

The earlier AOF was modified. The registered intermediaries are required to capture the KYC information as mentioned in the form finalized by CERSAI.  Click here to view the new form.

The information along with the supporting documents like identity proof, address proof, photograph of the client have to be uploaded on the CKYC portal. PAN is mandatory for KYC process.

How to upload the KYC information on the CKYC portal?

Step 1: Every specified intermediary has to first get registered with CKYC Registry. You can do it online. Click here to open the registration form.

At the time of filling the application, you have to keep the following ready:

1. Information for Head of the entity – this can be a partner (in case of partnership firm/ LLP; a director in case of company)
2. Details of Nodal Officer / Authorised Signatory – if you have assigned any person to keep check on the compliance you can mention his / her name. Else, same details as the head of entity can be mentioned
3. Details of 2 Admins – they have to be two different persons. One of them can be Head of Entity / Nodal Officer. One of the admin acts like a maker and the other one like a checker.
4. Documents – There is a list of document given to be submitted along with the application. Click here to view the list of documents.

There is no format specified for the authorization letter for admin users.

Step 2: On completion of the registration, an email will be sent to the Nodal Officer with link to register on testbed portal. Get registered on testbed portal.

Step 3: Once you complete filling all the details on testbed portal, an email will be sent to the Nodal Officer with a link to complete the submission. On successful submission of the application, a printable form will be generated and reference ID will be created. You can check the current registration status on the CKYC Portal with the reference number generated.

Step 4: On successful submission of the application on testbed, the 2 admins will get login credentials within 48 hours to test uploading documents on the portal.

Step 5: Once login credentials are received, the admins have to upload the documents of clients to test working of the portal. Admins will have to use their DSC to upload the documents.

Step 6: After testing is done and documents are verified by CKYCR, your application will be approved.

Step 7: On approval, physical copies of duly signed form along with the supporting documents have to be sent to Central KYC Registry’s Office at Delhi. The current address is : CERSAI, Tower – 1, Office Block, 4th Floor, Plate-A, (Adjacent to Ring Road), NBCC, Kidwai Nagar East, New Delhi –110023.

Step 8: CKYCR’s administrator will verify the physical documents.On successful verification, user credentials will be emailed to the Admin and Co-Admin users for uploading of clients’ documents.

Next…

Upon successful registration, the intermediary has to start uploading KYC information of the clients on the live portal. The intermediary has to, within ten days after the commencement of an account-based relationship with a client, file the electronic copy of the client´s KYC records with the Central KYC Records Registry.

The two admins will be responsible to upload data on the portal. The admins need to have Class 2 or Class 3 digital signature. The signature should be registered on the portal.

The intermediaries have to follow the new KYC procedure for all clients onboarded after October 31, 2016.

Once the KYC information is uploaded successfully and checked by the CKYCR administrator, a 14 digit unique KYC identifier will be generated for every client.

The good news

SEBI has clarified that the client need not undergo the KYC process again when he approaches different intermediaries in securities markets.

Where a customer submits a 14 digit KYC Identifier to any intermediary, then such intermediary can download the KYC records from the Central KYC Registry by using the KYC Identifier.

However, there is a need to submit and upload the KYC information on the CKYC portal if:

1. There is a change in the information of the customer as existing in the records of Central KYC Registry.
2. The current address of the client is required to be verified.
3. The intermediary considers it necessary in order to verify the identity or address of the client, or to perform enhanced due diligence or to build an appropriate risk profile of the client.

Other FAQs:

How can one search KYC records of the client?

The intermediary can search for the record by entering CKYC identifier or by entering a valid ID type and number. However, the intermediary has to get registered on the CKYC portal first.

The intermediary can download single / bulk records by entering CKYC identifier and an authentication factor (viz. date of birth / date of incorporation).

Is uploading or downloading or viewing of information free of charge?

No. Uploading or downloading or viewing of information is not free. The prescribed fee is payable by the intermediary for each type of transaction and Central KYC Registry will collect such fees in advance. For every transaction, a sum will be deducted by CKYCR from the advance payment made by the intermediary. If there is insufficient balance, the intermediary will not be able to do any transaction unless the fees is transferred in to the account.

If there is any discrepancy, where can one contact?

Here are the contact details of CKYC Registry Helpdesk:

022 61102592/022 26592595 OR helpdesk@ckycindia.in

Is it mandatory for Research Analysts (RA) to follow KYC process?

No, it is not mandatory as the Research Analyst do not come in contact with the client’s financial information.

Is it mandatory for individuals registered as Investment Advisers to follow KYC process?

Yes, it is mandatory for all investment advisers registered with SEBI. However, one can have a practical difficulty in registering with CKYCR in case of individual investment advisers without support staff. There is no clarity issued by SEBI in this regard.

If an intermediary is registered with CVL – KRA, does it need to register with CKYCR?

Yes, even though you may be registered with other KYC Registration Agency, CKYCR registration is required.

Click here to view the FAQs on the CKYCR website.

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As I mentioned earlier it is the responsibility of the intermediary to verify the KYC information of the clients. The intermediary which performed the last KYC verification or sent updated information in respect of a client will be responsible for verifying the authenticity of the identity or address of the client.

It is advised that KYC of the client is done before you, as an intermediary, start servicing the client.