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In an era marked by digital transformation and stringent regulatory frameworks, the integration of Aadhaar authentication services has emerged as a pivotal tool in ensuring robust Know Your Client (KYC) norms within the securities market. The recent circular issued by the Securities and Exchange Board of India (SEBI), dated May 06, 2024, sheds light on the entities permitted to utilize e-KYC Aadhaar Authentication services of the Unique Identification Authority of India (UIDAI) as sub-KUA (KYC User Agency). This regulatory development underscores the evolving landscape of compliance requirements and technological advancements in the financial sector.
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Key Points:
Background: SEBI's circular dated May 06, 2024, references previous circulars, specifically SEBI/HO/MIRSD/SECFATF/P/CIR/2023/169 dated October 12, 2023, which outlined provisions for Aadhaar-based e-KYC process and e-KYC Authentication facility for Resident Investors under section 11A of the Prevention of Money Laundering Act, 2002, in the securities market.
Entities Authorized for Aadhaar Authentication: The Department of Revenue, Ministry of Finance (DoR-MoF), has the authority to designate entities to undertake Aadhaar authentication services of UIDAI under Section 11A of the Prevention of Money Laundering Act, 2002. These entities are notified through gazette notifications issued by DoR-MoF.
Recent Notification: The DoR-MoF, through Gazette Notification S.O. 1863(E) dated April 30, 2024, has notified a specific entity permitted to use Aadhaar authentication services of UIDAI under section 11A of the Prevention of Money-laundering Act, 2002. The circular includes an attached copy of this notification.
Compliance Process: The entity mentioned in the notification must adhere to the process detailed in SEBI's circular dated October 12, 2023, and any additional guidelines prescribed by UIDAI. Key User Agencies (KUAs) are responsible for facilitating the onboarding of the entity as a sub-KUA to provide Aadhaar authentication services related to KYC.
Regulatory Authority: The circular is issued by SEBI under the powers conferred by Section 11(1) of the Securities and Exchange Board of India Act, 1992, with the aim of safeguarding investor interests in securities and promoting the development of, and regulating, the securities markets.
Overall, the circular underscores the regulatory framework surrounding Aadhaar-based e-KYC processes in the securities market, outlining the entities authorized to undertake Aadhaar authentication services and the compliance procedures they must follow.
Circular Link: https://www.sebi.gov.in/legal/circulars/may-2024/entities-allowed-to-use-e-kyc-aadhaar-authentication-services-of-uidai-in-securities-market-as-sub-kua_83178.html
