Customers and clients who want to engage in financial services like opening a dematerialised account or an insurance policy must provide KYC documentation. This documentation serves as proof of identity (POI) and proof of address (POA).
The Government, RBI, SEBI, and Insurance Regulatory and Development Authority have all implemented strict KYC policies. The main goal is to prevent money laundering, terrorist financing, financial fraud, tax evasion, and customer/client identification.
 CKYC registration just helps maintain the entire process easily. Usually, you go through the KYC process every time you invest or borrow money from financial organisations. You don’t need to go through the same KYC process again and again if you’ve done your CKYC correctly.
For instance, you had done your CKYC when you took a personal loan from an NBFC like Bajaj Finserv. Now you want to open an FD account because of the increased new FD rates. You don’t need to submit your KYC documents again this time.Â
According to an RBI circular, the following CKYC documents are recognised as ‘Officially Valid Documents’:
- Passport
- Driving license
- Voter’s identity card issued by the Indian Election Commission.
- Evidence of having an Aadhaar number.
- Job card properly signed by a state government officer.
- Letter from the National Population Register with name and address information.
In addition to the above-mentioned documents, proprietorship firms, partnership firms, Hindu undivided families (HUF), and companies must also provide the following documents, among others:
- Trade License
- Articles of Association
- Partnership Deed
- Shop & Establishment registration certificate
- Memorandum of Association
- Pan card of HUF, partnership firm, Company
- Identification of Ultimate Beneficial Owner
How does CKYC work?
The CKYC registry was established to keep track of KYCs in the shape of a central repository. This eliminates the hassle of continually presenting KYC documents for conducting financial transactions.Â
The reporting entity will upload the information and any necessary supporting papers to the CKYC portal. The enrolled customer or client will receive a 14-digit unique CKYC identity that they can quote to other financial institutions.
Financial institutions may access the KYC information because it is a centralised repository. Therefore if you are registered, you won’t be required to provide your KYC documents when starting a financial transaction.
If specified, the CKYC identification can be used to search for and download KYC information. The reporting entity can also enter a valid ID type and number instead. The CKYC register is thus maintained and promotes its goal of minimal documentation burden and simplicity of conducting financial transactions thanks to the reporting organisations.
Who are reporting entities, and what do they contribute to the Central KYC registry?
According to the Prevention of Money Laundering Act 2002, a reporting entity is any financial institution or intermediary engaged in a specified line of work.
An intermediary is any person or entity that is involved in the securities market, such as a stockbroker, sub-broker, share transfer agent, etc.
The reporting entities must register with the CKYC registry. Once they do, they must do initial due diligence and client verification while establishing an account-based relationship. If there is a change in the client’s current records, they are also responsible for updating the details of those clients.
Recent amendments in law:
The Prevention of Money Laundering Act, 2002 has been amended to include the introduction of Digital KYC and its associated process. According to the Act, ‘digital KYC’ refers to taking a live photo of the client.
A legally valid document or proof of possession of an Aadhaar by an authorised officer of the reporting entity is needed for digital KYC. Also, the latitude and longitude of the location where the live photo is being taken need to be recorded.
Digital signatures were also mentioned, but they are still not currently permitted. Physical signatures must still be obtained for all documents.
