SEBI Unleashes KYC Power: All KRAs to Double as Accreditation Agencies for Smoother Investing

In a landmark regulatory update, the Securities and Exchange Board of India (SEBI) proposed that all KYC Registration Agencies (KRAs) will now be eligible to function as Accreditation Agencies. This move aims to streamline and simplify the process for investor accreditation, enhancing both market transparency and ease of compliance for intermediaries and investors alike.

 

Key Highlights

 

Universal Eligibility: All registered KRAs can now act as Accreditation Agencies, significantly expanding the pool of entities authorized to accredit investors.

 

Simplified Process: Accreditation will be granted solely on the basis of KYC documents and financial information already available with KRAs, reducing paperwork and duplication.

 

Centralized Access: KRAs functioning as Accreditation Agencies can access applicant KYC documents from their own databases and from other KRAs, ensuring a seamless verification process.

 

Validity of Accreditation:

Accreditation certificates will be valid for two years if eligibility is met for the preceding financial year. Certificates will be valid for three years if the applicant meets criteria for each of the preceding two financial years.

 

Due Diligence Disclaimer: Accreditation certificates will include a disclaimer clarifying that market intermediaries and pooled investment vehicles must still conduct their own due diligence when onboarding accredited investors.

 

Immediate Implementation: The new provisions come into effect immediately, promising swift adoption across the securities market.

 

Industry Impact

This regulatory overhaul is expected to:

 

Enhance Market Efficiency: By leveraging existing KYC infrastructure, the accreditation process becomes faster and less resource-intensive.

 

Boost Investor Confidence: A more transparent and standardized process is likely to attract greater participation from both institutional and retail investors.

 

Support Regulatory Compliance: Centralized access to KYC data ensures that all market participants adhere to uniform standards, reducing compliance risks.

 

Source: Taxmann