Uniform KYC is likely to become a reality soon. The Supreme Court appointed Special Investigation Team (SIT) on black money has recommended to set up a Central KYC Registry (CKYC) which will link different identity proofs like PAN, Aadhaar and Passport of an individual to help track all financial transactions.
Though the recommendations have been made to curb black money, it will help financial institutions like banks, fund houses and insurers to do KYC through a single window. “A central KYC Registry should be established with all law enforcement agencies, Registrar of Companies and financial institutions having access to its database,” SIT has said in its recommendations.
The team further said, “At present for entering into financial/business transactions persons have option to quote their PAN or UID or Passport number or driving license or any other proof of identity. However, there is no mechanism/system at present to connect the data available with each of these independent proofs of ID. It is suggested that these data bases be interconnected. This would assist in identifying multiple transactions by one person with different IDs.”
The process of setting up this agency has already started. In fact, the Department of Revenue has already sent the structure of Central KYC Registry (CKYC) and is awaiting approval from the legislative department, said SIT. “The rules are expected to be notified shortly. This is expected to expedite the setting up of this Central KYC Registry which shall be an important office to tackle the menace of black money and money laundering more effectively.”
The Supreme Court had appointment SIT to suggest measures to curb black money.
Currently, a separate KYC is needed for different financial products. For instance, separate KYCs are required for opening a bank account and investing in mutual funds. Distributors feel that the existing complications in KYC norms are, to some extent, proving to be deterrent for new investors to invest in mutual funds. This KYC hindrance is a major cause of concern for the MF industry.
These recommendations would ultimately benefit the mutual fund industry, feel distributors.
