SEBI Allows Digital Wealth Management Startups To Use DigiLocker For KYC
SEBI registered entities have to complete KYC for investors by obtaining soft copies of documents
DigiLocker e-documents are already approved under PMLA Rules, 2005
The decision will increase the penetration of wealth management platforms in Tier 2, 3, and 4 cities
In a move that can increase adoption of digital investment and wealth management platforms, the Securities and Exchange Board of India (SEBI) has allowed the use of documents digitally stored in the central government’s DigiLocker application for facilitating know your customer (KYC) processes.
In a circular related to updates on KYC, SEBI said that documents issued by the issuing authority to a customer’s DigiLocker account can now be accepted as officially verified documents by SEBI registered entities. Entities can obtain documents to complete the KYC of investors such as the PAN card, Aadhaar, a cancelled cheque, among other documents for completing their registration.
The notice was sent by SEBI to various stakeholders including all recognized stock exchanges, recognized depositories, stockbrokers of recognized stock exchanges, the Association of Mutual Fund of India (AMFI), portfolio managers, KYC registration agencies, alternate investment funds, digital investment and wealth management platforms among others.
SEBI held discussions with the stakeholders and used the feedback to push for ease of investing, which should bring some relief to investors and investment platforms. The current notification is in line with the inclusion of DigiLocker documents in the Prevention of Money-laundering (Maintenance of Records) Rules, 2005. The government had updates these rules in August 2019 to allow stakeholders to accept electronic documents stored in DigiLocker.
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