SEBI on Wednesday relaxed the Know Your Clients (KYC) norms for various overseas entities including foreign institutional investors, and has done away with in- person verification requirements for non—individual clients.

The market regulator has given the clarifications on KYC norms for FIIs, sub-accounts and Qualified Foreign Investors (QFIs).

In a circular, SEBI said that foreign entities such as Sovereign Wealth Fund and overseas government agencies would not be required to provide residential and photograph, among others, to meet KYC norms.

Instead, global or local custodians of such entities can furnish a resolution from the concerned party’s board of directors and power attorney to carry out transaction.

This would be applicable for Sovereign Wealth Fund, foreign governmental agency, international or multilateral organisation and central or state government pension fund, among others. They would be part of KYC Registration Agency.

In case, the global or local custodian fails to provide the undertaking, then the intermediary can seek details from foreign investors.

Meanwhile, the market regulator has done away with personal verification requirement for non-individual clients.

In October 2011, SEBI had issued guidelines regarding the KYC norms. Later, the market regulator received representations related to operational issues in following those guidelines, especially in the case of foreign investors like FIIs and sub—accounts.

“Also, they (intermediaries) shall conduct ongoing client due diligence based on the risk profile and financial position of the clients as prescribed by SEBI,” the circular said.

In case, the place of incorporation of a particular FII, QFI or sub account is not available, then the intermediary can use “registered office address/principal place of business of entity“.

The circular would be applicable for new as well as existing clients.

Related Topics
comment COMMENT NOW