On Sep. 5, IND CDSL issued reminder on validation of KYC records.
IND CDSL reminds depository participants (DPs) contact existing beneficial owners (BOs) if KYC records are not found to be valid by KYC registration agency (KRA).
Document dated Sep. 5, 2023, received from IND CDSL Sep. 7, summarized Sep. 7.
Follows IND SEBI Jan 2021 issued consultation on infrastructure for AML, see #95503.
Reminder
Starting from Sep 6, 2023, existing BOs whose KYC records are not validated by KRAs as of Sep. 1, 2023, will have their accounts frozen with a new reason code 27.
The freezing process will be carried out by IND CDSL for operational convenience, and DPs will be provided with a list of frozen accounts in their billing folders.
DPs will receive data of the frozen demat accounts in their billing folder and are required to inform affected account holders through email, SMS, or letter.
To unfreeze demat accounts in the future, DPs must verify the KYC status on the KRA system and ensure it is validated, DPs can remove the freeze after verification.
DPs can also freeze demat accounts using the reason code 22if KRA/KYC has failed.
Sep. 7, 2023 Simplification of KYC
On Sep. 7, 2023, IND BSE issued circular to trading member re simplification of KYC process and suspension of trading for invalidated KYC clients by KRA from Sep. 2.
Based on representations from trading members and investor interests, clients are now allowed to square off their existing open positions between Sep. 8 to 12, 2023.
During this period, trading members can only permit the square off of existing positions and are not allowed to facilitate new trades, positions, or rollovers.
Permanent account numbers (PANs) that are not compliant with KRA requirements will undergo re-verification and face potential blocking starting from Sep. 13, 2023.
Nov. 3, 2023 Freeze on Demat Accounts
On Nov. 3, 2023, IND CDSL issued a communique re validation of KYC records.
Noted that a list of DP accounts against invalidated PANs has been made available by IND CDSL in the DPs billing folder for follow up with identified deficient BOs, based on the details of invalid PANs which KRAs updated as of Aug. 31, 2023.
The relevant demat accounts will be frozen both for debit and credit on Nov. 25, 2023, considering that the update data is made available by KRAs as of Nov. 23, 2023.
Nov. 29, 2023 Invalid KYCs
On Nov. 29, 2023, IND CDSL announced that KRAs have provided the additional list of KYC records which are not found to be valid due to various reasons on Aug. 31, 2023.
Based on details of invalid PANs received from KRAs updated as on Aug. 31, 2023, list of DP-wise accounts identified against said invalidated PANs has been made available.
The aforesaid demat accounts will be frozen for both debit and credit on Dec. 9, 2023.
This is considering the updated data made available by KRAs as on Dec. 7, 2023.
Feb. 12, 2024 Validation
On Feb. 12, 2024, IND CDSL said KRAs have provided list of records deemed invalid due to various reasons, including PANs updated from Sep. 1, 2023 to Jan. 31, 2024.
IND CDSL shared list of DP-wise accounts identified with invalidated PANs for follow up; demat accounts identified will be frozen for debit, credit transactions on Feb. 24.
The freeze reason code indicating KYC non-compliance should be noted by DPs.
Document dated Feb. 12, 2024, received from IND CDSL Feb. 13, summarized Feb. 15.
Mar. 2024 Freeze Reason Code
On Mar. 14, 2024, IND CDSL updated freeze reason code re freezing of demat account.
The demat accounts identified will be frozen for both debit and credit with the freeze reason code 27 – account holder related–KYC non-compliant on Mar. 30, 2024.
This action is based on the updated data provided by KRAs as of Mar. 28, 2024.
Document dated Mar. 14, 2024, received from IND CDSL Mar. 15, summarized Mar. 18.
Apr. 2024 Invalid KYCs
On Apr. 23, 2024, IND CDSL announced that KRAs have provided a list of KYC records which are not found to be valid due to various reasons, updated during Mar. 2024.
Based on details of invalid PANs received from KRAs updated as on Mar. 31, 2024, list of DP-wise accounts identified against said invalidated PANs has been made available.
These demat accounts will be frozen for both debit and credit on May 4, 2024, taking into account the updated data made available by KRAs as on May 2, 2024.
Regulators
IND BSE; IND CDSL
Entity Types
B/D; Depo; Exch
Reference
Com CDSL/OPS/DP/POLCY/2024/219, 4/23/2024; Com CDSL/OPS/DP/POLCY/2024/147, 3/14/2024; Com CDSL/OPS/DP/POLCY/2024/88, 2/12/2024; Com CDSL/OPS/DP/POLCY/2023/693, 11/29/2023; Com CDSL/OPS/DP/POLCY/2023/643, 11/3/2023; Nt 20230907-8, 9/7/2023; Com CDSL/OPS/DP/SYSTM/2023/525, 9/5/2023
