Context:
The Ministry of Corporate Affairs (MCA) has announced a major compliance relief for company directors, allowing them to file their Know Your Customer (KYC) details once every three years instead of annually.
The relaxed norms will come into effect from March 31.
What Has Changed?
- Earlier:
- Company directors were required to file KYC annually
- Now:
- KYC filing required once in three years
- Applies to directors governed under Section 12A of the Companies (Appointment & Qualification of Directors) Rules, 2014
This move significantly reduces the regulatory and compliance burden for hundreds of thousands of directors.
What is KYC?
Know Your Customer (KYC) is a regulatory process through which financial institutions verify the identity, address, and financial profile of customers before or while providing services. It aims to prevent money laundering, terrorist financing, fraud, and identity theft.
Who mandates KYC in India?
- KYC norms are prescribed and supervised by the Reserve Bank of India
- Also followed by other regulators like SEBI and IRDAI for their respective entities
What is CKYC?
Central Know Your Customer (CKYC) is a centralised KYC system in India that allows a customer to complete KYC once and use it across multiple financial institutions.
Who manages CKYC?
- CKYC Registry is managed by Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI)
- Implemented under the Prevention of Money Laundering Act (PMLA), 2002
