SEBI Circular

SEBI Directs Intermediaries to Centralize FATCA and CRS Certifications at KYC Registration Agencies

The Securities and Exchange Board of India (SEBI) issued a circular SEBI/HO/MIRSD/SECFATF/P/CIR/2024/12 February 20, 2024, related to the centralization of certifications under the Foreign Account Tax Compliance Act (FATCA) and common reporting standard (CRS) at KYC Registration Agencies (KRAs). SEBI made registered Intermediaries upload FATCA and CRS certifications duly obtained from clients onto the KRA system from the start of July 1, 2024. Existing certificates obtained before this date are also required to be uploaded within a period of 90 days after the implementation of the SEBI circular. In accordance with the SEBI circular, now intermediaries are duly responsible for obtaining and reporting this certification, ensuring reasonableness, and updating the same when needed. KRAs will develop uniform guidelines and standards in consultation with the SEBI.

Key highlights of this circular

Background:

SEBI’s circulars from 2015 and guidance notes from the Department of Revenue require reporting financial institutions (RFIs) to obtain self-certifications from clients in order to determine tax residency. It is mandatory for regulators to provide a detailed and comprehensive structure to maintain this kind of information.

Feedback and Decision:

SEBI circular depends upon various stakeholders’ feedback, and to enhance the ease of doing business and proper compliance reporting, intermediaries acting as RFIs are instructed to upload the FATCA and CRS certifications on the KRAs system from 1^st July 2024.

Transition Period:

It is mandatory in respect of certifications duly obtained before 1^st July 2024 that need to be uploaded within 90 days from the circular’s implementation.

Responsibilities of Intermediaries:

Under the SEBI circular, Intermediaries are duly responsible for obtaining, verifying and reporting FATCA and CRS certifications and ensuring reasonableness depends upon the account opening information and will update such information when needed on the relevant portal.

Role of KRAs:

KRAs under the SEBI circular are mandated with the responsibility of developing a coordinated system and ensuring a proper mechanism that follows uniform guidelines and standards through consultation with SEBI officials.

Legal Basis:

SEBI issued this circular through the powers conferred by the Securities and Exchange Board of India Act, 1992, and under Regulation 17 of SEBI (KYC Registration Agency) Regulations, 2011, to protect the potential investor interests and govern the entire securities markets.

Aspect	Details
Circular Title	SEBI Circular 2024/12, dated February 20, 2024
Objective	Centralize FATCA and CRS certifications at KYC Registration Agencies (KRAs)
Implementation Date	July 1, 2024
Existing Certificates	Must be uploaded within 90 days after July 1, 2024
Responsibilities	Intermediaries: Obtain, verify, and report certifications; update information when needed
Role of KRAs	Develop systems based on uniform guidelines and standards in consultation with SEBI officials.
Legal Basis	SEBI Act, 1992, and SEBI (KYC Registration Agency) Regulations, 2011
Purpose	Streamline compliance, promote transparency, align with regulatory norms
Background	Prior circulars and guidance notes required RFIs to obtain self-certifications from clients for tax residency determination.
Decision	Based on stakeholder feedback, intermediaries are instructed to upload certifications on KRAs from July 1, 2024
Transition Period	Certifications obtained before July 1, 2024, must be uploaded within 90 days of circular implementation.

Conclusion:

SEBI’s circular was issued with the intent to enhance compliance reporting and ease of doing business through the centralizing of the FATCA and CRS certifications. The transition period and responsibilities outlined in this circular for intermediaries are showing a significant effort to ensure regulatory alignment and investor protection in the securities market landscape. This showcases SEBI’s commitment to transparency, regulatory norm compliance, and safeguarding investor interests. 

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