EKYC Electronically know your customer
For customer identification EKYC or Know Your Customer is a process an institution employs. Under the Prevention of Money Laundering Act, 2002 the Securities Exchange Control Board of India (SEBI) laid down that any institute that deals with financial transactions or functions as financial intermediaries needs to verify their customer’s identity. It did help with preventing money fraud and identifying suspicious transaction activity of an account holder with banks and mutual funds instituting the EKYC process for all its customers. This is mandatory for all people of Indian nationality and KYC is a one-time process.
Though electronically eKYC is the process of an institution getting acquainting with their customer. To reduce the use of physical paperwork is the main objective of electronic KYC. EKYC always permits filing to happen in real-time and this has made the process streamlined & less prone to corruption in industries such as finance, banking, telecom etc.
Mobile verification, video verification and email verification are required for any subscriber who has filled out a class III in the KYC application form and the normal KYC process requires an individual to physically verify his identity through documents that have been attested by a notary, a bank manager or a Gazetted officer. It reduces the time and effort taken by several folds of any individual who uses the electronic form of KYC and need not attest the documents physically.
Approval needed from Unique Identification Authority of India (UIDAI) for those Organizations that want to use the E-KYC service for their customers. By manually verifying a customer’s details the normal KYC process takes about 2 days or more to open a new bank account, to activate a sim card, etc but the EKYC process takes a few minutes & ensures always that a customer will leave the premise of the shop / bank with a fully functioning account or sim.
STEPS IMVOLVED IN THE KYC PROCESS:-
At the time of the KYC process an individual is physically requiring to be present. To conduct the KYC , The individual will be required to take multiple copies of documents, physically attest & sign the same and travel to and from the office of the place.. The process involves are as follows:-
• Application form
To fill out an application all require an applicant/customer form along with a signature and the application form can be for a new bank account, a new sim card, a new investor investing in shares or mutual funds, etc.
. Proof of Identity
Proof of identity can be Permanent Account Number (PAN) / Aadhaar number Proof of identity by using Government issued documents and we can do this online or offline because though records are easier to access when stored online. To prove their authenticity Offline KYC requires documents to atteste as a Proof of Address.
• Recent photograph
With the application form a recent photograph needs to taken and submitted. For a customer getting a picture done requires travel & waiting at another store which makes it inconvenient.
• Register for Aadhaar
Aadhaar is a 12 digit numerical code that stores demographic and biometric data of the population and this service is been provided by the Unique Identification Authority of India (UIDAI) which is a Central Government Agency
• OTP or Fingerprint Biometric
On the Aadhaar registered mobile number for verification, a one-time password (OTP) will be provided. To verify the thumbprint of an individual a fingerprint biometric scanner can also use to verify the identity of an individual. in case an individual may not have fingerprint scanning capabilities OTP is more convenient though.
• Multiple parties signatures if required
Irrespective of their location an individual can get multiple parties to sign a document electronically.
• Download or send the same
The document can save or downloaded for later use.
How It Works:
1. To be electronically sign an individual needs to upload the document that needs it.
2. Along with the document the Aadhaar number and one-time password on the Aadhaar registered mobile number needs to submitt.
3. . Any individual needs to above the age of 18 to be able to electronically sign documents in India and other parties can invite to electronically sign documents from any location.
4. After all the concerned signatures are placing on the electronic document, the document can download for use or storing.
ADVANTAGES OF EKYC:
It would eliminate the need for any physical paperwork If the entire process can be shifted online.
2. Consent based
For any data to be shared or accessed (Aadhaar based authentication) by any other third-par thereby protecting an individual’s right to privacy an individual needs to give their consent.
3. Compliance with the Information Technology Act, 2000
Any transfer of data is securing through. The use of digital signature and encryption as per the Information Technology Act. 2000 so electronic KYC is legally equivalent to that of a paper document. So it has the same value as a normal document.