Digital KYC (Know Your Customer)
Digital KYC, or electronic Know Your Customer, is a process established by regulatory bodies such as the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) to facilitate the verification of customer identities for accessing financial services through online channels. Here’s an overview of the key points regarding Digital KYC:
Digital KYC is an online process where customers can fulfill their KYC requirements electronically, either by filling out online forms or undergoing video-based customer identification processes (V-CIP), as approved by regulatory authorities.
Types of Digital KYC
- Online KYC Form: Customers can complete KYC procedures for various financial services, such as mutual fund investments, by filling out online forms and submitting them to intermediaries.
- Video-based KYC: Customers undergo identity verification through live video calls where they provide necessary information and documents to a designated executive.
- OTP-based KYC: Customers can complete KYC using their Aadhaar card through a one-time password (OTP) sent to their registered mobile number.
Some of the situations that require a Due Diligence Investigation include:
- Required Documents: Customers need to provide officially valid documents for identity and address proof, such as PAN card, Aadhaar card, passport, and utility bills.
- Purpose: Digital KYC aims to streamline the KYC process, enhance efficiency, and mitigate risks associated with money laundering, fraud, and identity theft.
- Eligibility Customers need a valid Aadhaar number to be eligible for Digital KYC, as it serves as the basis for client registration in India.
- Workflow: Digital KYC involves paperless identity verification using the internet, utilizing the Aadhaar platform for authentication. Customers provide their Aadhaar number and biometric data or OTP for verification.
- Verification Options: Digital KYC offers various verification methods, including video-based checks and image-based verification using biometric data.
Advantages
- Paperless Process: Eliminates the need for physical document submission, making the process more efficient and eco-friendly.
- Consent-Based: Customers provide consent for the KYC process, safeguarding their privacy rights.
- Quick Process: Digital KYC is automated and can be completed within minutes, compared to traditional methods that may take days or weeks.
- Transparency: Online storage of documents and data enhances transparency and accountability in transactions.
In summary, Digital KYC revolutionizes the traditional KYC process by leveraging technology to offer a more convenient, efficient, and secure means of identity verification for accessing financial services.
