e-CSIN

The Institute of Company Secretaries of India has once again extended the last date for employed company secretaries to obtain their e-CSIN, an online identification number at their portal from 15th January 2020 to 29th February 2020. This is required in case of those company secretaries in respect of whom the erstwhile form 32 under the old companies act or the form DIR-12 under the new companies act was filed with the ministry of corporate affairs. 

LODR amendment - CMD post

SEBI has vide an amendment dated 10th January, 2020 to the Listing Obligations and Disclosure Requirements, 2015 (LODR) required that the chairperson of top 500 listed entities as per market capitalisation shall be a non executive director and not related to the MD or CEO as per the definition of relative within the Companies Act, 2013 with effect from 1st April, 2022. The earlier stipulation was that this was to be enforced from 1st April, 2020 onwards.

The relevant SEBI circular can be found here

compliances for Drone Operators

PIB press release dated 13th January 2020 on the need for drone operators to register their drones with the agency. There is a portal in which they need to register and they will be given some unique identification numbers. All this to be done by 31st January, 2020.

In order to facilitate the identification of civil drones and drone operators, a one-time opportunity for voluntary disclosure of such drones and drone operators is now being provided by the Ministry of Civil Aviation (MoCA). The persons in possession of drones are required to submit the information to the government, starting from 14^th January 2020 by visiting the Digital Sky portal at https://digitalsky.dgca.gov.in. Drones and Drones operators have to obtain Unique Identification Number (UIN), Unmanned Aircraft Operator Permit (UAOP) and other operational requirements as per the guidelines issued by the Directorate General of Civil Aviation (DGCA) which regulates the use of drones in the Indian Airspace.

It was brought to the notice of the Government of India that such drones and drone operators are not complying with the CAR mentioned abovThe conditions of No Permission-No Takeoff (NPNT) as envisaged in the aforesaid CAR are not mandatory for this purpose whereas if drones are operated without due permission, the aforesaid process of CAR is violated. The deadline to submit the required information to the Government is 31^st January 2020.

On successful submission of voluntary disclosure of possessing drone, a Drone Acknowledgement Number (DAN) and an Ownership Acknowledgement Number (OAN) will be issued online which will assist in validation of operations of drones in India. However, the DAN or OAN does not confer any right to operate a drone(s) in India, if it does not fulfill the provisions given in the CAR. Further, ownership of drone(s) in India without a valid DAN or OAN shall invite penal action as per applicable laws.

Any clarification or additional information in this regard may be sought from Digital Sky Help desk at support-digisky@gov.in. 

investment advisers in IFSC

SEBI has vide its circular dated 9th January, 2020 issued operating guidelines for investment advisers in International Financial Services Centre including net worth requirements, qualifications, annual compliance audit etc.

https://www.sebi.gov.in/legal/circulars/jan-2020/operating-guidelines-for-investment-advisers-in-international-financial-services-centre_45620.html

KYC - video verification process

RBI circular dated 9th January, 2020 wherein they have allowed video based customer identification process (CIP) to establish the KYC of the clients being on boarded. Elaborate rules have been laid down for the same purpose, including procedure for carrying out live CIP, software & security audit of the live CIP process, etc. All accounts to be opened under live CIP shall be done only after concurrent audit to ensure robustness of the process.

This is supposed to be ease of doing business, but as we have seen from the past experiences, it becomes anything but that. Increasingly, it is becoming difficult to open a bank a/c inside of 3 weeks from the banks, but yet as we have seen, instances of fraud are being committed by the bank's employees themselves as we have seen in the PNB and PMC Bank fiasco.

RBI circular follows

https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=11783&Mode=0

Government of India, vide Gazette Notification G.S.R. 582(E) dated August 19, 2019 and Gazette Notification G.S.R. 840(E) dated November 13, 2019, has notified amendment to the Prevention of Money-laundering (Maintenance of Records) Rules, 2005. Further, with a view to leveraging the digital channels for Customer Identification Process (CIP) by Regulated Entities (REs), the Reserve Bank has decided to permit Video based Customer Identification Process (V-CIP) as a consent based alternate method of establishing the customer’s identity, for customer onboarding.

2. The consequent changes carried out in the Master Direction on KYC dated February 25, 2016, with the aforementioned amendments to the PML Rules and V-CIP are as under:

A. Changes due to amendments to the PML Rules

a) “Digital KYC” has been defined in Section 3 as capturing live photo of the customer and officially valid document or the proof of possession of Aadhaar, where offline verification cannot be carried out, along with the latitude and longitude of the location where such live photo is being taken by an authorised officer of the Reporting Entity (RE) as per the provisions contained in the Act. Steps to carry out the Digital KYC process have also been stipulated.

b) “Equivalent e-document” has been defined in Section 3 as an electronic equivalent of a document, issued by the issuing authority of such document with its valid digital signature including documents issued to the digital locker account of the customer as per Rule 9 of the Information Technology (Preservation and Retention of Information by Intermediaries Providing Digital Locker Facilities) Rules, 2016.

c) Section 16 has been amended and accordingly,

I. customer, for the purpose of Customer Due Diligence CDD) process, shall submit:

1. the Aadhaar number where he is desirous of receiving any benefit or subsidy under any scheme notified under section 7 of the Aadhaar (Targeted Delivery of Financial and Other subsidies, Benefits and Services) Act, 2016 (18 of 2016); or he decides to submit his Aadhaar number voluntarily to a banking company or any reporting entity notified under first proviso to sub-section (1) of section 11A of the PML Act; or
2. the proof of possession of Aadhaar number where offline verification can be carried out; or
3. the proof of possession of Aadhaar number where offline verification cannot be carried out or
4. any Officially Valid Document (OVD) or the equivalent e-document thereof containing the details of his identity and address; and
5. the Permanent Account Number or the equivalent e-document thereof or Form No. 60 as defined in Income-tax Rules, 1962; and
6. such other documents including in respect of the nature of business and financial status of the client, or the equivalent e-documents thereof as may be required by the RE.

II. Provided that where the customer has submitted

1. Aadhaar number under paragraph (c.I.i) above to a bank or to a RE notified under first proviso to sub-section (1) of section 11A of the PML Act, such bank or RE shall carry out authentication of the customer’s Aadhaar number using e-KYC authentication facility provided by the Unique Identification Authority of India.
2. proof of possession of Aadhaar under clause (c.I.ii) above where offline verification can be carried out, the RE shall carry out offline verification
3. an equivalent e-document of any OVD, the RE shall verify the digital signature as per the provisions of the Information Technology Act, 2000 (21 of 2000) and any rules issues thereunder and take a live photo as specified under Annex I of the Master Direction.
4. proof of possession of Aadhaar number where offline verification cannot be carried out under clause (c.I.iii) above or any OVD under clause (c.I.iv), the RE shall carry out verification through digital KYC as specified under Annex I of the Master Direction.
   Provided, for a period not beyond such date as may be notified by the Government for a class of REs, instead of carrying out digital KYC, the RE pertaining to such class may obtain a certified copy of the proof of possession of Aadhaar number or the OVD and a recent photograph where an equivalent e-document is not submitted.

III. Equivalent e-document has also been permitted for accounts of non-individual customer.

IV. Where a customer has provided his Aadhaar number under paragraph (c.I.i) above for identification and wants to provide a current address, different from the address as per the identity information available in the Central Identities Data Repository, he may give a self-declaration to that effect to the Regulated Entity.

B. Changes due to introduction of Video based Customer Identification Process (V-CIP)

a) Definition of V-CIP has been inserted in Section 3 of the Master Direction

b) The process of V-CIP has been specified in Section 18 in terms of which, REs may undertake live V-CIP, to be carried out by an official of the RE, for establishment of an account based relationship with an individual customer, after obtaining his informed consent and shall adhere to the following stipulations:

i. The official of the RE performing the V-CIP shall record video as well as capture photograph of the customer present for identification and obtain the identification information as below:

• Banks: can use either OTP based Aadhaar e-KYC authentication or Offline Verification of Aadhaar for identification. Further, services of Business Correspondents (BCs) may be used by banks for aiding the V-CIP.
• REs other than banks: can only carry out Offline Verification of Aadhaar for identification.

ii. RE shall capture a clear image of PAN card to be displayed by the customer during the process, except in cases where e-PAN is provided by the customer. The PAN details shall be verified from the database of the issuing authority.

iii. Live location of the customer (Geotagging) shall be captured to ensure that customer is physically present in India

iv. The official of the RE shall ensure that photograph of the customer in the Aadhaar/PAN details matches with the customer undertaking the V-CIP and the identification details in Aadhaar/PAN shall match with the details provided by the customer.

v. The official of the RE shall ensure that the sequence and/or type of questions during video interactions are varied in order to establish that the interactions are real-time and not pre-recorded.

vi. In case of offline verification of Aadhaar using XML file or Aadhaar Secure QR Code, it shall be ensured that the XML file or QR code generation date is not older than 3 days from the date of carrying out V-CIP.

vii. All accounts opened through V-CIP shall be made operational only after being subject to concurrent audit, to ensure the integrity of process.

viii. RE shall ensure that the process is a seamless, real-time, secured, end-to-end encrypted audiovisual interaction with the customer and the quality of the communication is adequate to allow identification of the customer beyond doubt. RE shall carry out the liveliness check in order to guard against spoofing and such other fraudulent manipulations.

ix. To ensure security, robustness and end to end encryption, the REs shall carry out software and security audit and validation of the V-CIP application before rolling it out.

x. The audiovisual interaction shall be triggered from the domain of the RE itself, and not from third party service provider, if any. The V-CIP process shall be operated by officials specifically trained for this purpose. The activity log along with the credentials of the official performing the V-CIP shall be preserved.

xi. REs shall ensure that the video recording is stored in a safe and secure manner and bears the date and time stamp.

xii. REs are encouraged to take assistance of the latest available technology, including Artificial Intelligence (AI) and face matching technologies, to ensure the integrity of the process as well as the information furnished by the customer. However, the responsibility of customer identification shall rest with the RE.

xiii. RE shall ensure to redact or blackout the Aadhaar number in terms of Section 16.

xiv. BCs can facilitate the process only at the customer end and as already stated in para B(b) above, the official at the other end of V-CIP interaction should necessarily be a bank official. Banks shall maintain the details of the BC assisting the customer, where services of BCs are utilized. The ultimate responsibility for customer due diligence will be with the bank.

3. The Master Direction on KYC dated February 25, 2016, is hereby updated to reflect the above changes and shall come into force with immediate effect.

e-mandate in UPI transactions

RBI circular dated 10th January, 2020 allowing e-mandate recurring transactions to be processed on UPI (Unified Payments Interface) transactions in the same manner as for cards/ prepaid payment instruments (PPIs) with additional factor authentication.

https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=11784&Mode=0

Processing of e-mandate in Unified Payments Interface (UPI) for recurring transactions

Please refer to our circular DPSS.CO.PD.No.447/02.14.003/2019-20 dated August 21, 2019 on “Processing of e-mandate on cards for recurring transactions” whereby processing of e-mandate on cards / Prepaid Payment Instruments (PPIs) was permitted for recurring transactions (merchant payments), with Additional Factor of Authentication (AFA) during e-mandate registration, modification and revocation, as also for the first transaction, and simple / automatic subsequent successive transactions, subject to certain conditions.

2. On a review of the developments since this facilitation, it has been decided to extend the above instructions to cover UPI transactions as well. All the instructions / conditions outlined in the circular under reference would apply, mutatis mutandis, while processing e-mandate in UPI. This is also in line with the measures proposed for furthering digital payments announced vide, the RBI Press Release dated November 8, 2019.

3. This directive is issued under Section 10 (2) read with Section 18 of Payment and Settlement Systems Act, 2007 (Act 51 of 2007).

4. This may be brought to the notice of all the members of UPI.

payment and settlement systems

RBI circular dated 10th January 2020 follows, for laying down framework for imposing monetary penalty on authorised payment system operators/ banks under the Payment and Settlement Systems Act, 2007.

Some of violations are compoundable offences so procedure for dealing with that also mentioned in this circular.

https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=11785&Mode=0