Know Your Client Information System 1. Central KYC Organization (CKO) Introduction Presently, a t...

Know Your Client Information System

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Central KYC Organization (CKO)

Introduction Presently, at the time of opening of new client

account, capital market intermediaries required to perform the process of Know Your Client (KYC) of their clients separately.

Investors desirous of opening an account with different intermediaries in the capital market are required to go through the KYC process with each intermediary again and again.

This process leads to unnecessary duplication of efforts and wastage of resources at both intermediary and investor level.

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Introduction In order to bring efficiency and to avoid

duplication of KYC process with every intermediary, it is envisaged that a centralized mechanism needs to be developed for the performance of one time KYC and maintenance of centralized KYC database.

Accordingly, the SECP constituted a Committee on the Standardized Account Opening Form (SAOF) which consisted of key stakeholders with the mandate to comprehensively review various documentation requirements and devise a revised SAOF for Central KYC Organization (CKO ) and the TREC Holders.

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Introduction Keeping in view the significant role of the

National Clearing Company of Pakistan Limited (“NCCPL”) in provision of various centralized services to all three stock exchanges and other market intermediaries, NCCPL is considered as the most suitable for the task of establishing and acting as CKO.

As per the recommendations of the Committee, SAOF consists of two portions:

KYC Application Form; and Combined Trading Account Opening Form & the CDC

Sub-Account Opening Form.

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Introduction

Accordingly, NCCPL being a CKO, is developing a centralized web-based system namely KYC Information System (KIS) which will maintain separate and exclusive database for the storage of KYC information of clients, entered by respective market intermediaries.

Authorized market intermediaries will perform initial KYC and In-Person Verification of their clients.

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Introduction

Following are the persons who are eligible for registration as Authorized Intermediary (AI) with CKO i.e. NCCPL:

Broker Clearing Members (BCMs) or TREC Holder CM Non- Broker Clearing Members (NBCMs) Custodian Clearing Members Members of PMEX Non-Banking Finance Companies registered with SECP Any other entity approved by NCCPL Board

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Introduction

Centralized KYC Mechanism will be implemented in phased manner:

Phase I For all TREC Holders; and Asset Management Companies and their Funds.

Phase II Insurance Industry; and Pakistan Mercantile Exchange Limited (PMEX)

Moreover in Phase I requirement of KYC through NCCPL will be applicable on all new client codes to be created in NCSS.

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KYC Information System (KIS)

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Access of AIs in KIS

Upon admission of a person as AI, NCCPL will issue dedicated User ID and Password to AI.

Standard Password Policy will also be communicated at the time of admission and AI shall be required to change password at first login into KIS.

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KYC Application Form for New Clients An electronic KYC Application Form will be made

available in KIS.

AIs will submit on-line KYC Application Form duly filed-in with standard KYC Information of a client.

AI will send such Filled-in KYC Application Form to NCCPL electronically for its approval.

AI shall also send a copy of the Filled-in KYC Application Form to NCCPL along with the following supporting documents:

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Supporting Documents:

For Individuals For Corporate

Attested copy of CNIC, NICOP, NARA or Passport where applicable

Certificate of Incorporation or constitutive documents

Utility Bills, Bank Statement, Rental Agreement, Insurance Policy and/or Certificate from Employer shall be provided (Any of these documents required in case of difference in address with CNIC ETC)

Any License issued by a regulatory body in case of specialized companies

For salaried persons:

• Attested copy of service card or • Certificate from the Employer

Memorandum and Articles of Association

•List of Directors on latest Form 29•Copies of CNICs of all the Directors•Board Resolution

- Latest Form A-NTN Certificate- Latest Audited Financial Statements

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Verification and Processing of KYC Application Form

NCCPL will initiate necessary verification process of KYC Application Form and supporting documents of a client.

KYC Application Form which is in-complete and/or lack of supporting documents shall not be processed by NCCPL and shortcomings will be communicated to AI.

After successful verification of KYC Application Form and supporting documents, NCCPL will approve it electronically in KIS.

Accordingly, UKN for the client shall be auto-generated and linked with the Unique Identification Number (UIN) of such client.

Such UKN will also be tagged with the requested AI.

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Verification and Processing of KYC Application Form

NCCPL will also obtain confirmation from the client for the issuance of UKN.

NCCPL will send a letter on the mailing or registered address of a client as mentioned in KYC Application Form.

In case of any non-compliance of KYC requirement within stipulated time, the UKN and/or Client Code of such client shall be restricted by NCCPL under intimation to AI.

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Process Flow of KYC Registration for New Client

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KYC Registration of Client already having UKN

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Registration of Client already having a UKN

KYC Application Form will not be required for a client who has already been provided a UKN by NCCPL at the time of opening an account with other AI.

AI who wants to register such client will be required to send a UKN tagging request electronically through KIS.

A hard copy of an authorization letter (on standard format) duly signed by a client will also be submitted to NCCPL within stipulated time.

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Registration of Client already having a UKN

After successful verification, NCCPL will approve such tagging request electronically in KIS.

NCCPL will also obtain confirmation from the client for the tagging of his UKN with AI(s)

NCCPL will send a letter on the mailing or registered address of a client.

In case of non-confirmation/returned mail by a client within stipulated time, the UKN of such client shall be restricted by NCCPL under intimation to AI.

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Process Flow of KYC Registration for Client Already Having UKN

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Updation of KYC Information of Client having UKN

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Updation of KYC Information of Client having UKN

If a client having valid UKN desirous to update his KYC Information, such client will inform concerned AI to initiate changes in KIS.

Accordingly, KYC Application Form will be updated by such AI and send it electronically to NCCPL.

Moreover, hard copy of KYC Application Form, supporting documents and authorization of change(s) from client will also be provided physically by AI to NCCPL within stipulated time.

Accordingly, after successful verification, NCCPL will approve such changes in KYC Application Form electronically in KIS.

In case where client is registered with other AI(s), NCCPL will also inform such changes to all other AIs who have registered such client through system reports/alerts in KIS.

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Thank You!

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Know Your Client Information System 1. Central KYC Organization (CKO) Introduction Presently, a t...

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