The market regulator has fined Jainam Broking Rs 3 lakh for not updating Know Your Customer (KYC) details on a central registry in time and in entirety. The regulator noted that, in some cases, there was even a delay of seven years.
The order, issued by the Securities and Exchange Board of India (Sebi) on August 30, stated that the brokerage had made these mistakes with records of 1,701 clients.
This is the second Sebi order issued against the brokerage in two days. On August 29, Jainam was fined Rs 6 lakh for various violations done by its authorised persons (APs), including the APs using non-permissible words such as wealth advisory or investment advisory in their names.
Also read: Jainam Broking's APs found to be using 'wealth', 'advisory' in names; Sebi fines Rs 6 lakh
According to the latest order, of the 1,701 clients, details of 1,501 clients were not updated on the Central KYC Registry (CKYCR) in time and there was no evidence that the details of the rest of the 200 were updated at all.
The brokerage had claimed that, out of the 200 clients, 15 were closed, 30 clients were dormant in nature and that the status of one account had changed into major. It had also claimed that it had taken corrective measures with regard to details of 96 clients.
The regulator did not accept these claims because the brokerage did not provide any evidence to substantiate them.
The order stated: "It is an admitted fact that the Noticee (Jainam) has not followed the stipulated procedures for updation of clients’ KYC on CKYCR with respect to 1,701 clients out of 37,172 clients verified. It is noted from the material on record that for some cases the delays were of more than seven years."
The central registry facilitates inter-usability of KYC records, reduces the burden for customers in not having to produce the documentation for every new financial intermediary, and helps in the implementation of prevention of money laundering (PML) rules.
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