Jainam Broking Penalised Rs3 Lakh for KYC Non-compliance
Moneylife Digital Team 02 September 2024
Market regulator Securities and Exchange Board of India (SEBI) has imposed a penalty of Rs3 lakh on Jainam Broking Ltd for failing to comply with the know-your-client (KYC) regulations mandated by the prevention of money-laundering (PML) (maintenance of records) rules, PML rules and SEBI circulars.
 
In the order, N Hariharan, chief general manager (CGM), of SEBI noted that "in the present case, lapses in updating the KYC of the clients on central KYC records registry (CKYCR) have been established against Jainam Broking. I note that the SEBI Circulars envisage that the registered intermediaries shall upload the KYC data with CKYCR in respect of all individual accounts opened on or after 1 August 2016, within ten days after the commencement of an account-based  relationship with a client. However, Jainam Broking failed to comply with the requirement of the circulars in 1,701 instances." 
 
Jainam Broking Limited, a registered stockbroker with SEBI since 30 September 2004, was found to have violated these regulations during an inspection conducted on 4 October and 5 October 2023, 
 
SEBI's investigation revealed that Jainam Broking failed to update the KYC information of 1,501 clients within the stipulated time frame of 10 days after commencing an account-based relationship with these client. 
 
Additionally, in 200 instances, the brokerage failed to update the KYC records of clients with the Central KYC Records Registry (CKYCR) altogether.
 
Despite Jainam Broking admission of these violations, the firm argued that the lapses were technical in nature and did not cause any prejudice to clients or the broader market. However, SEBI emphasised that as a registered intermediary, Jainam Broking was required to proactively comply with all legal requirements within the stipulated time periods. 
 
The market regulator noted that the non-compliance was not an inadvertent omission and that Jainam Broking failure to adhere to the applicable laws was a significant breach of regulatory obligations.
 
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