SEBI Enhances Business Ease and Reporting Compliance

The Securities and Exchange Board of India (SEBI) has announced new measures to improve the ease of doing business and compliance reporting for intermediaries who are reporting to financial institutions (RFI) under the Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS).

FATCA and CRS are global standards for the automatic exchange of financial account information between countries to prevent tax evasion and money laundering. RFIs are required to obtain a self-certification from their clients to determine their tax residency status and report it to the relevant authorities.

According to SEBI’s circular dated February 20, 2024, RFIs will have to upload the certifications under FATCA and CRS obtained from the clients in the system of KYC Registration Agencies (KRAs) from July 1, 2024. The existing certifications obtained from clients prior to July 1, 2024 will be uploaded by the intermediaries onto the systems of KRAs within a period of 90 days of implementation of the new rule.

The onus of obtaining and reporting the FATCA and CRS certification and related compliances will lie with the respective intermediaries. They will also have to confirm the reasonableness of such certification based on the information obtained in respect of account opening, including any documentation obtained in accordance with Prevention of Money Laundering (Maintenance of Records) Rules, 2005 and update the self-certification, as and when, there is a change reported by the client.

The KRAs are required to develop their mechanism, in coordination with each other and follow uniform internal guidelines in consultation with SEBI. The regulator said that these measures are aimed at promoting ease of doing business and compliance reporting by centralizing the certifications under FATCA and CRS at KRAs.

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