Aligned with UnlistedCorner’s KYC/AML policy—plus practical steps for investors and channel partners
Why read this: Unlisted trades—pre-IPO, ESOP resales, secondary transfers—move outside exchange clearing, so KYC/AML discipline is what keeps you safe and deal-ready. This guide explains what to collect, what to watch, and how to execute cleanly on UnlistedCorner, with a step-by-step checklist you can put to work today.
What “good KYC/AML” looks like on UnlistedCorner
UnlistedCorner’s policy requires PAN, Aadhaar, and a CMR (Client Master Report PDF) before you trade. We reserve the right to review accounts and transactions, hold/refuse unusual transfers, and report suspicious activity to authorities when required. Documents are stored securely; access is limited to authorised staff; and we may deny/suspend service for non-compliance.
This mirrors India’s regulator playbook for securities intermediaries: SEBI’s AML/CFT master circular (June 6, 2024) and the PML Act/Rules that define client due diligence, beneficial ownership, PEP screening, ongoing monitoring, and STR reporting to FIU-IND.
Why KYC/AML matters more in the unlisted market
- Off-exchange settlement: Private transfers rely on off-market demat and bank-to-bank consideration—increasing dependency on identity, source-of-funds, and proper paper trails.
- Price discovery is negotiated: When trades happen away from a screen, FMV gaps and layered structures are a bigger risk unless you verify the parties.
- Regulatory tightening: Since 2023, beneficial ownership thresholds have been lowered to 10% for companies/partnerships under the PML Rules; AML expectations on intermediaries and facilitators are noticeably higher.
The document checklist (individuals & non-individuals)
Below is a pragmatic, deal-tested pack you can assemble on Day 1. It aligns with UnlistedCorner’s policy and India’s AML rules.
A) Individuals (Resident / NRI)
- Identity & address
- PAN (mandatory) and Aadhaar (as applicable).
- Demat proof
- CMR (Client Master Report) PDF from DP—shows DP ID/Client ID, holder name, mode of holding (single/joint), and depository (NSDL/CDSL).
- Bank proof (own-account only)
- Cancelled cheque / bank statement (name, IFSC, account number) to tie consideration flows to the demat holder.
- Source-of-funds (if high-value)
- Salary slips / investment redemptions / loan disbursal proof where relevant (risk-based).
- Declarations
- PEP status; sanctions/adverse-media declarations; residency/tax (FATCA/CRS, if applicable).
- Power of Attorney/mandates
- Only if a legal representative signs; include ID, relationship proof, and PoA document.
B) Non-individuals (Company/LLP/Trust/AIF, etc.)
- Constitutional docs
- COI, MOA/AOA or LLP/Trust deed; GST if available.
- Authorisations
- Board/partner resolution authorising signatory and trade.
- KYC of signatories
- PAN + address proof of authorised signatory(ies).
- Demat & bank
- Entity CMR PDF + bank proof in entity name.
- UBO (beneficial owner) declaration
- Identify natural persons with ≥10% ownership/control (companies/partnerships), or 15% for certain unincorporated associations; if none, record Senior Managing Official (SMO)—per PML Rules/SEBI guidance.
- PEP/sanctions screening
- On UBOs, SMO, trustees/beneficiaries (as applicable).
- Foreign elements
- FEMA/ODI/FDI checks if remittances or cross-border parties are involved.
Tip: For high-value or non-face-to-face transactions, expect enhanced due diligence (EDD): independent address verification, deeper source-of-funds, and closer transaction monitoring. That is standard under SEBI’s AML/CFT guidelines.
Payments, stamp duty & clean delivery (at a glance)
- Only own-account payments from the buyer; no third-party or cash/UPI through unrelated accounts.
- Stamp duty on delivery-based transfer of securities other than debentures is 0.015% of consideration; collected electronically via the depository/RTA framework (unified regime since July 1, 2020).
- Off-market demat transfer executes once funds clear and duty is collected; details flow from your instruction slip/eDIS onto the depository system.
The red-flag library for unlisted deals
Use this table to triage risk before you commit:
|
Pattern |
Why it’s risky |
What to do |
|
Third-party funds (payer ≠ demat holder) |
Obfuscates ownership, enables layering |
Reject; insist on payer = BO; document exceptions narrowly |
|
Rapid in-and-out (e.g., within weeks) |
Smells like parking/round-tripping |
Heighten EDD; ask for rationale and funding trail |
|
Price far below/above FMV with no rationale |
Could indicate accommodation entries |
Obtain valuation note (Rule 11UA context), board approvals; consider STR if unexplained |
|
Multiple small splits across accounts |
Structuring to avoid thresholds |
Aggregate monitoring; verify common control/UBO |
|
Frequent B2B hops before final buyer |
Layering |
Ask for end-beneficiary; tighten terms or walk away |
|
Politically Exposed Persons (PEPs) involved |
Higher corruption exposure |
Senior approval + EDD; ongoing review per SEBI AML/CFT |
|
Mismatched docs (name/DoB/address differ across PAN/CMR/bank) |
Identity risk |
Re-KYC and rectification before trade |
|
Offshore remittances or complex trusts |
Cross-border AML complexity |
Enhanced screening; legal/FEMA opinion where needed |
|
Repeated last-minute bank changes |
Account-takeover / mule risk |
Freeze process; re-verify; use escrow if justified |
|
Negative media / sanctions hits |
Legal/regulatory exposure |
Escalate; consider declining the engagement |
SEBI’s AML/CFT master circular expects risk-based monitoring, PEP treatment, and record-keeping; when suspicion crystallises, file an STR with FIU-IND within seven working days of being satisfied that a transaction is suspicious.
The simple Compliance Checklist (print-ready)
- Collect & verify: PAN, Aadhaar (as applicable), CMR PDF, bank proof (individual/entity).
- Match names & ownership across all docs; resolve any mismatch before moving money.
- Identify UBOs (≥10% / control) & SMO for non-individuals; record PEP/sanctions outcomes.
- Confirm own-account funding and keep a bank trail (inward remittance proofs).
- Get approvals: board/partner resolution, seller authorization; ensure Articles/shareholder restrictions (if any) are respected.
- Money first, then delivery: align consideration + stamp duty (0.015%) → off-market demat transfer.
- Document pack: invoices/contract notes, transfer instruction/eDIS, valuation note (if price differs from prior trades), and communications.
- Ongoing monitoring: post-trade reviews, unusual patterns, periodic KYC refresh.
- Escalate/Report: if suspicion forms, STR to FIU-IND within 7 working days.
How UnlistedCorner operationalises this (Investors and Channel Partners)
For investors
- Guided onboarding with PAN/Aadhaar/CMR capture, and a support team that checks name matches and demat details before trade.
- Inventory & deal desk: Browse popular unlisted shares (NSE, HDB, Tata Capital, Care Health, etc.), view lot sizes and reference prices, and raise personalised share queries if a script isn’t listed.
- Education hub: A busy Blog/News stream that demystifies process, tax, and exit routes so you can trade with context, not hearsay.
For vendors / channel partners (our “vendor system”)
- Lead & price dashboard, knowledge centre, commission tracking, and 3-step onboarding (submit query → verification → go-live)—all built to make a compliant unlisted practice repeatable. (See prompts across our Blog/News pages.)
- KYC/AML alignment out of the box: your clients follow the same document and screening flow; we pause/decline trades when signals flash red—protecting you and your brand.
Workflow: a clean trade from enquiry to delivery
- Discovery → Price: You pick a counter on UnlistedCorner (or submit a query). We share reference pricing and required KYC pack.
- KYC capture & review: Upload PAN/Aadhaar/CMR, bank proof, and declarations. We verify names, assess UBO/PEP, and reconcile addresses.
- Funds & duty: You transfer funds from your own bank account. Stamp duty @ 0.015% is collected per the depository framework.
- Off-market demat: Seller executes off-market delivery to your demat; we share DP confirmation and a deal pack (invoice/communication trail).
- Post-trade: We monitor for anomalies and maintain records per AML rules. If something doesn’t add up, we flag, pause, or report as required.
Frequently Asked Questions (FAQs)
Q1) Why is CMR PDF mandatory for unlisted trades?
Because it proves demat ownership, DP/Client IDs, and the exact holding pattern—critical to ensure the buyer actually receives clean title during off-market transfer. UnlistedCorner’s policy requires it.
Q2) What changed in India’s AML/KYC expectations lately?
Post-2023, beneficial ownership thresholds were tightened (10% for companies/partnerships), PEP/CDD definitions were clarified, and SEBI re-issued consolidated AML/CFT guidance (June 6, 2024) for market intermediaries.
Q3) Do I need to be KRA-validated to trade elsewhere—does that affect unlisted?
Stock-exchange trading now requires KRA-validated KYC (brokers will restrict non-validated clients). While unlisted off-market transfers are outside exchange matching, strong KYC and document hygiene remain essential—and we follow our policy strictly.
Q4) How quickly must suspicious activity be reported?
Once an intermediary is satisfied a transaction is suspicious, an STR must be filed with FIU-IND within seven working days.
Q5) Who counts as a “beneficial owner” for non-individual clients?
Generally, the natural person(s) with ≥10% ownership/control (company/partnership); for some associations it can be ≥15%; if none identified, record the Senior Managing Official.
Disclaimer
This article is for information only and aligns with UnlistedCorner’s public KYC/AML policy. It draws on SEBI’s AML/CFT master circular (June 6, 2024) and the PMLA (Maintenance of Records) Rules as amended in 2023, plus FIU-IND guidance on STR timelines. Regulations evolve; specific facts (residency, structures, foreign flows) can change outcomes. Please consult qualified compliance/tax counsel for case-specific advice.