Know Your Customer (KYC)
To ensure compliance with the Prevention of Money Laundering Act, 2002, and SEBI and AMFI guidelines on the subject of AML (anti-money laundering), investors have to undergo KYC (Know Your Customer) formalities from CVL (CDSL Ventures Limited). Upon furnishing the required documents, CVL issues KYC Acknowledgement. The KYC formalities have to be completed for all mutual fund transactions viz. (Purchase, Switch-in, Systematic Investment Plans, Systematic Transfer Plans, etc.), irrespective of the transaction amount. If the purchase / transaction application is not accompanied by KYC Acknowledgement, the same is liable to be rejected.
In order to make the data capture and document submission easy and convenient for the investors, Mutual Fund Industry has collectively entrusted the responsibility of collection of documents relating to identity and address of the investor(s) to an independent agency (presently CDSL Ventures Limited) which will act as central record keeping agency ('Central Agency'). As a token of having accepted the documents for identity and address of the investor(s) and for efficient retrieval of records, the Central Agency will give an acknowledgement letter to each investor who submits an application and the prescribed documents to the Central Agency.
With effect from January 01, 2011 KYC compliance is mandatory for all categories of investors irrespective of the amount invested for the following transactions:
• New / Additional Purchases
• Switch Transactions
• New SIP/ STP/ Flex STP/ FlexIndex/ DTP registrations received from the effective date
• Any SIP/STP/Trigger related products launched subsequently
Who all need to be KYC Compliant
• Any individual(s) or non-individual(s)
• Guardian investing on behalf of minor
• Constituted as Power of Attorney (POA) holder(s), in case of investments through POA
• If an individual becomes an Investor due to an operation of law, e.g., transmission of units upon death of an investor, the claimant / person(s) entering the Register of unit holders of the Fund will be required to be KYC compliant before such transfer can take place
KYC compliance procedure
Investors both Individuals and Non-Individuals need to fill in the KYC application form available at any AMC office or Point of Service (POS) location. Alternatively, you can also download the form from www.amfiindia.com or www.cdslindia.com. Submit the filled in KYC form along with a copy of your PAN Card, proof of residence and photograph. You can submit them with the originals or notarized copies (originals/notarized copies will be returned on verification) at the POS/select Mutual Fund Offices. Upon submission of KYC Form, the investor will be issued a KYC Acknowledgement in token of receipt. A copy of KYC Acknowledgement shall be attached by the investor/Unitholder to application for Purchase of Units.
This is a one-time, free of cost exercise to enable investors to comply with the KYC Procedure across all Mutual Funds. The list of documents to be submitted for the KYC procedure is given below:
• Proof of Identity
• Proof of Address
• PAN Card
• In case of joint applicants, KYC should be completed by all joint applicants.
• In case of applications under Power of attorney, KYC has to be completed by both the investor and the power of attorney holder.
• In case of NRIs/PIOs, they are required to complete KYC.
• In case of minor, the KYC should be completed by the Parent/Guardian signing on behalf of the Minor. However, in the event of such minor person becoming major, the KYC has to be completed on becoming major.
Applications incomplete in any respect will be liable to be rejected.
As per letter received by AMFI dated June 19, 2009 from SEBI wherein it has been conveyed that micro schemes such as SIPs upto Rs. 50,000 per year per investor shall be exempted from the requirement of PAN. The letter further states that this may be operationalised by accepting other standard specified identification instruments like Voter ID card, Government/Defense ID card, Card of Reputed employer, Driving License, Passport in lieu of PAN.
Applicability & Transactions covered
Systematic Investment Plans (SIPs) where aggregate of installments in a financial year i.e. April to March does not exceed Rs 50,000 (to be referred as "Micro SIP" hereinafter)
This exemption will be applicable ONLY to investments by individuals (including NRIs but not PIOs), Minors and Sole proprietary firms. HUFs and other categories will not be eligible for Micro SIPs.
Investors having Mutual Fund Identification number (MIN)
Investors who submit their PAN, issued with a MIN, can attach copy of MIN letter with their application form, and they need not undergo KYC again
Change of any particulars mentioned in KYC Form
Investors/Unit holders should note that in case of any change in future in any particulars furnished in KYC Form, they should notify such changes in writing to the POS, and NOT to the Registrar.
After issuing KYC Acknowledgement, the Central Agency may cancel the evidence of KYC Compliance within prescribed time period in case of any deficiency in the document/information. Intimation of such cancellation of KYC Compliance will be sent by the Central Agency to the investor. No separate communication will be sent to the investor if the KYC Form and documents submitted are found to be in order.
The Fund will normally validate the copy of KYC Acknowledgement received from the investors/Unitholder with the records of the Central Agency before allotting units. All applications without a valid KYC Acknowledgement can be rejected, or in case of having allotted the Units, the allotted Units can be compulsorily redeemed or transaction reversed.
With a view to ensure compliance with Anti Money Laundering Regulations, AMC has the right to scrutinize/verify the application/applicant and the source of the applicant’s funds and also reserves the right to redeem/reverse/cancel, in its sole discretion, the investment or redeem the investment proceeds in favor of the source account from which the monies had been invested, reporting the transaction/account to anti-money laundering authorities and/or taking such other action, that may be necessary under AML Regulations.
The Fund, Trustee, AMC or Registrar shall not be liable for any failure to perform its obligations or for any delay therein so as to complete verification of KYC compliance status of any investor.
The above provisions relating to prevention of money laundering and ‘Know Your Client’ may change from time to time as required by Regulations.