Your Guide to KYC Compliance in Mutual Fund Investments

Scenario 1

If the MIN was obtained by submitting the PAN, the MIN acknowledgement can be enclosed along with the Investment Application Form(s)/Transaction Slip(s) while investing for the first time in a Mutual Fund, as the PAN number will be stated on the said acknowledgement.

Scenario 2

If the MIN was obtained without submitting the PAN but with other proof of identity documents, the investor must carry the original PAN card and a copy for submission at the PoS. For such cases, CVL will communicate with the respective investors, requesting them to submit the PAN for KYC compliance.

Terms

Starting from January 1, 2011, all types of investors, regardless of how much they invest in Mutual Funds, must adhere to KYC norms under the Prevention of Money Laundering Act 2002 (PMLA). This applies to transactions, such as new purchases, additional investments, switches, and registrations for SIPs, STPs, and DTPs received from January 1, 2011, onwards.

Therefore, from January 1, 2011, any investor (all applicants in a folio) investing in Mutual Funds through the Investment Services Account must have completed KYC compliance with CVL (CDSL Ventures Ltd). Failure to comply may result in the rejection of transactions by mutual fund companies.

You can request Mutual Fund to update the KYC acknowledgement against all the folios/accounts you have with it. However, each holder in these folios/accounts should be KYC compliant.

The requirement to provide your PAN along with proof is sufficient for proof of identity. However, the current requirement for KYC requires the Mutual Fund to verify identity and address, as well as obtain further information about the investor.

If the deceased is the sole applicant, the claimant should submit his/her KYC acknowledgement in the request along with the other relevant documents to effect the transmission in his/her favour.

The Association of Mutual Funds of India (AMFI) has facilitated a centralised platform through CDSL Ventures Limited (CDSL), a wholly owned subsidiary of Central Depository Services (India) Limited, to carry out the KYC procedure on behalf of all Mutual Funds. CVL, through its Points of Service (PoS), will accept KYC application forms, verify documents and provide the KYC acknowledgement (across the counter on a best-effort basis). The list of PoS will be displayed on the websites of Mutual Funds, CDSL, and AMFI. Once the KYC is duly completed, the investor needs to produce a copy of the acknowledgment when investing for the first time with a Mutual Fund. There is no need to repeat the KYC process individually for each Mutual Fund.

Upon a minor attaining the age of majority (i.e., upon completing 18 years of age), he/she must be KYC compliant and have KYC acknowledgement of their own. The Mutual Fund should be informed of where he/she holds an investment, along with other details such as the bank details, signature, etc., as per the present requirements of such Mutual Fund.

As per PMLA, Mutual Funds must obtain details of financial status from their investors. It is for this reason that the income details are sought. Please note that no proof/income documents are required. The information given to you in the KYC Application form will be treated in a confidential manner and used for regulatory purposes if called for.

KYC norms apply to all investors. It is in the interest of all investors to obtain KYC acknowledgement and submit it to the Mutual Fund House to avoid any inconvenience in the future.

Yes. If you find an increase/decrease in your income, which would effectively change the income bracket you declared in the KYC Application form, you should apply to any convenient PoS in the specified form. No proof is needed.

KYC acknowledgement is a separate form. Time stamping is not required on the KYC Acknowledgement.

All investors (individuals or non-individuals) who wish to invest in a Mutual Fund Schemes, regardless of the amount, will be required to complete the Mutual Fund KYC process. This would also apply to new Systematic Investment Plan (SIP) registrations on or after 01 January 2011, irrespective of amount. Please find the list of investors who are required to be KYC compliant:

• Joint holders: Joint holders (including first, second, and third, if any, are required) are to be individually KYC compliant before investing with any Mutual Fund. E.g., in the case of three joint holders, all holders must be KYC compliant, and copies of each holder's KYC acknowledgement must be attached to the investment application form with any Mutual Fund.

• Minors: In case of investments with respect to minors, the guardian should be KYC compliant and attach their KYC acknowledgement while investing in the name of the minor. Upon attaining majority, the minor should immediately apply for KYC compliance in his/her capacity and inform the concerned Mutual Fund(s) to be able to transact, furthering his/her own capacity.

Power of Attorney (PoA) Holder: Investors desirous of investing through a PoA must note that the KYC compliance requirements are mandatory for both the PoA issuer (i.e., investor) and the Attorney (i.e., the holder of PoA), both of whom should be KYC compliant in their independent capacity and attach their respective KYC acknowledgements while investing.

A KYC application form has been designed for individual and non-individual investors separately. These forms are available on the mutual funds website, AMFI, and Central Depository Services (India) Limited (CDSL). You may also approach your distributor for a form. It is essential to read the instructions on the KYC application form when filling out the form.

When investing for the first time in a Mutual Fund, investors must attach their KYC acknowledgement along with the investment application form(s)/transaction slip(s).

Once the investor is KYC compliant, he must provide his KYC details to all the Mutual Funds with whom he has investments by quoting the folio numbers. The same will be updated in the Mutual Fund's records.

The requirements applicable to an NRI will also apply to a PIO. However, he will need to submit a certified true copy of the PIO Card.

With effect from 1 January 2011, investors in Mutual Funds, regardless of amount, will be required to complete the KYC process.

No. If the investor is not able to visit the PoS personally, the Mutual Fund KYC application form along with the necessary documents (including originals if the copies are not attested) can be sent through the distributor or representative, who can arrange to complete the KYC process and obtain the KYC acknowledgement through any of the PoS.

Yes. In addition to the certified true copy of the passport, a certified true copy of the overseas address and permanent address will also be required. If any documents (including attestations/certifications) towards proof of identity or address are in a foreign language, they must be translated into English for submission. The documents can be attested by the consulate office or overseas branches of scheduled commercial banks registered in India.

Investors must attach their KYC acknowledgement along with the investment application form(s)/transaction slip(s) while investing for the first time in a Mutual Fund. Application forms/transaction slips not accompanied by KYC acknowledgement are liable to be rejected by the Mutual Fund. If you do not obtain a KYC acknowledgement, you cannot invest in a Mutual Fund.

You should intimate your change of name/address/status/signature, etc., to any convenient PoS. You need to quote your PAN and submit proof (in case of a new address). You should provide at least 10 days for the change of address to take effect with all the Mutual Funds with whom you are invested. Please note that you should not write to the Mutual Fund or its Registrar for the change of address (unless as a designated PoS). The specified form can be obtained from the AMFI/Mutual Fund/CDSL website. All details of the holders in the Mutual Fund records will be replaced by the address details available in the CVL record.

Individual investors must produce proof of identity (photo PAN card copy, or PAN card copy and copy of the passport, driving license, etc.) and Proof of Address (any valid documents listed in section B of the KYC application form for individuals). Non-individual investors must produce certain documents pertaining to their constitution/registration to fulfill the KYC process. A list of mandatory certified documents to be submitted can be found in section C of the KYC application form for non-individual investors.

No. Once the KYC acknowledgement is obtained and informed to a Mutual Fund, it will be registered against the folio and quoted in all future account statements. The same will exist in perpetuity unless cancelled by CVL.

The soft copy of these KYC forms will be made available on the website of all Mutual Funds, AMFI and Central Depository Services (India) Limited (CDSL). You may also approach your distributor for a form. The same, duly completed, along with the necessary attested documents, can be submitted at the PoS or mailed to your representative or distributor, who can complete the KYC formalities.

KYC is an acronym for 'Know your Customer', commonly used for customer identification process. SEBI has prescribed certain requirements relating to KYC norms for Financial Institutions and Financial Intermediaries, including Mutual Funds, to 'know' their customers. This would be verification of identity and address, financial status, occupation, and other personal information. An applicant must be KYC compliant while investing with any SEBI registered Mutual Fund.

If any KYC Application form is found deficient due to a lack of information or insufficiency of mandatory documentation, further investments will not be permitted.

Currently, KYC is done free of cost.

A redemption request is given to the investor service centre, while the change of address (if the KYC process has been previously completed) has to be given to a PoS. CVL will affect the change of address and will inform the Mutual Funds. As this process will take 10 days to complete, the redemption transaction accompanied by a change of address request will likely be processed without effecting the change of address request.