What has changed from 1st April 2024 in mutual fund KYC?
What has changed from 1st April 2024 in mutual fund KYC?
 |
What has changed from 1st April 2024 in mutual fund KYC? |
SEBI vide circular SEBI/HO/MIRSD/FATF/P/CIR/2023/0144 dated 11th August 2023, as a risk management framework advised that KYC Registration Agencies (KRAs) shall verify the following attributes of KYC:
PAN (including PAN Aadhar linkage, as referred to in rule 114 AAA of the Income Tax Rules, 1962
Name
Address
Client Mobile Number and Email ID
The records of clients whose all of the above attributes are verified by KRAs with official databases (such as Income Tax Database on PAN, Aadhar XML/Digilocker/M-Aadhar) shall be considered validated records.
What is KYC?
KYC stands for Know Your Customer and is a process that the Mutual Fund Industry or any financial institutions use to verify the identity of their customers and clients as part of the Account Opening Process. KYC Compliance is mandatory under the Prevention of Money Laundering Act 2002. It involves several steps such as verifying the customer's identity, Understanding the nature of their activities, identifying the source of their funds, and analysing money laundering risks.
Why is KYC essential?
The purpose of KYC is to prevent mutual funds from being used for money laundering and other illegal activities. It also helps the mutual fund industry better understand their customers and their financial dealings, which can help them, serve their customers better and manage risk.
KYC is a key part of any successful compliance and risk management program. Mutual Fund Industry or any Financial Institution may refuse to open an account or terminate a business relationship if a client doesn't meet the minimum KYC requirements.
KYC helps mutual funds comply with regulations set by financial authorities to prevent money laundering and fraud.
What Documents are required for KYC?
Proof of identity
Proof of address
A valid document like an Aadhar Card, Passport, Driving License, Voter ID, Bank Statement, or registered lease agreement that is less than three months old.
Bank Account Details
Mutual funds ask for bank account details to verify your income and account which will be used for investing in mutual funds.
Photograph
A recent passport-sized colour photograph that matches the photograph on the proof of identity document.
Power of Attorney (when an investor is a joint Applicant)
How and Where an Investor Can Check Their KYC Status?
Visit your KRA website (links to the KRA website are given below
Links to KRA Websites
CVL KRA - https://www.cvlkra.com/
NDML - https://kra.ndml.in/kra-web/jsps/pos/KYCClientInquiry_NEW.jsp
CAMS - https://www.camskra.com/
NSE - https://www.nsekra.com/
KARVY - https://www.karvykra.com/UPanSearchGlobalWithPanExempt.aspx
Click on KYC Inquiry
Enter your Pan Details and submit
The details displayed will indicate the proof used for your KYC
What is the KYC Status?
The KRAs have changed the KYC status of all existing KYC complied investors after validating the above 4 attributes such as PAN, Name and Address with the official database (such as Income Tax database on PAN, Aadhar XML/Digilocker/M-Aadhar) and Email ID/Mobile Number as follows:
KYC Validated - These investors do not face any issues related to mutual fund transactions. These are users who have done KYC via Aadhar card (Digilocker or Aadhar card with QR code). There will be No impact on their existing or new AMCs.
KYC Registered - These investors can do all financial transactions only in their existing AMCs. They are not allowed to do any financial transactions in any new AMCs until they redo their KYC now with an Aadhar card and then only this status shifted to ‘validated’ status.
KYC On Hold - These investors can transact only after correcting the reason for KYC status On Hold. Till then they can't invest in any AMCs. After the revised rules, they will be allowed to redeem their investments (based on due diligence done by AMCs).
How do Investors Update their KYC Status to “KYC VALIDATED”?
The Investors have to log on to any of the AMC websites visit the page “Modify / Update KYC” and follow the steps such as entering details and uploading documents as required. Once the Email ID / Mobile Number and other details entered/uploaded are validated by the KRAs with the official database (such as the IT database on Pan, Aadhar XML/Digilocker/M-Aadhar), the KYC status will change to “Validated”.
An investor can submit a physical form download from any AMC, RTA or AMFI website to any of their AMC’s or RTA’s offices.
“In conclusion, KYC is a critical component of regulatory compliance in the financial industry. By implementing effective KYC procedures, businesses can mitigate the risk of financial crimes, protect their customers' identities, and maintain the integrity of the financial system."
INVESTING IN YOUR DREAMS!
Comments
Post a Comment