Single-Point KYC Clearance For MF Investors

MUMBAI: Come January 15, 2008, mutual fund investors will have a single-point of dissemination of all financial documentation essential to fulfil the mandatory KYC norms as prescribed by SEBI.

Mutual funds association AMFI, in collaboration with CDSL Ventures, a subsidiary of Central Depository Services (India), has developed a single centralised platform, to store these documents for access by asset management companies in line with the enhanced “Know Your Client” norms, AMFI chairman AP Kurian told ET.

The AMFI chief said with PAN being made mandatory for all mutual fund investments from January 1, 2008, the association had decided to facilitate a common KYC process to ease matters for investors. “Besides as part of the PMLA Act, the back-up documentation has to be kept for a period of 10 years. If there is no common system evolved, think of the wastage in terms of human resources,” he adds.

However, unlike PAN, this system would be introduced in two stages. In the first stage, every investor with a fresh investment of Rs 50,000 and above in mutual funds will be asked to adhere to the KYC norms. The second stage would see the limit phased down to zero. “We have tentatively decided on kick-starting the process from January 15 or latest by February 1,” Mr Kurian said.

Investors will henceforth be able to submit all the required documentation at around 300 points of services, that include non-AMCs (registrars, distributors, CVL, CDSL etc) and AMCs. The essential documentation includes proof of identity and residence apart from the financial status of the individual.

“This will help the investors to give the required documents and information only once. No new number will be issued. PAN will be the only identification and reference number,” said Mr Kurian. In terms of the Prevention of Money Laundering Act 2002, the rules issued there under the Sebi guidelines regarding the Anti Money Laundering (AML) Laws, all intermediaries, including MFs, have to formulate and implement a client identification programme, verify and maintain the record of identity and addresses of investors.