KYC/CKYC

Know Your Customer (KYC)

 

KYC is an acronym for "Know your Customer", a term commonly used for Customer Identification Process. The Prevention of Money Laundering Act, 2002 ("PMLA") forms the core of the legal framework put in place by the Indian Regulators to combat money laundering to be followed by banking companies, financial institutions and intermediaries by administering KYC process and other reporting requirements such as suspicious transactions reporting, etc. SEBI has prescribed certain requirements relating to KYC norms for Financial Institutions and Financial Intermediaries (such as Mutual Funds) to 'know' their customers.

With effect from January 01, 2011 all investors (Individuals or Non Individuals) who wish to transact in mutual fund schemes should complete the CVL KYC process. KYC is applicable for the below mentioned transaction types:

New / Additional Purchases

Switch Transactions,

New Systematic Investment Plan (SIP) Registrations received from effective date.

New Systematic Transfer Plan (STP) Registrations received from effective date.

This one-time KYC verification through CVL is valid for transactions across all mutual funds.

KYC is a one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc), you need not undergo the same process again when you approach another intermediary.

 

Central KYC

 

Central KYC Registry is a centralized repository of KYC records of customers in the financial sector with uniform KYC norms and inter-usability of the KYC records across the sector with an objective to reduce the burden of producing KYC documents and getting those verified every time when the customer creates a new relationship with a financial entity.

With reference to the circulars issued by SEBI from time to time on KYC, the board of AMFI has decided on best practices for uniform and smooth implementation of CKYC norms within the MF industry.

With effect from February 1, 2017, while on boarding any individual customer who has never done KYC under KRA regime i.e. a prospective customer who is new to KRA (“KYC Registration Agency”) system and whose KYC is not registered or verified in the KRA system, new CKYC form is to be used to register the KYC. This new KYC form is in line with CKYC form guidelines and requirements and hence captures all the information needed for CKYC as well as KRA’s.

PAN is still mandatory for investing in Mutual Funds (except Micro KYC and other PAN Exempt scenarios). If an investor had complied with KRA-KYC and CKYC norms, then he/she will have to update their 14 digit KYC Identification Number (KIN) and  mention date of birth in the mutual fund application form. 

There is no change in terms of the documentary proof submission such as ID Proof and Address Proof for both KRA-KYC and CKYC. In case of an investor who had got the CKYC reference number through non mutual fund route (outside KRA), he needs to additionally be compliant of KRA-KYC as well, by submitting the application form, including IPV (In Person Verification) and PAN.

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