Know Your Customer (KYC) norms for Mutual Funds
Prevention of Money Laundering Act, 2002 (PMLA) came into effect from July 1, 2005 and consequently SEBI mandated that all intermediaries (which includes Mutual Funds) should formulate and implement a proper policy framework as per the guidelines on anti money laundering measures and also adopt a Know your Customer (KYC) Policy. Your attention is drawn to the notice cum addendum dated September 29, 2010, December 18, 2010 and January 02, 2012 issued by Edelweiss Mutual Fund (Mutual Fund) / Edelweiss Asset Management Limited (AMC) on PMLA.
Effective January 01, 2011 KYC compliance was made mandatory for all categories of investors irrespective of the amount invested for the following transactions:
- New / Additional Purchases
- Switch Transactions,
- New SIP/ STP registrations.
- 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.
NEW KYC Norms
SEBI vide Circular No. MIRSD/SE/Cir-21/2011 dated October 5, 2011, SEBI (KYC Registration Agency) Regulations, 2011 and Circular No. MIRSD/ Cir-26/ 2011 dated December 23, 2011 has introduced the concept of KYC Registration Agency (KRA) for the purposes of a unified KYC in the securities market. This is effective January 1, 2012. Edelweiss Asset Management Limited, being a SEBI registered intermediary is a point of service for processing KYC applications. KRA shall send a letter to the investor within 10 working days of the receipt of the initial/updated KYC documents from the Mutual Fund, confirming the details thereof. The KYC done with us will be valid for all the SEBI registered intermediaries viz. Mutual Funds, Portfolio Managers, Depository Participants, Stock Brokers, Venture Capital Funds, Collective Investment Schemes, etc.
Apart from KYC, it is mandatory for intermediaries including mutual funds to carry out In-Person Verification (IPV) of all its new investors. The IPV carried out by any SEBI registered intermediary can be relied upon by the Mutual Fund. Edelweiss Asset Management Limited and NISM/AMFI certified distributors who are KYD compliant are authorized to undertake the IPV for Mutual Fund investors. Further, in case of any applications received directly (i.e. without being routed through the distributors) from the investors, the Mutual Fund may rely upon the IPV (on the KYC Application Form) performed by the scheduled commercial banks.
Please click here to read the addendum dated January 2, 2012