SECTION I - KYC AND UNIFORM KYC
- What is KYC?
- What is Central KYC Registry?
- Is Uniform KYC compliance mandatory/compulsory? To whom is it applicable?
- Why Uniform KYC and how does it benefit investors?
- What if two or more persons wish to jointly invest in a single folio / account?
- What about a minor?
- What should be done, when a minor becomes a major?
- What about a Power of Attorney (POA) Holder?
- What about a Legal Heir or a Nominee, applying for transmission of units/proceeds thereof, upon death of a sole unit holder / all joint holders?
- I wish to start an SIP of just Rs.500 per month. Do I need to fulfil the Uniform KYC process?
- I have some units of pre-KYC era. I wish to redeem them. Do I have to undergo the Uniform KYC process?
- What should I do to complete the Uniform KYC process? Whom should I approach?
- What supporting documents do I need to submit to complete the KYC process?
- Are the supporting documents required to be attested? If yes, by whom?
- Who is authorised to do IPV?
- What proof do I need to submit to a mutual fund for having fulfilled the Uniform KYC process, while investing?
- Are there any additional requirements for an NRI to be Uniform KYC Compliant?
- Is there any special requirement for a PIO (Person of Indian Origin)?
- I had completed KYC Compliance before the introduction of CKYCR regime. Do I need to undergo the Uniform KYC once again with any financial entity?
KYC is an acronym for "Know Your Customer" and is a term used for Customer Identification Process as a part of Account Opening process with any financial entity. KYC establishes an investor’s identity & address through relevant supporting documents such as prescribed photo id (e.g., PAN card) and address proof and In-Person Verification (IPV). KYC compliance is mandatory under the Prevention of Money Laundering Act, 2002 and Rules framed there under, read with the SEBI Master Circular on Anti Money Laundering (AML) Standards/ Combating the Financing of Terrorism (CFT) /Obligations of Securities Market Intermediaries.
A standard Account Opening form (AOF) is generally divided in 2 parts:
- Part I contains the basic and uniform KYC details of the investor as prescribed by the Central KYC registry (Uniform KYC) to be used by all registered financial intermediaries and
- Part II additional KYC information as may be sought separately by the financial intermediary such as a mutual fund, stock broker, depository participant opening the investor’s account (Additional KYC).
Central KYC Registry (CKYCR) is a centralized repository of KYC records of customers in the financial sector through an entity substantially owned and controlled by Central Government to receive, store and safeguard the KYC records of a client in digital form. This is to implement uniform KYC norms and inter-usability of the KYC records across entities in the financial 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 entity.
Government of India has authorised the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI), to act as, and to perform the functions of the Central KYC Registry.
Currently, Uniform KYC compliance is mandatory for ALL prospective Individual customers / investors, who wish to open an account with a mutual fund, irrespective of the amount of investment. The effective date for non- individual including shall be announced later.
Uniform KYC has been prescribed in order to bring uniformity in KYC process and eliminate the requirement for investors to undergo the KYC process multiple times when opening accounts with different financial intermediaries like mutual funds, stock brokers, depository participants etc. The CKYCR has prescribed uniform KYC guidelines and a standard KYC form and the supporting documents to be obtained by all registered financial intermediaries. Financial intermediaries shall use this standard KYC form as Part I of their Account Opening Form. The financial intermediary, as part of their account opening process, shall upload the KYC information contained in Part I and documents with CKYCR .
Thus, an investor has to undergo a Uniform KYC process only once and the KYC details are shared by the CKYCR with other financial intermediaries with whom the investor may open accounts subsequently. However, any changes in the KYC information provided earlier need to be updated with any of the intermediaries with whom the investor is maintaining an account.
In case of joint holders in a folio/account, each holder needs to complete the KYC process individually using separate KYC forms.
In case of investments in respect of a minor, the Parent/Legal Guardian who opens the account on for the minor needs to complete the KYC process.
When a minor becomes a major on attaining 18 years of age, she/he has to undergo and complete KYC process in his/her own capacity and notify each of the concerned Mutual Funds/Financial Intermediaries by filling up a prescribed ‘Minor Attaining Majority form’ in order to be able to transact further in his/her folios/accounts.
To be able to make investments in mutual funds under a POA, the Client i.e. the issuer of Power of Attorney as well as the Constituted Attorney (i.e., the POA holder) have to complete the KYC process in their individual capacity
For transmission of units or settlement of proceeds thereof upon death of a sole unit holder or all joint holders, the claimant, i.e., the nominee or the legal heir or the Executor to the Will of the deceased unit holder, as the case be, needs to complete the KYC process in her/his individual capacity in order to get the securities/units transmitted in his/her folio/account.
Yes. KYC is mandatory irrespective of the amount of investment in a mutual fund - whether through lump-sum investment or via Systematic Investment Plan (SIP)/ Systematic Transfer Plan (STP)/ Dividend Transfer Plan (DTP) and Switch transactions etc.
No. If you wish to redeem, you need not complete the KYC process, as of now.
The duly completed KYC form along with supporting documents such as proof of identity and proof of address and the Account Opening Form may be submitted at any of the Points of Service (POS)/Investor Service Centre (ISC) of any mutual fund. The In Person Verification (IPV) also needs to be completed and certified by an authorised person on the KYC form itself. Your distributor/financial advisor will be able to assist you in this regard.
The list of documents which could be submitted towards proof of identity and proof of address is printed on the KYC form.
Yes. All supporting documents submitted with the KYC form must be certified i.e., attested by an appropriate authority as per instructions printed on the KYC form. Alternatively, one may submit self-attested photocopies of the supporting documents at the POS. In such a case, one must carry the original documents for being verified by the officials of the POS, who will return the original documents across the counter, after verification.
In case of mutual funds, the IPV can be performed by an authorised official of a mutual fund, AMFI registered Distributor or an authorised officer of a Scheduled Commercial Bank.
You will be allotted a 14-digit unique identification number by CKYCR which should be quoted at the time of opening an account with any financial intermediary.
Yes. In addition to a certified true copy of the passport, a certified true copy of proof of the overseas address and permanent address is also required. If any of the documents (including attestations/certifications) towards proof of identity or proof of address is in a foreign language, the same will need to be translated into English before submission. The supporting documents can be attested by the Indian Consulate or overseas branches of scheduled commercial banks registered in India.
The requirements applicable to an NRI as explained above, are also applicable to a PIO. However, a PIO is additionally required to submit a certified true copy of the PIO Card.
If you had undergone KYC process before the introduction of Uniform Centralised KYC by CKYCR, you will need to provide certain ‘additional KYC information' as and when you open a new account with any mutual fund. It is however, advisable to complete the Uniform KYC process immediately.
SECTION II – ADDITIONAL KYC
- Why am I being asked to provide additional KYC information to each and every mutual fund in addition to completing the KYC with a KRA/CKYCR??
- What is the ‘additional KYC information’ that I need to provide?
- Why do I need to give my Income details? How can I be sure that it will not be misused?
- Do I need to inform about my change of Income status?
- How do I provide / update the ‘additional’ KYC information?
- Is there any timeline for providing the ‘missing’ KYC information?
As explained under Q 1 above, in order to comply with the second stage of the KYC process (Additional KYC), the customer needs to furnish additional KYC Information as required under Prevention of Money Laundering Act to each mutual fund, as part of Account Opening process, as the same is not included in the basic KYC information registered with the KRAs/CKYCR.
In case of Individuals, the additional details to be provided are:
- Gross Annual Income details
- Occupation Details
- Politically exposed Person status
- Addresses in other jurisdictions other than India, where the customer has tax residency
In case of Non-Individuals, the entire KYC process needs to be done afresh, due to significant changes in KYC requirements
As per PMLA, it is mandatory for all SEBI registered intermediaries (including mutual funds) to obtain financial status details from its investors. Please note that this information is sought in the form of income slabs (and not a specific figure) and no proof of income is required. The information given by you in the Account Opening Form (AoF) will be treated in a confidential manner and used for regulatory purposes only, if called for.
Yes. If you have an increase or a decrease in your income, which would effectively change the income bracket or the net worth that you have previously declared, you should inform the mutual funds with whom you hold an account/folio. No proof is needed. In fact, you need to update if there is a change in any of the additional KYC information previously submitted.
For Individuals, a ‘KYC Change Request form’ may be submitted. In case of Non-Individuals, the entire KYC process needs to be done afresh, due to significant and major changes in KYC requirements. Duly filled KYC Change Request form or a complete Non-individual form can be submitted to any of the POS/ISCs of any Mutual Fund.
You may provide the additional/missing KYC information at the time of -
- opening of a new account/folio with a mutual fund or
- updation of any KYC information, such as address, provided earlier.
SECTION III - Ultimate Beneficial Owner (UBO)
- What is a UBO?
- Who has to provide details of UBO?
- Is any entity exempted from providing the UBO details?
- What is the purpose of identifying an Ultimate Beneficial Owner?
- Who can sign the UBO declaration form?
- How is the identity of the Ultimate Beneficial Owner determined?
- Who is considered the UBO in case of a trust?
- How can I register the UBO?
UBO is an acronym for Ultimate Beneficial Owner. A UBO is the is the natural person or persons, who ultimately owns, controls or influences a customer and/or persons on whose behalf a transaction is being conducted, and includes a person who exercises ultimate effective control over a legal person or arrangement. In terms of SEBI Circular CIR/MIRSD/2/2013 dated January 24, 2013, all intermediaries are required to identify the beneficial owners of their clients and take reasonable measures to verify the identity of such persons.
All non - individuals investors are required to provide details of the UBO(s)
Yes. In case the client entity is a company listed on a stock exchange or is a majority owned subsidiary of such a company, the details of shareholders or beneficial owners are not required to be provided. However, such a company/entity has to submit an appropriate declaration.
The Prevention of Money Laundering Rules, 2005 inter- alia mandates that every intermediary shall identify the beneficial owner and take all reasonable steps to verify his identity. SEBI Circular CIR/MIRSD/2/2013 dated January 24, 2013 has prescribed a uniform approach to the securities market towards determination of beneficial ownership. The term reflects a recognition that a person in whose name the investments are held may not necessarily be the person who ultimately controls such investments or who is ultimately entitled to such investments.
Only persons authorized to represent a company or entity in accordance with its constitution/ resolutions may complete and sign the UBO declaration form.
The identity of the UBO can be ascertained from the following information:
- For investments of non-individuals (other than trusts) viz., company, partnership or unincorporated association/body of individuals, the identity of the natural person, who, whether acting alone or together, or through one or more juridical person, exercises control through ownership or who ultimately has a controlling ownership interest. Here controlling ownership interest means ownership of/entitlement to:
- more than 25% of shares or capital or profits of the juridical person, where the juridical person is a company;
- more than 15% of the capital or profits of the juridical person, where the juridical Person is a partnership; or
- more than 15% of the property or capital or profits of the juridical person, where the juridical person is an unincorporated association or body of individuals.
- Where there exists doubt as to whether the person with the controlling ownership interest is the beneficial owner or where no natural person exerts control through ownership interests, the identity of the natural person exercising control over the juridical person through other means such as through voting rights, agreement, arrangements or in any other manner.
- Where no natural person is identified under above clauses the identity of the relevant natural person who holds the position of senior managing official shall be declared as the UBO.
The identity of the settlor of the Trust, the trustee, the protector, the beneficiaries with 15% or more interest in the trust and any other natural person exercising ultimate effective control over the trust through a chain of control or ownership.
You can register the UBO details by filling up the prescribed ‘Declaration of Ultimate Beneficial Ownership’ Form and submitting the same to the nearest ISC or POS of the Mutual Fund or its Registrar or MFU POS.