Sunday, November 20, 2011

What is Know Your Customer (KYC) ?

Know Your Customer (KYC) requirements are mandatory for all investors, irrespective of the amount invested. 

What is KYC?

KYC means Know Your Customer. The Prevention of Money Laundering Act requires every intermediary to have a client identification programme with a KYC policy, which means knowing your customer by seeking information and supporting documentation about the customer's identity and address, besides such other information as nationality, income source, occupation, etc.

Where and how does one get to be KYC-compliant?

The Association of Mutual Funds of India has facilitated a centralized platform through CDSL Ventures Limited (CVL), can carry out the KYC procedure on behalf of all mutual funds. CVL, through its points of service (POS), will accept KYC application forms, verify documents and provide the KYC acknowledgement.

Once the KYC is duly completed, the investor would have to produce a copy of the acknowledgement when investing for the first time with a fund.

Who needs to be KYC compliant?

Any individual(s) or non-individual(s) applying for units in a mutual fund;

Any individual(s) constituted as Power of Attorney holder(s).

Each of the applicants, in case of an application in joint names; Guardian investing on behalf of a minor.

If an individual becomes an investor due to an operation of law, e.g., transmission of units upon death of an investor, the claimant will be required to be KYC-compliant before such transfer can take place.

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