SEBI brings in to action the new KYC process

Effective January 1, 2012, all AMCs will adhere to the new Know Your Customer (KYC) process implemented by SEBI to bring uniformity in the system.

Some of the fund houses which have already incorporated the new process are ICICI Prudential Mutual Fund, SBI Mutual fund, Union KBC Mutual fund, DSP BlackRock Mutual fund, Birla Sun Life Mutual fund, Canara Robeco Mutual fund and many others.

As per the new KYC procedure, there shall be a common KYC Application Form for all the SEBI registered intermediaries viz.Mutual Funds, Portfolio Managers, Depository Participants, Stock Brokers, Venture Capital Funds, Collective Investment Schemes etc. The New Investors will be required to use the Common KYC Application Form and carry out the KYC process including In-Person Verification (IPV) with any SEBI registered intermediaries including mutual funds.

The Mutual Fund/Register & Transfer Agents (RTA) shall perform the initial KYC of its new investors. The Mutual Fund/RTA shall upload the details of the investors on the system of the KYC Registration Agency (KRA). KRA shall send a letter to investor after receipt of initial/updated KYC documents from the Mutual Fund/RTA confirming the details thereof.

Once the investor has done KYC with a SEBI registered intermediary, the investor need not undergo the same process again with another intermediary including mutual funds. However, the Mutual Fund reserves the right to carry out fresh KYC of the investor.

It is mandatory for intermediaries including mutual funds to carry out IPV of its investors from the effective date. The IPV carried out by any SEBI registered intermediary can be relied upon by the Mutual Fund. 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 schedule commercial banks.

Existing KYC compliant investors of the Mutual Fund can continue to invest as per the current practice. However, existing investors are also urged to comply with the new KYC requirements including IPV as mandate by SEBI.