Why mutual fund investors must be FATCA compliant - If you are a mutual fund investor in India and invest in mutual funds, your KYC (Know Your Customer) process is also FATCA (Foreign Account Tax Compliance Act) compliant. FATCA is a U.S. legislation that mandates reporting of the financial account of U.S. persons who are outside the U.S. But even you, as a non-U.S. person, your Indian mutual fund houses have a legal obligation from SEBI to file some declarations to fulfil inter-governmental agreements. If you do not complete this FATCA declaration, your mutual fund investments will be frozen for redemptions or new purchases.
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FATCA is part of your KYC, but not always so - Most investors assume that KYC needs to be done once. But if you performed your KYC before 2015, the process may not have incorporated FATCA data. Many investors who completed their mutual fund KYC some years ago find that their accounts show "KYC registered" but not "FATCA compliant." That's why checking FATCA compliance independently is important even if your PAN already shows association and your KYC shows "verified."
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How to confirm your FATCA status of compliance - To check whether your mutual fund KYC is FATCA compliant or not, visit the websites of the KYC registration centres like CAMS (www.camsonline.com), Karvy (www.kfintech.com), or CVL (www.cvlkra.com). Log in with your PAN number and check your KYC information. When FATCA is not updated, you'll find your status as "Pending FATCA declaration" or something similar. Or you can simply call your mutual fund distributor or log in to your investment platform dashboard where such notices are generally raised.
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What to do if you are not FATCA compliant - If your status is one of non-compliance, you will have to submit a self-declaration form with information such as place of birth, tax residency status, nationality, and U.S. person status. Most registrars and websites of mutual funds provide an online link for amending FATCA information. You will need your PAN, date of birth, and registered email or mobile number. This procedure would take about a couple of minutes and once done, all the mutual fund houses where your KYC is used have their status updated.
Do not wait for your account to be frozen - Mutual fund houses have already started blocking accounts for fresh investments and even redemptions where FATCA compliance is pending. To avoid unpleasant surprises—especially if you’re planning a withdrawal or SIP—it is advisable to check and update your FATCA details at the earliest. The process is simple and can be done online without paperwork.
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Stay invested, stay compliant - FATCA might look like just another regulation, but it does in fact affect your ability to invest, redeem, or exchange mutual fund units. Take a few minutes to verify your status and update your information. Doing that small thing now can save you from being bogged down and caught out later as you organize your finances.
