As part of Prevention of Money Laundering Act (PMLA), all Mutual Funds are required to comply with the “Know Your Customer” guidelines. These guidelines enlist steps to ensure all their investors receive due diligence. A systemised process will be put in place by CDSL Ventures Limited (CVL) on the request of Association of Mutual Fund Industry (AMFI) and Mutual Funds. This process intends to keep investors away from the hassle of producing the proof documents to all the funds at the time of investment.

The KYC makes it mandatory to submit the Permanent Account Number (PAN) by all the investors. This PAN number will act as the new identification number for the investor. Besides this, every Mutual Fund scheme will have its own RTA. At the time of an investment, the PAN number will be quoted, against which the RTA will access the CVL database for detailed information. It should be noted here, that an investor is required to register with CVL. Failing to do so, the KYC process will be incomplete for that investor resulting in a rejection or failure of the current investment.

For complying with the KYC, all investors need to approach Point of Service (POS) for submitting their KYC Application Form (KAF) along with the mandatory documents.

An investor can apply for KYC to CVL under any of the following categories and sub-categories (based on the Mutual Fund investor categories):

Individual
• Resident Indian
• Non-Resident Indian

Non-Individual
• Body Corporate
• Partnership
• Hindu Undivided Family (HUF)s
• Trusts
• Financial Institutions
• Foreign Financial Institutions (FII)
• Association of Person
• Bank
• Government Body
• Defence Establishment
• Any Other

Pursuant to SEBI Circular No. Cir-26/ 2011 dated December 23, 2011, SEBI (KYC Registration Agency) Regulations, 2011 and SEBI Circular No. MIRSD/SE/Cir-21/2011 dated October 5, 2011, regarding uniformity in the Know Your Client (KYC) process, the revision in Know Your Client process is applicable from 1st January 2012.

Every process needs its own validation technique, so the customer is provided a wholesome and trustworthy experience. A few Preliminary Checks are conducted to ensure this.

It is checked to see that:

1. The KYC Application Form (KAF) or Change Request Form (CRF) is filled as per instructions, in legible block letters with each letter in appropriate box provided.
2. There is no overwriting in the KAF. Any overwriting in the application form should be counter signed by the applicant.
3. In case any information is struck off, then the applicant has signed the same and the signature matches the one in the signature block.
4. The PAN field is not be left blank by the investor and a copy of the PAN card is submitted.
5. If the applicant name in the KAF does not match with the PAN card name then an additional document for proof of identity is also provided.
6. Additional documents of proof (PAN, Proof of Identity & Proof of Address) are provided on a one-sided A4 size paper.
7. The applicant has submitted Proof of Identity and Proof of Address as per the list of admissible documents; i.e. the list mentioned in this document and also available on the KAF/CRF. In case of change in the applicant’s name, the POI for the new name should be submitted. A POA would be required if the applicant wishes to change any of the addresses.
8. Copies of all documents submitted are legible and signed by the applicant.
9. There is no prima facie evidence to suspect tampering with the original documents or the copies submitted by applicant.
10. When an applicant does not submit the original document for verification, the copies are properly attested by entities authorised to attest the copy as per the list of persons authorised for attestation. In such cases, the attested copy submitted should be original. A photocopy of attested document will not be acceptable as proof.
11. When the ‘Present Address’ is other than the ‘Current/Correspondence Address’, proof is required for both the addresses. In case the applicant has written the same address at both the places instead of writing ‘Same as above’, only one proof for the address provided would be sufficient.
12. When documents like Passport, Driving License carrying an expiry date are submitted as proof, the document must be current on the date of acceptance.

After all this effort, it is also important to know when the POS can and will reject the KYC Application Form (KAF).

1. Any of the mandatory fields are left blank in the KYC Application Form (KAF).
2. The age of the applicant is less than 18 years i.e. if a minor has applied for KYC.
3. The Permanent Account Number (PAN) is not provided in the application form.
4. The PAN card copy is not provided as proof of PAN.
5. The name in PAN card does not match with the name in KAF and no additional proof of identity document is provided.
6. The signature across the photograph on the KAF does not match with the signature in the KYC application form.
7. Changes/overwriting in the application form have not been signed or the sign does not match the signature on the KAF.
8. If the documents provided for Proof of Identification and Proof of Address are not from the admissible list.
9. The POI and POA copies are not self-attested by the investor.
10. Electricity bill, telephone bill, bank passbook, bank statement, Demat account statement submitted as proof of address are invalid on the day of submission to the POS i.e. more than 3 months old.
11. Proof document copies are not verified against the original.
12. Any evidence of tampering with the original document for proof copies submitted.
13. Documents verified by Bank Branch Manager, Gazetted Officer or any representative of the Legislative is not submitted in original.