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