What is KYC ?
KYC or Know Your Clients or Know Your Customer, is a process to
know and verify the identity of a client.
The
customer’s identity is established through IPV and various officially valid identity
documents such as PAN
card, Aadhar Card, Passport etc. KYC process also includes identification of Ultimate Beneficial
Ownership
(UBO), address, occupation & income details.
Objective
The
objective is to know the identity of the customer investing in the products offered
by the
financial organization which in turn would also enable the financial organization to monitor and
prevent
Money
Laundering.
It also helps organization to better understand their customer and endeavor to provide better
services.
Further
The Prevention of Money Laundering Act, 2002 (PMLA and Securities and Exchange Board of India
(SEBI)
Guidelines
on Anti-Money Laundering (AML) Standards and Combating the Financing of Terrorism (CFT) issued
from time to
time
requires all the intermediaries registered with Securities and Exchange Board of India (SEBI) to
verify the
identity of the clients and beneficial owners of its clients as a measure to prevent Money
Laundering and
Combat
Financing of Terrorism.
Modes of KYC Registration
Investors who want
to make an investment in a mutual fund scheme should get KYC complied before investing.
KYC
registration can be done by either paper based method or through online. In a paper based method
where
investor
has to submit duly filled KYC application form and supporting documents as proof. The whole
process is
physical.
Online KYC can be done through various mode like Video KYC, Aadhar based KYC, Digi-locker etc.,
subject to
applicable guidelines issued by SEBI from time to time. The benefit of online KYC is that
investor is not
required to visit and submit physical documents for KYC registration.
What should
the investor do ?
The investors are required to complete the KYC
procedures and provide the precise details in the KYC forms
to
avoid any inconvenience. Further, in case of any change in their KYC details such as address,
occupation,
income
etc. should be updated in their KYC details and also informed to the financial institutions
where they are
holding any investments.
In case of any change in their KYC details (as mentioned above),
they should reach out to the AMC / KYC
Registration Agency and get the details updated.
Documents required to be KYC
compliant
Broadly, the documents required for KYC include
proof
of address and proof of identity
documents. Here is a list of documents admissible:
Proof of Identity (POI): -
- Unique Identification Number (UID) (Aadhaar) | Passport | Voter ID card | Driving
license
- PAN card with photograph
- Identity card/ document with applicant’s
Photo, issued by any of the following:
- Central/State Government and its Departments
- Statutory/Regulatory Authorities
- Public Sector Undertakings
- Scheduled Commercial Banks
- Public Financial
Institutions
- Colleges affiliated to Universities
- Professional Bodies
such as ICAI, ICWAI, ICSI, Bar Council etc., to their members
- Credit cards/Debit
cards issued by Banks
Proof of Address (POA):-
- Passport | Voters Identity Card | Ration Card | Registered Lease or Sale Agreement
of Residence | Driving License | Flat Maintenance bill | Insurance Copy.
- Utility bills like Telephone Bill (land line only), Electricity bill or Gas bill
- Not more than 3 months old.
- Bank Account Statement/ Passbook -- Not more than 3 months old.
- Self-declaration by High Court and Supreme Court judges, giving the new address
in respect of their own accounts.
- Proof of address issued by any of the following:
- Bank Managers of Scheduled Commercial Banks
- Scheduled Co-Operative Bank
- Multinational Foreign Banks
- Gazetted Officer
- Notary public
- Elected
representatives to the Legislative Assembly or Parliament
- Documents issued by
any Govt. or Statutory Authority.
- Identity card/ document with address, issued by any of the following:
- Central/ State Government and its Departments
- Statutory/ Regulatory Authorities
- Public Sector Undertakings
- Scheduled Commercial Banks
- Public Financial
Institutions
- Colleges affiliated to Universities and Professional Bodies
such as ICAI, ICWAI, ICSI, Bar Council etc., to their members.
- For FII/ sub account, Power of Attorney given by FII/ sub-account to the Custodians
(which are duly notarized and/or apostiled or consularised) that gives the
registered
address should be taken.
- The proof of address in the name of the spouse may be accepted
It is important to note that all documents that have an expiry date should be valid
on the date of submission.
Some additional documents required from non-individuals:
For corporates –
- Copy of the balance sheet for the last 2 financial years (to be submitted every
year).
- Copy of latest share holding pattern including list of all those holding
control, either directly or indirectly, in the company in terms of SEBI takeover
Regulations, duly certified by the company secretary/Whole time director/MD(to
be
submitted every year).
- Photograph, POI, POA, PAN and DIN numbers of whole time
directors/two directors in charge of day to day operations.
- Photograph, POI, POA, PAN of individual promoters holding control -either directly
or indirectly.
- Copies of the Memorandum and Articles of Association and certificate
of incorporation.
- Copy of the Board Resolution for investment in securities
market.
- Authorised signatories list with specimen signatures
For Partnership firms –
- Copy of the balance sheets for the last 2 financial years (to be submitted every
year).
- Certificate of registration (for registered partnership firms only).
- Copy of partnership deed.
- Authorised signatories list with specimen signatures.
- Photograph, POI, POA, PAN of Partners
For Trusts –
- Copy of the balance sheets for the last 2 financial years (to be submitted every
year).
- Certificate of registration (for registered trust only).
- Copy
of Trust deed.
- List of trustees certified by managing trustees/CA.
- Photograph,
POI, POA, PAN of Trustees
For HUFs –
- PAN of HUF.
- Deed of declaration of HUF/ List of coparceners.
- Bank
pass-book/bank statement in the name of HUF.
- Photograph, POI, POA, PAN of Karta
For an unincorporated association or a body of individuals –
- Proof of Existence/ Constitution document.
- Resolution of the managing body
& Power of Attorney granted to transact business on its behalf.
- Authorized
signatories list with specimen signatures.
For Banks/ Institutional Investors –
- Copy of the constitution/registration or annual report/balance sheet for the last
2 financial years.
- Authorized signatories list with specimen signatures.
For Foreign Institutional Investors (FII) –
- Copy of SEBI registration certificate.
- Authorized signatories list with
specimen signatures.
For Army/ Government Bodies –
- Self-certification on letterhead.
- Authorized signatories list with specimen
signatures.
For registered societies –
- Copy of Registration Certificate under Societies Registration Act.
- List
of Managing Committee members.
- Committee resolution for persons authorised to
act as authorised signatories with specimen signatures
- True copy of Society
Rules and Bye Laws certified by the Chairman/Secretary.
