As a part of the Client Due Diligence (CDD) Process under PMLA 2002 read with PMLA Rules, 2005 every SEBI registered entity, which inter alia includes Mutual Funds, is required to obtain sufficient information from their clients in order to identify and verify the identity of persons who beneficially own or control the securities account.
Further, pursuant to SEBI Master Circular No. SEBI/HO/MIRSD/MIRSDSECFATF/P/CIR/2024/78 dated June 6, 2024, Guidelines on Anti-Money Laundering (AML) Standards and Combating the Financing of Terrorism (CFT) /Obligations of Securities Market Intermediaries under the Prevention of Money Laundering Act, 2002 and Rules framed there under and SEBI Master Circular No. SEBI/HO/MIRSD/SECFATF/P/CIR/2023/16 dated October 12, 2023, KYC norms for the securities, investors who are Ultimate Beneficial Owner(s) (“UBO(s)”) are required to be compliant towards KYC norms in order to comply with the above Act/Rules/Regulations & Guidelines. The following CDD process is being implemented by HDFC Mutual Fund.
Applicability
Providing information about beneficial ownership will be applicable to the subscriptions received from all categories of investors except Individuals and a Company listed on a stock exchange or is a majority-owned subsidiary of such a Company.
KYC acknowledgement along with the declaration form for ‘Ultimate Beneficial Ownership’ are required submitted to HDFC AMC/its RTA.
In case of any change in the beneficial ownership, the investor should immediately intimate HDFC AMC / its Registrar / KRA, as may be applicable, about such changes.
Identification Process
For Investors other than Individuals
If the investor is an unlisted company, partnership firm or unincorporated association / body of individuals, the beneficial owners are the natural person/s who are acting alone or together, or through one or more juridical person and exercising control through ownership or who ultimately has a controlling ownership interest.
- Controlling ownership interest means ownership of /entitlement to:
more than 10% of shares or capital or profits of the juridical person, where juridical person is a company.
more than 10% of the capital or profits of the juridical person, where the juridical person is a partnership firm; or
more than 15% of the property or capital or profits of the juridical person, where the juridical person is an unincorporated association or body of individuals.
In cases, where there exists doubt as to whether the person with the controlling ownership interest is the beneficial owner or where no natural person exerts control through ownership interests, the identity details should be provided of the natural person who is exercising control over the juridical person through other means (i.e. control exercised through voting rights, agreement, arrangements or in any other manner).
Where no natural person is identified under any of the above criteria, the person who holds the position of senior managing official shall be provided.
- For Investor which is a Trust
- In the case of a Trust, the author of the trust, settlor of the trust, the trustee, the protector, and the beneficiaries with 10% or more interest in the trust or any other natural person exercising ultimate effective control over the trust through a chain of control or ownership shall be considered as beneficial owner.
- The trustees to disclose their status at the time of commencement of an account-based relationship or when carrying out transactions as specified in clause (b) of sub-rule (1) rule 9.
- For Foreign Investors
- Registered intermediaries dealing with foreign investors’ may be guided by SEBI Master Circular SEBI/HO/AFD-2/CIR/P/2022/175 dated December 19, 2022 and amendments thereto, if any, for the purpose of identification of beneficial ownership of the client;
Relevant SEBI Circulars:
