KYC, Supplementary KYC and UBO

KYC means Know Your Customer. As mandated under extant SEBI regulations and provisions of Prevention of Money Laundering Act, every intermediary (including Mutual Funds) is required to have a Client Identification Program and frame a KYC policy, which means knowing your customer by seeking information and supporting documentation about the customer's identity and address, besides other information like address, nationality, residential status, PAN etc.  

The requirement is applicable to all categories of investors eligible to invest with us viz., Resident Individual investors, Non Resident Indians, Persons of Indian Origin (PIO), HUF, Societies, Partnership Firms, Trusts, Companies, Body Corporate, Public Sector Undertakings, Banks, Financial Institutions, Mutual Funds, Foreign Institutional Investors and such other individuals / institutions, including any holders / issuers of Power of Attorney.  

KYC compliance is mandatory for the below mentioned a. New / Additional Purchases b. Switch Transactions c. New SIP/ STP/ Flex STP/ FlexIndex/ DTP registrations  

Compliance with KYC requirements is mandatory to invest in mutual funds irrespective of the investment amount.

In case there are any changes to any of the information provided previously, then you are required to submit an updated form. This new information will override the previous information. In terms of PML Act, all intermediaries are obligated to exercise ongoing due diligence with respect to the business relationship with every client. Accordingly, you may be approached for any additional information.  

KYC compliance consists of 2 parts
Basic KYC:To bring uniformity in securities markets, SEBI vide its circular MIRSD/SE/Cir-21/2011 dated 05th October 2011 has prescribed uniform KYC form and supporting documents to be used by SEBI registered intermediaries such as DPs, MFs, AMFI, PMs, Collective Income Schemes and Venture Capital Funds. For this purpose, KYC registration is centralized through KYC Registration Agencies (KRAs) registered with SEBI. Thus each investor has to undergo a uniform KYC process only once in the securities market and the details would be shared with other intermediaries by the KRAs. Updating KYC with a KRA basically involves, providing proof of identity, proof of address and In-person verification.
Supplementary KYC:Intermediaries are mandated to collect the additional information from clients details such as Occupation details, Gross Annual Income/ net worth and Politically Exposed Person (PEP)* status etc. In case of non-individuals, the details of Ultimate Beneficial Owners (UBO) have to be provided.  

All documents required by us in terms of PMLA must be certified i.e. attested / gazetted / notarized by appropriate authorities (see instructions on KAF). In case you wish to bring the original documents to our offices, the copies of such documents should be self-certified. In such cases, original documents will be seen for verification by POS and returned to the applicant.  

In-Person Verification (IPV) - Mandatory: SEBI vide circular number MIRSD/Cir-26/2011 dated December 23, 2011 has mandated IPV for all new clients other than Non-Individuals In case of mutual funds, the IPV can be performed by AMCs or AMFI/NISM certified distributors who have complied with KYD requirements. Further, details like name of the person doing IPV, designation, organization name, signatures and date of IPV should be recorded on the KYC form at the time of IPV.
Further, SEBI has mandated that In Person Verification (IPV) of clients be carried out by the Intermediaries through a process specified in this regard. The IPV shall be a one-time process and IPV carried out by a client with any of the intermediaries shall be relied upon by all the other Intermediaries with respect to the dealing of such client with such other Intermediaries. With respect to the Mutual Fund clients, IPV carried out by the Know Your Distributor (KYD) registered Distributors who hold valid certifications issued by the National Institute of Securities Market (NISM)/Association of Mutual Funds in India (AMFI) will be valid. For investors who deal under “Direct” broker code (without any distributor), the IPV conducted by Scheduled Commercial Banks can also be relied upon.  

The information will be updated by the KRA (KYC Registration Agency) in their central database.  

KYC Registration Agency (KRA) is an agency registered with SEBI under the Securities and Exchange Board of India [KYC (Know Your Client) Registration Agency] Regulations, 2011. The KRA will maintain KYC records of the investors centrally, on behalf of capital market intermediaries registered with SEBI.

At present, there are 5 KRA’s registered with SEBI

• CVL KRA - www.cvlkra.com
• NDML KRA - www.kra.ndml.in
• Dotex KRA- www.nsekra.com
• CAMS KRA - www.camskra.com
• Karvy KRA - www.karvykra.com

The KYC forms can be downloaded from the above mentioned websites of the respective KRA. The KYC forms are also available on our website under Investor Desk Tab within Forms and Documents. The Supplementary KYC form is a separate form which is also available on our website.

Unit holders can submit these forms to any of our Investor Service Centres (ISC) or offices of our registrar, CAMS Ltd. nearest to your location. This form can also be submitted along with a fresh purchase.

After submitting all the requisite documents, the KRA’s will take 10 working days to update the KYC status.  

On receipt of KAF along with the required documents, the KYC Compliance letter will normally be issued across the counter at the designated Official Points of Service after preliminary verification of documents. However, based on final verification of the documents at the back office, the KYC Compliance letter may be invalidated in case of deficiency of documents / incomplete information. The status of KYC is available on the websites of the KRAs.  

 

Yes. Separate KAF is available for Individual and Non-Individual applicants. Documentation requirements are also unique to both categories of applicants.  

Yes all investors including joint holders within a folio / all other folios need to get KYC compliant. If investment is in the name of a minor, the Guardian has to be KYC compliant. Holders and issuers of Power of Attorney, both have to be KYC compliant.  

A minor investor is not required to be KYC compliant for investments in Mutual funds. In such cases, the Guardian has to be KYC compliant and provide his / her KYC Compliance letter along with the minor's investment application form. Upon attaining majority, the unit holder will have to complete KYC formalities and inform us to update the status in our records.  

If you have already updated your KYC information through some other intermediary and the KYC status on the KRA website is updated as “KYC Registered – New KYC” you may attach this as KYC confirmation while investing with us.  
 

If a valid document (including attestations / certifications) towards proof of address is in a regional language or a foreign language, they have to be translated into English prior to submission.  

Only Permanent Account Number (PAN) card can be submitted as proof of Identity . However, for proof of address a most recent document needs to be submitted which is not more than 3 months old. If proof of address is for example a passport, voters ID, Driving License, etc such a requirement will not apply as long as it is within the validity period.  

No. In the event of such nominees stepping into the shoes of a unit holder by virtue of Operation of Law, the nominee has to complete KYC requirements in force at that time. If the nominee is still a minor in such an event, the Guardian of the minor has to be KYC compliant.  

The HUF as an entity is required to be KYC compliant.  

The Partnership entity is required to be KYC compliant and not the individual partners. Hence all requirements as applicable to a non-individual applicant will apply. Please refer new KRA norms.  

No. Such documents will not be accepted. Every documentary proof has to be either certified i.e. attested / gazetted / notarized by appropriate authorities or the document has to be produced in original with self-attested photocopies for In-person verification (IPV).  

Any deficiency in documentation / information will render the KAF and KYC Compliance letter, if any, allotted as invalid. The status of KYC will be as “KYC-on hold “. The applicant will have to provide the required information/ documents to update the KYC status. Investors will not be able to make any subscriptions in our schemes till such time that the status is “KYC-on hold”.  

If the PAN is updated in all the folios, KYC will also get updated in all the folios. In case the PAN is not updated, in all or few folios, investors must send us a separate letter containing a complete list of their folios, for updating PAN along with KYC status in those folios. The list must explicitly state the unit holders name unit-holding pattern (whether 1st / 2nd / 3rd unit holder). All unit holders must sign such letters. Invalid requests will not be processed. We also strongly recommend that for similar unit holding patterns across folios, you send us a request for consolidation of folios.  

Yes, provided the status of your KYC is “KYC REGISTERED - New KYC” only.  

Such Unit holders must send us a separate letter containing a complete list of their folios. The list must explicitly state the unit holders name, scheme, plan, unit-holding pattern (whether 1st / 2nd / 3rd unit holder). All unit holders must sign such letters. Invalid requests will not be processed. We also strongly recommend that for similar unit holding patterns across folios, you send us a request for consolidation of folios.  

It is in your own interest to do so at the earliest, so that a future investment is smoothly processed.  

Yes, you need to be KYC compliant to switch between schemes of HDFC Mutual funds irrespective of the switch amount.  

KYC will be not be applicable for the below mentioned a. Existing SIP/ STP/ Flex STP/ FlexIndex/ DTP registrations, including those received till December 31, 2010 b. Dividend reinvestment transactions of any amount. c. Redemptions  

In accordance with SEBI Circular No. CIR/MIRSD/13/2013 dated December 26, 2013, the additional details viz. Occupation details, Gross Annual Income/net worth and Politically Exposed Person (PEP)/ Related to PEP status mentioned under section 2 & 3 which was forming part of uniform KYC form will now be captured in the application form of the Fund.  

As per the above circular, these details need to be maintained by each intermediary. This new information will override any previous information provided.  

The KYC details maintained with the KRA consists of only basic information of an investor like address, the contact details, and his tax status. The supplementary KYC consists of others details of the investor such as Occupation details, Gross Annual Income/net worth and Politically Exposed Person (PEP) status )*/ Related to PEP, etc. The supplementary KYC information is to be sought by each intermediary.

You will receive an email from CAMS confirming receipt of your information. Alternatively, you may contact any of our Investor Services Centre (ISC) or call us on 180030106767 to know the status. Kindly allow 5 working days for updation of such information provided in a physical form. Information submitted online on the website of CAMS will be updated in our records on the same day.  

This information will be updated by our registrar CAMS (Computer Age Management Services Pvt. Ltd) in their central database. This information will be shared with all other AMC’s serviced by CAMS where you have investments. Please visit the website of CAMS to check the list of such AMCs.  

The beneficial owner is the natural person or persons, who ultimately own, control or influence a client and/or persons on whose behalf a transaction is being conducted, and includes a person who exercises ultimate effective control over a legal person or arrangement. 

SEBI vide its Circular No. CIR/MIRSD/2/2013 dated January 24, 2013 has mandated that all investors (other than Individuals) are required to provide details of UBO(s).  

In case the investor or owner of the controlling interest is a company listed on a stock exchange or is a majority owned subsidiary of such a company, the details of shareholders or beneficial owners are not required to be provided. Such a company has to submit a declaration to this effect.  

The Prevention of Money Laundering Rules, 2005 inter alia mandates that every intermediary shall identify the beneficial owner and take all reasonable steps to verify his identity. SEBI Circular CIR/MIRSD/2/2013 dated January 24, 2013 prescribes a uniform approach to the securities industry towards determination of beneficial ownership. The term reflects a recognition that a person in whose name the Units are held not necessarily be the person who ultimately controls such Units or who is ultimately entitled to such Units.  

Only persons authorized to represent the company or entity according to its constitution/ resolutions should complete and sign the declaration.

The identity of the UBO can be ascertained from the following information:

• For investments of non-individuals (other than trusts) viz., company, partnership or unincorporated association/body of individuals, the identity of the natural person, who, whether acting alone or together, or through one or more juridical person, exercises control through ownership or who ultimately has a controlling ownership interest. Here controlling ownership interest means ownership of/entitlement to:

i. more than 25% of shares or capital or profits of the juridical person, where the juridical person is a company;
ii. more than 15% of the capital or profits of the juridical person, where the juridical Person is a partnership; or
iii. 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.

• Where there exists doubt as above 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 of the natural person exercising control over the juridical person through other means such as through voting rights, agreement, arrangements or in any other manner.

• Where no natural person is identified under clauses a or b above, the identity of the relevant natural person who holds the position of senior managing official.

The identity of the settlor of the trust, the trustee, the protector, the beneficiaries with 15% or more interest in the trust and any other natural person exercising ultimate effective control over the trust through a chain of control or ownership.  

You can register the UBO details by filling up the ‘Declaration of Ultimate Beneficial Ownership’ Form and submitting the same to the nearest Investor Service Centre (ISC) of HDFC Mutual Fund. This information will be updated by our registrar CAMS (Computer Age Management Services Pvt. Ltd) in their central database. This information will be shared with all other AMC’s serviced by CAMS where you have investments.  

Yes. Such applicants must furnish a certified copy of proof of their identity (their PAN). PAN is the sole identification number for KYC compliance. Also a copy of their overseas / local address proof (as applicable) certified by a local authority / Indian embassy / consulate is required. If documents are not in the English language, they must be translated into English.

Yes. The requirements are same as those applicable to Non Residents Indians.  

You may send us a true copy of your documents attested by the Notary Public, Gazetted Officer, Manager of a Scheduled Commercial Bank (Name, Designation and Seal should be affixed on the copy) or by an official from the local office of the Indian Embassy / Consulate. However, the KYC application form has to be in original only.

You may provide your local address proof and a notarized copy of mariner's declaration or your Continuous Discharge Certificate (CDC).  

GUIDANCE NOTE This FAQ is only meant to clarify certain basic questions around PMLA. The information given is included only for general purpose and the investors / unit holders should be aware that the relevant rules, regulations, or their interpretation might change. We strongly advise you to contact your distributor / our Investor Service Center / official POS for any additional information / clarifications. Please read the notes, guidelines and checklist given on the reverse of the KAF before filling up / submission of the same to a POS. Please visit the website of the Financial Intelligence Unit of the Government of India at http://fiuindia.gov.in or the website of Securities and Exchange Board of India at http://www.sebi.gov.in/ regularly for further information.