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| Basics about PMLA |
| What is Money Laundering? |
| Money laundering broadly means the conversion or "Laundering" of money that is illegally obtained, so as to make it appear to have originated from a legitimate source. It was originally used in the context of terrorist, criminal, smuggling and drug-dealing activities. In a wider context, tax-evaded money is also covered. |
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| What is the Prevention of Money Laundering Act (PMLA)? |
As part of a global initiative, a Financial Action Task Force ("FATF") was created to help member countries draw up Anti-Money Laundering ("AML") legislation which would help implement the policies, techniques and counter-measures to combat money laundering.
In India, The Prevention of Money Laundering Act, 2002 ("PMLA") was created under the aegis of FATF. The PMLA forms the core of the legal framework put in place by India to combat money laundering to be followed by banking companies, financial institutions and intermediaries by administering KYC and other reporting requirements such as suspicious transactions reporting, etc |
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| What is FIU? |
The Government of India set up Financial Intelligence Unit – India (FIU-IND) on18th November 2004 as an independent body to report directly to the Economic Intelligence Council (EIC) headed by the Finance Minister.
FIU-IND has been established as the central national agency responsible for receiving, processing, analyzing and disseminating information relating to suspect financial transactions. FIU-IND is also responsible for coordinating and strengthening efforts of national and international intelligence and enforcement agencies in pursuing the global efforts against money laundering and related crimes. |
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| Are Mutual Fund Investors also covered by PMLA? |
| Yes, the PMLA covers all Financial Intermediaries, and this includes Mutual Funds. As such, all investors are required to submit necessary documentation that will help the Mutual funds complete the KYC procedure. |
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| Submission of PAN and completing KYC formalities |
| What is KYC? |
| KYC is an acronym for “Know your Customer”, a term commonly used for Customer Identification Process. SEBI has prescribed certain requirements relating to KYC norms for Financial Institutions and Financial Intermediaries including Mutual Funds to ‘know’ their customers. This could be in the form of verification of PAN Number, identity and address, financial status, occupation and such other personal information. |
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| What are the KYC requirements for a Mutual Fund Investor? |
| An Individual investor will have to produce copy of his PAN card as proof-of-identity and a separate document as proof-of-address. Non-Individual Investors will have to produce certain documents pertaining to their constitution / registration to fulfill the KYC process. A list of documents to be submitted, can be found on the reverse of the KYC application form. |
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| Why am I asked to prove my identity, if I have done no wrong? |
| As has been discovered in some recent terrorist acts such as the 9/11 bombings in New York or the attack on our Parliament in Delhi, white collared crime has arrived. Seemingly innocent people have been involved. It is also observed that had the checks, as now proposed by the PMLA, been in place, the detection or even pre-emption of the crime could have been possible. In this context, you will appreciate that providing your identity / address proof and information about your occupation and financial status will only help the Government in isolating the few who are involved in money laundering. |
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| All this seems quite scary. Do I need to take any precautions? |
| Yes. You should be prudent in your money matters, just as you are in following some rules such as – say – not carrying unknown articles from unknown persons when you are traveling across cities. You should not receive or pay money on behalf of others, unless it is for a genuine transaction in which you have participated. You should also take care that you only deal with known individuals or companies which are registered with or regulated by SEBI, RBI, etc for all financial transactions. Please also ensure that you fill in forms completely and strike out any portions which you do not use or need. |
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| To whom is KYC applicable? Is there any exemption? |
Effective 01st FEBRUARY 2008, where value of subscriptions is equal to or greater than Rs.50,000/-, KYC is applicable to all unit holders, both existing and new investors, (including NRI’s), guardians and any Power of Attorney Holders. |
| There is no exception to the rule. KYC is not required for Minor applicants and in such cases Guardian need to be KYC Compliant. |
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| How do I submit PAN and complete the KYC formalities? |
The process for submission of PAN and completion of KYC formalities at CVL / Lotus India AMC Investor Service Centres is as follows:
Investors will need to submit a completed KYC application form affixing a copy of their recent passport-size photograph along with the following documents at any of the designated 'Point of Service' of CVL (CDSL Ventures Ltd) or Lotus India AMC Pvt. Ltd. |
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| Documents required |
a. Photo PAN Card
(which will also serve as a proof of identity)* and
b. Proof of Address
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| * In case Non-Photo PAN Card is provided, in addition to the copy of the PAN Card, any one of the following is to be submitted : Driving License/Passport Copy/Voter ID/Bank Photo Pass Book |
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| All AMCs have tied up with M/s CDSL Ventures Limited (CVL) to accept KYC applications on our behalf. A list of designated 'Points of Service' of CVL and various other AMCs are available on AMFI/various AMC’s website at www.lotusindiaamc.com, www.franklintempletonindia.com, www.birlasunlife.com, www.barjeelgeojit.com, www.amfiindia.com etc. |
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| All documents must be submitted in original along with a self-attested copy. The original documents will be returned across the counter after verification. Alternatively, investors may submit notarized copies of the requisite documents. On submission of the KYC form and documents to CVL, investors will receive a “KYC Acknowledgement” across the counter, a copy of which must be submitted to the Mutual Fund as proof of having completed the formalities related to KYC. |
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- CVL will not accept submission of documents separately for PAN verification and KYC. Both procedures must be completed together.
- CVL will not accept a Distributor-attested copy of the PAN card. However, the same would be accepted at Lotus India AMC Point of Service.
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| For instructions on how to fill the details, please refer the instructions overleaf the KYC application form. |
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| Does the investor have to approach every Mutual Fund separately to fulfill these requirements? |
In order to facilitate KYC process, the Mutual Fund Industry has collectively entrusted the responsibility of collection of documents relating to identity and address of investors and record keeping to an independent agency CDSL Ventures Limited (CVL). CVL through its designated “Points of Service”, which include the designated Investor Service Centers of various Mutual Funds and Distribution companies, would issue a “KYC Acknowledgement” to each investor who submits an application and the prescribed documents. By approaching the designated “Point of Service” for this process, you only need to complete these formalities once.
The acknowledgement issued by CVL can be submitted by investors to any mutual fund as proof of PAN verification and KYC compliance.
A list of 'Points of Service' is available at the websites mentioned above under the 'Download' section. |
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| Is it necessary to submit the “KYC acknowledgement” for every transaction? |
| You need to register your “KYC Compliant Status” only once by submitting a copy of the KYC acknowledgement to the Mutual Fund or its authorized Registrars. Please ensure to provide a complete list of folio numbers where you are a Holder, Guardian or Power of Attorney Holder to enable the Mutual Fund to verify and update their records. |
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| What happens if I have multiple folios/accounts with a Mutual Fund? |
| You can inform the Mutual Fund to register your PAN & KYC compliance against all the folios/accounts where you are a unit holder. However, each of the holders/guardian/POA in these folios should register their KYC compliance by submitting a copy of their KYC acknowledgement. |
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| How long does it take to get the KYC formalities completed? |
When the KYC application and documents are submitted at the designated Points of Service, a preliminary verification of documents is carried out and a “KYC acknowledgement” will be issued across the counter. This “KYC acknowledgement” is a proof of your KYC Compliance unless otherwise the same is cancelled / rejected due to deficiency of documents or incomplete information observed during final verification of the documents. A separate communication intimating you about the cancellation / rejection of your KYC Application will be sent by CVL if your application cannot be processed for any reason.
If you do not receive any such communication from CVL within 10 working days after you have submitted your documents, you may use the acknowledgement to register your KYC Compliance status with Mutual Funds. |
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| I do not have a PAN card. Can I get a KYC acknowledgement without submitting the PAN card? |
| Submission of copy of PAN card is mandatory while submitting the KYC application. |
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| I already have a MIN number. Do I need to get a fresh KYC acknowledgement? What will happen to the number? |
| If you have a MIN number where you have provided your PAN number with proof, then you need not approach CVL for a fresh KYC acknowledgement. Please submit the same to the Mutual Fund. |
| If you have not submitted your PAN with proof at the time of applying for KYC, please approach any POS with your existing acknowledgement and submit your PAN card with Proof to any of the POS. You will receive a fresh acknowledgement which you can then use for submission to Mutual Funds. Only acknowledgements from CVL where PAN is quoted will be accepted for KYC compliance. |
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| I have given a Change of Address to CVL. How long will it take to reflect in my records with the Mutual Fund? |
| It will generally take a minimum of 10 working days for your address to be updated in the Mutual Fund Registrar’s records. |
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| I have lost/misplaced my KYC acknowledgement. What do I do? |
| If you have misplaced your KYC acknowledgement, please contact CVL’s Helpdesk on 022-32485170 / 022-22721383 or email at investors@cdslindia.com who will advice you further. |
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| What are the consequences of KYC acknowledgement cancellation/rejection? |
Where subscription of value equal to or greater than Rs.50,000/- is received after 01 Feb 2008, and any one or more of the holders are found to be Non-KYC compliant, further subscriptions of value equal to or greater than Rs.50,000/- will not be permitted. All other transactions (redemptions, subscriptions of value less than Rs.50,000/-, switches, dividend reinvestment / payout) will continue to be processed.
Investors will then need to re-apply for completing PAN and KYC formalities. |
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| I have re-applied to CVL and received a fresh acknowledgement within the 21 day period. Can I have my earlier transaction reinstated by submitting this fresh acknowledgement? |
| The earlier transaction cannot be restored. You will need to submit a fresh application. |
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| Is KYC compliance required for a minor attaining majority? |
| Upon a minor attaining the age of majority (on completion of 18 years of age), he/she must complete the KYC process in his/her own name. The acknowledgement received should be registered with the mutual funds where he/she holds investments, along with other Bank Details, Signature, etc as per the requirements of the Mutual Fund. |
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| Does the KYC acknowledgement have an expiry date? |
| Generally, the KYC process once completed does not have an expiry date. However, a KYC acknowledgement can be cancelled in certain circumstances (e.g. if you do not register your acknowledgement with Mutual Funds for a long period of time). You will be intimated of any such changes or cancellations by CVL. |
| However, Mutual Funds reserve the right to request additional information and documents or perform additional verification as a part of ongoing KYC compliance. |
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| Exceptions on documents required |
| I work in the Indian Army what are the acceptable documents as proof of address? |
| For Individuals with an Army Address (’56 APO’), Letter from Commanding Officer / Photo copy of Army Id card duly attested can be accepted as proof of address. |
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| What are the valid documents as Proof of Identity? |
| Only a PAN card is a valid document for Proof of Identity. |
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| I have printed my Bank Statement online which contains my address. Can I use it as a valid Proof of Address? |
| Bank/DP statements provided as proof of address must be on the letterhead of the Bank/DP. If not, they should carry the stamp of the bank and signature of an authorised person. Statements printed on plain stationery without the Bank/DP stamp and signature are not acceptable as a valid proof of address. |
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| My Passport is expiring this month. Will it cause any problem in getting a KYC acknowledgement? |
| When documents such as Passports, Driving Licenses, etc carrying an expiry date are submitted as proof of address, the document must be current on the date of submission. |
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| I haven’t received my latest Bank Statement. Can I use my last statement which was sent out 3 months before? |
| Electricity /Telephone bill, Bank passbook, Bank statement, Demat account statement submitted as proof of address should not be more than 3 months old as on the date of submission. |
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| I cannot sign, will you accept a KYC application carrying Thumb impression? |
| KYC applications carrying thumb impression in lieu of signature can be accepted, provided the thumb impression is attested by a Notary or a Gazetted officer. |
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| If the documents are in vernacular language, do I need to get a translated version in English? |
| If your proof of address document is in vernacular language, you will need to have the same translated into English and attested prior to submission. |
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| Who are the attesting authorities? |
| Wherever attested copies are provided, attestation should be in original done by a Notary / Judicial Authority or a Bank manager of a Scheduled commercial bank / Multi national Bank (Excluding Grameen and Co-operative banks) can be accepted. Attestations by SEO, Police Inspector are not acceptable. Please ensure the attested copy carries the name, address, designation and seal / stamp of the attesting authority. |
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| My name is spelt as John King on the PAN card, whereas I have given my name as John K with Mutual Fund. Will my application be rejected? |
| While the Mutual Fund will make every effort to ensure they accept applications with minor name variations (such as expanded initials, etc) this can only be determined on a case to case basis. |
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| How will I know that the KYC compliance is registered in a Mutual fund? |
| KYC compliance for an investor in the folio will be reflect in the account statement as “KYC Registered”. |
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| Do I have to visit a POS personally to obtain an acknowledgement? |
| No. If you are not in a position to visit a POS personally, you may send the form duly filled in along with the necessary documents through your distributor or representative, who can arrange to obtain the acknowledgement for you from a POS. |
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| Is there a charge I need to pay to obtain the acknowledgement? |
| Currently, KYC acknowledgements are issued free of cost. |
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| NRI / PIO FAQs |
| I am an NRI residing outside India. How can I become KYC compliant? |
| At present, there is no POS available outside India. You may download the KYC application form from the AMFI / Mutual Fund website. The duly completed form along with the necessary documents can be mailed to your representative or distributor who can submit the same at any POS and obtain an acknowledgement. |
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| Are there any special requirements for an NRI? |
In addition to the certified true copy of the passport, certified true copy of the proof of overseas address and permanent address will also be required. The documents can be attested by a Consular Officer or an authorized official of overseas branches of scheduled commercials banks registered in India.
Apart from this, if any of the documents (including attestations / certifications) towards proof of identity or address are in a foreign language, please have them translated into English before submission. |
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| If all members in my family invest, can I get a single KYC acknowledgement? |
| Each individual investor must apply separately for completion of PAN verification and KYC. This however does not apply to minors, where the Guardian must have completed these formalities on behalf of the minor. |
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| I am an NRI living abroad. What documents are valid as Proof of Identity? |
| In case of an NRI, identity documents are a Passport and PAN card. This is mandatory and other documents such as driver’s license, electricity bill, bank statement etc. cannot be accepted. |
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| I am a Person of Indian Origin (PIO). What documents are acceptable as Proof of Identity? |
| In case of PIOs, Identity document is a copy of the PIO card and PAN Card. The alternatives in lieu of a PIO card are |
- Copy of OCI card OR
- Copy of foreign passport with place of birth as India OR
- Indian passport copy of Self / Parents/ Grandparents (with proof of relationship) OR
- Documents issued by a Government authority specifying place of birth as India
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| What is a valid Proof of address for NRI/PIO? |
Documents for Address proof for NRIs/PIOs can be any document issued by local authority for Eg: Bank statements or Utility bills or driving license issued in your country of residence. Notarization/Attestation of such documents can be performed by any local authority in the country or the Consulate of the Republic of India or bank branches of scheduled commercial banks registered in India and Multinational banks in the country where the NRI / PIO resides.
NRI’s / PIO must provide their overseas address along with proof of such overseas address in the KYC application form. An address in India is not mandatory for NRIs / PIOs. |
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| I am an existing NRI investor in a Mutual Fund. I have given my local address for correspondence. Can I continue to transact the same way? |
| Existing NRI / PIO investors who have provided only their local address must provide their overseas address as part of the KYC process. |
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| My husband/Father/Partner is an NRI / PIO. I do not have a valid Proof of address in my name, but I hold investments with a Mutual Fund. How do I proceed with KYC? |
Spouses / Children / Dependents of an NRI/PIO who do not have a proof of address can produce the proof of address of the sponsoring husband / parent with documents supporting the relationship such as marriage certificate/Visa, etc.
In case you desire to register an address in India for communication you must provide proof of address in your own name or that of an immediate relative with an additional document evidencing the direct relationship with such person i.e. Parent/Spouse/Child. |
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| I live in UAE where post is delivered to a PO Box. Do you consider this a valid address for KYC? |
| A PO Box Address is adequate provided you can also provide us Proof for such PO Box such as bank statements, Telephone bills etc. carrying this PO Box address |
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| I am an NRI who works for Merchant Navy. I do not hold an overseas address proof. What is the valid Proof of Address? |
| In case of Merchant Navy NRI’s, where overseas address proof is not available, please provide your local address in India with proof, along with a notarized copy of your Mariners’ declaration or CDC (Continuous Discharge Certificate) |
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| I am an NRI as I frequently stay abroad, but I do not have any valid address proof overseas. What will be acceptable as Proof of Address? |
| Investor’s who travel frequently by nature of their profession and stay away in foreign countries in company’s accommodation or hotels (who become NRI and do not have a permanent address) but have a residential address in India, may provide such Indian address with proof. In addition, please also provide a letter of confirmation from your employer / business on company letterhead as an additional proof of address. |
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| I invest in my minor child’s name? Do I need to get a KYC acknowledgement for my minor child as well? |
| KYC compliance is not mandatory for minors. The guardian must be KYC compliant. |
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| Should I give the company proof of address on a letterhead? |
All documents for non-individuals need to be on the company letterhead or in a letter format with the stamp of the firm/company.
Documents of Non-individual investors can be self attested by Director / Company Secretary / Partners / Trustees, only in case of registered entities. For All other (non registered) entities, documents must be attested by a Notary / Judicial Authority or a Bank manager of a Scheduled commercial bank / Multi national Bank (Excluding Grameen and Co-operative banks). Attestations by SEO, Police Inspector are not acceptable. |
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| What are the documents that need to be submitted by Non- Individuals? |
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Status |
Documents required (apart from copy of PAN card in the name of the non-individual |
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Hindu Undivided Family (HUF) |
- Deed of Declaration
- Latest Bank Passbook
- Latest Bank statement
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Company/Body Corporate |
- Certificate of Incorporation
- Memorandum and Articles of Association
- Resolution of the Board of Directors
- Authorised signatory list with specimen signatures
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Partnerships firms |
- Certificate of Registration
- Partnership deed
- Documents evidencing authority to invest
- Authorised signatory list with specimen signatures
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Trusts, foundations, NGOs, Charitable Bodies, Clubs / Mutual Fund Schemes |
- Certificate of registration
- Trust deed
Authorised
- Signatory List with specimen signatures
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Unincorporated association or a body of individuals |
- Proof of Existence / Constitution Document
- Documents evidencing authority to invest
- Authorised signatory list with specimen signatures
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Foreign Institutional Investors (FIIs) |
- Letter and Certificate of Registration issued by SEBI
- Authorised Signatory list with specimen signature
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Scheduled Commercial Banks and Institutions not incorporated under the Registered Financial Copy of Constitution / registration documents evidencing authority to invest |
- Copy of Constitution / registration documents
- Documents evidencing authority to invest
- Authorised signatory list with specimen signatures
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| Are there any additional requirements for investments managed by a Power of Attorney (POA) holder? |
| The POA holder is also required to be KYC compliant in his/her own name and produce a copy of the KYC acknowledgement for investments where he / she is a POA holder. This is apart from that of the investor on whose behalf the POA holder is investing. |
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| Whom do I inform about change of Name/Address/Status /Signature etc? |
| All the above requests must be made via CVL for investors who have completed their KYC process. A KYC modification form is available with the POS. You can make a request for change of address / correction of name / change of status / signature update etc in the form and submit the same. You need to enclose a copy of your previous KYC acknowledgement and provide necessary address proof in case of a request for change in address. |
| You should provide for at least 7 days for these changes to take effect with all the Mutual Funds with whom you are invested. |
| Please note that you should not write to the Mutual Fund or its Registrar for the change of address (unless as a designated POS). The specified form can be obtained form the AMFI or Mutual Fund website. |
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| In case of transmission (in case of death of the unit holder) cases what are the extra documents required to be obtained? |
| If the deceased is the sole applicant, the claimant should produce his/her KYC acknowledgement along with the other relevant documents to effect the transmission in his/her favor. |
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| My income status has now changed from what I have provided earlier in the KYC application form. Do I need to request for the change to reflect in my details submitted? How do I request for the change? |
| A change in income status must be intimated if such change results in a change in the income bracket you declared in the application form. Please apply to any POS in the specified form. No proof is needed for such change. |
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| For determining financial status, will any supporting documents for annual income of an investor need to be submitted? |
| No documents are required to prove the financial status of an investor. |
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