‘You will have to update KYC status of your clients with each AMC’

Why did I get this list of folios?

Based on a SEBI’s direction, AMCs have withheld trial commission for assets where KYC is pending. In other words, if the KYC status is other than ‘KYC Verified’ or ‘KYC Done’ or ‘KYC Registered – New KYC’, you will have to update the KYC.

CAMS has shared details of clients with pending KYC through an email. You can download this file by using password mentioned in the email.

Why is there no common list across all AMCs?

You will have to update KYC status with each AMC separately as before 2012, there was no necessity of doing KYC at the time of first transaction with an AMC.

When will commission be withheld by the AMCs?

All CAMS serviced AMCs have decided to withhold commission if the KYC status of any of the holders in a folio is pending. You will get commission only if the status on folio is ‘KYC Verified’, ‘KYC Done’ or ‘KYC Registered – New KYC’.

Pending KYC is most prevalent in joint account. For instance, there are two holders in the folio and the first holder’s KYC status on KRA website is showing as ‘KYC Registered – New KYC’. However, the second holder’s KYC status is showing as ‘KYC Registered – Old KYC’ then AMCs can withhold the commission on such folios

There are regular SIP/STP/SWP transactions in a folio. How can such a folio be included in this list for KYC remediation when transactions were being allowed by the AMC?

If an SIP/STP/SWP started before the introduction of KYC regime in 2012, AMCs may be honouring such triggers, even if the KYC status is pending. However, AMCs cannot initiate new purchases/switches/SIP registrations. It is likely that the listed folio has started SIP/STP/SWP prior to the KYC regime.

I checked the KYC status in KRA website for one of the investor’s PAN in the list circulated by CAMS and found that it is showing as ‘KYC Registered – New KYC’. Is this folio incorrectly included in the list from CAMS?

This is possible due to one of the scenarios.

• Scenario 1: There is no customer-initiated transaction, meaning customer has not submitted a purchase or switch in the folio after 2012 and so the AMC has not downloaded KYC status of the investor from the KRAs. The status in AMC folio in the file shared with you will show as “0” or “1”
• Scenario 2: The status on KRA website has to show as ‘KYC Registered – New KYC’ for all joint holders of a folio. If even one of them has a status that is different, that folio will be included in the list sent to you
• Scenario 3: If a PAN of an investor is showing status as ‘KYC Registered – New KYC’ in KRA site but the folio is in the list sent to you and shows ‘KYC Rejected – Name Mismatch’, ‘KYC Failed – Name Mismatch’ or ‘KYC – Name Mismatch’, this is because of significant variation between the name of the investor in the AMC application form and the name according to KRA records
• Scenario 4: If you have created folio through MFU, MFU has to provide KYC status based on its agreement with the AMCs. If MFU has not provided the status, this folio will show up in the list. However, CAMS and AMCs will take care of such folios

KYC status of the folio is ‘KYC in Process’ and transactions are being allowed in the folio. Why is this folio in the list of folios for remediation?

AMCs have been allowing simultaneous submission of KYC documents and a purchase application form. In addition, KRAs need some processing time for KYC documents and will provide an interim status of ‘KYC in Progress’. 

AMCs have been allowing transactions in such instances for up to 30 days. Since it is only an interim status and it is not certain that the final status will be ‘KYC Registered – New KYC’, AMCs have decided that they will withhold commission on such folios until they obtain final status.

If I help the investor remediate his KYC status, when will I get brokerage?

It depends on the date of completion of KYC. For instance, if KRAs update KYC before 30^th of a particular month, you will get withheld brokerage on such folios in the next month’s brokerage cycle.

For example, if the status reflects as ‘KYC Registered – New KYC’ in the KRA site before September 30, AMCs will release the withheld brokerage along with September brokerage paid in October.

What should I do next?

• Take the list of folios for all AMCs as sent by CAMS
• Extract list of PANs where KYC status has to be remediated
• The following table will help you to identify actions needed from you/investor for each scenario

Also, once AMC or CAMS download the information from KRAs, KRAs will sent an email or SMS to the investor intimating your client on the status. 

Here is a summary understanding of the KYC status codes furnished in the email triggered to your mail ID with the list of folios and investor details for pursuing KYC remediation. If the status is anything other than “3”, action needed is available in the table above

• 0 &1 – KYC Not done by the Investor / No request (No transaction) received by that AMC from the investor for updating the KYC status in the folio.
• 2 – KYC is pending in the folio as No further KYC status updates / No transaction received by that AMC from the investor for updating the KYC status in the folio.
• 3 – KYC is registered and valid.
• 4 – KYC is failed in the folio – reasons could be o Investor has done only CVLMFKYC / Existing old KYC o KYC is ON Hold / rejected by the respective KRA for reasons such as discrepant/insufficient documents.  Communication on the reasons for KYC On hold would have already been received by the Investor from the KRA (or) the same can be viewed now on the KRA website by querying the KYC status of the PAN