In an effort to bring uniformity across fund houses in dealing with pending KYC accounts, AMFI has asked fund houses to ensure that their clients get KYC ‘verified’ status on time to avoid any inconvenience to investors.
In a note sent to AMCs, AMFI said, “It is the responsibility of the intermediary i.e. AMC to ensure that the KYC is completed as specified in various SEBI circulars / guidelines. Once the investor has submitted KYC application form complete in all respects along with the necessary KYC documents like identity proof, address proof and PAN to AMC, and the same are found to be order, the investor is deemed to have fulfilled his/her obligation w.r.t. KYC compliance, and the AMC may process the transaction after validating the PAN (i.e., PAN validation should be completed before processing the transaction). It is thereafter the responsibility of AMC to enter/update the KYC data in KRA system and upload the documents on KRA portal immediately and track the KYC status to ensure that KYC status of the investor gets updated to reflect ‘verified status’.”
In other words, AMCs cannot ask clients to wait to get their KYC status ‘verified’ before processing transaction.
AMFI has also clarified that the practice of accepting subscription from new investors along with KYC form and KYC document will continue in the industry.
For KYC having status of ‘under process’, AMCs will have to accept the subscription/ switch transaction but they have to put units of such investors ‘on hold’ for further transaction till these investors get KYC ‘verified’ status.
For redemption cases where KYC status is ‘under process’, AMCs have to collect fresh KYC documents before processing the request. In closed end funds, AMCs can pay maturity proceeds only after obtaining KYC documents.
AMCs will have to make conscious efforts to update existing investors especially with SIPs to send their KYC details before their SIP due date. In such communication, AMCs will have to caution them that they will discontinue their SIPs if they do not complete KYC on time.
There will be no impact on payment of dividends.
Also, AMCs will have to honour non-financial requests such as nomination, change of email address/telephone number, change of bank etc irrespective of their KYC status. However, AMCs will have to use this as an opportunity to obtain KYC documents from investors and fulfil the KYC compliance.
