Distributors were facing difficulties in performing IPV of outstation clients.
AMFI, in its best practice circular, has clarified that in-person verification of investors can be done through web camera.
SEBI’s new KYC rule which came into effect from January 2012 required distributors to personally verify their clients, a process known as in-person verification (IPV).
“Individual
investors are required to undergo In-Person Verification (IPV) as a part of updation
of additional/ missing information with KRA. It is now clarified by SEBI that
as per the SEBI KYC circulars issued from time to time, In-person verification
through web camera can be performed by any intermediary and records of the same
shall be maintained,” stated AMFI circular.
Distributors,
especially those who wanted to enroll outstation or NRI clients, were facing
hurdles in IPV. SEBI had allowed depository participants to verify their
clients through a web camera. However, the same facility was not extended to
mutual fund distributors.
“It
was difficult for us to perform IPV of clients who had shifted abroad. The
missing information (IPV) can now be updated for clients who did KYC before
January 2012. It is big relief for distributors,” said A K Narayan, President,
IFA Galaxy.
Some
distributors are not performing IPV to avoid getting into trouble. “We have
been advised to be cautious while doing IPV by a due diligence team. There is
now common KYC for investing in all SEBI registered financial instruments. If a
client who has done IPV through us perpetrates a fraud in stock market then we
can face the music since IPV was done by us. Like me many others don’t do IPV,”
says a Mumbai based IFA.
IPV can be done by any SEBI registered entity like an AMC or NISM/AMFI certified distributors who are KYD compliant. Banks are also allowed to do IPV.
