In an interview with Value Research, SEBI Chief U K Sinha has clarified that there will be no compulsion on distributors to do in-person verification (IPV) on small ticket investments of Rs.1-2 lakh. However, he advised distributors to do IPV if they have any suspicion.
IPV means that information provided in the KYC form has to be verified in-person by distributors.
“The rules framed under the money-laundering law say that the ultimate responsibility is of the intermediary. Therefore, this practice of always going in for an in-person verification has emerged. We are having discussions with fund houses highlighting that this is not required each and every time, especially for transactions below a certain size,” Sinha was quoted in Value Research magazine.
When asked whether it will not be mandatory for distributors to do in-person verification if somebody is verified through Aadhar, he was quoted, “The correct way to interpret this is that it will not be compulsory, but if they (distributors) have any suspicion they can do that. Effectively, for millions of retail customers who are transacting less than Rs.1 or Rs. 2 lakh, the life will become simple.”
Earlier in September, AMFI has asked fund houses to ensure that all investors undergo IPV from January 2016.
So far, AMCs were accepting transactions even if IPV was not done by distributors. However, AMCs will not accept incomplete applications (where KYC is done and IPV is incomplete) from January 2016.
For ease of doing IPV, SEBI has allowed distributors to perform IPV through web camera. SIP and STP mandates already registered till December 2015 are exempted from this requirement.
Also, AMFI has urged distributors to make sustained efforts to obtain missing KYC information and complete IPV and update the same in KYC Registration Agency (KRA) records till December 2015.
