As per law, all old and new mutual fund investors are required to provide certain additional KYC (Know Your Customer) details to their respective fund houses. Following are some important points you should be aware of in this regard:
- In September last year a circular was released by the AMFI (Association of Mutual Funds of India) directing all mutual fund houses to collect some additional information from their new clients starting November 2015. Obtaining such additional information was mandatory in compliance with the FATCA (Foreign Account Tax Compliance Act) and CRS (Common Reporting Standard) norms. The association further advised the fund houses to mandatorily obtain these additional KYC details from all their investors starting January 1, 2016.
- FATCA or Foreign Account Tax Compliance Act is basically a US government initiative targeted at curbing tax evasions by the US residents. It’s an intergovernmental agreement signed between the United States and 50 other countries (including India). As per this agreement, the financial institutions operating in these 50 countries and doing business with the US nationals (US citizens or green card holders) must disclose the income details of their clients in order to help US government check tax evasions.
- Developed by the OECD (Organisation for Economic Cooperation Development) and G20 alliance, CRS or Common Reporting Standard is a similar type of reporting standard which helps in tackling issues like stashing unaccounted money abroad and offshore tax evasions.
- The additional KYC details that mutual fund houses are being urged to obtain from their clients under the CRS and FATCA include the country of birth, source of wealth, occupation, net worth and gross annual income.
- If any of the mutual fund investors is a tax resident of a country other than India, additional details needed would include the country of tax residency and the tax identification number in that country.
- Mutual fund investors can update these KYC details either off-line by visiting the office of the mutual fund company or online by accessing their website. Where an individual is invested into more than one mutual funds, he/she has the option of making the updates online on the respective websites of the different fund houses.
- The off-line submission of additional KYC details can be done by downloading the concerned form from the mutual fund house’s website and then submitting it at its nearest office or point of service (POS).
- In case an investor doesn’t want to take the trouble of updating additional KYC details on multiple fund house websites, he/she can simply update them with the registrars and be done with it. Both mutual fund registrars – Karvy and CAMS, which are responsible for recording mutual fund transactions, have sent out emails to investors, consisting of links for updating their additional KYC details online.
- Mutual fund investors can also download the updation form from the registrars’ websites and submit their duly signed copies at the closest CAMS or Karvy offices.
- In case an investor is serviced only by a single mutual fund registrars, he/she doesn’t need to update his/her KYC details with both of them. However, if he/she wishes to invest in a mutual fund which uses the services of the other registrar, it would make sense to update the KYC details with both of them.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.