PAN and KYC for all now

If you want to invest in MF, make sure you are KYC compliant and have your PAN handy

Effective January 1, 2008, Permanent Account Number (PAN) card is mandatory for all your mutual fund (MF) investments, as against in excess of Rs 50,000 earlier. In addition to submitting your PAN number, you will now also have to adhere to ‘Know your Customer’ (KYC) norms.

All these norms will now be followed to help MFs know their investors better. KYC norms are required under the ‘Prevention of Money Laundering Act (PMLA)’, to keep a check on the legality of funds used for investments. Money laundering means converting money that is earned through illegal ways, like terrorism, into legal money by passing it through various banking channels. This makes it difficult for authorities to track the ‘dirty money’ to their illegal origins. It’s is a serious issue globally, as according to an International Monetary Fund report, the aggregate size of money laundering in the world could be somewhere between US $ 590 billion and US $ 1.5 trillion.

Follow these three steps for a hassle-free MF investing in 2008 and beyond.

Step #1: Fill the KYC form that you get from Amfi’s website or on your MF’s websites or 283 KYC centres that Amfi has appointed throughout the country. Visit Amfi’s website to know the centre in your city that is closest to you.

Attach a self-certified copy of your PAN card and an address proof along with your KYC form and submit them to your nearest centre. Don’t forget to carry your original PAN card also; they’ll give it back you instantly after verifying it with its copy. The centre will give you an acknowledgment across the counter on the same day.

Although KYC is presently required for investments of Rs 50,000 and above, we suggest you get your KYC done irrespective of your investment amount. Just like PAN started with Rs 50,000 and above investments but will now encompass everyone, it’s only a matter a time when KYC will be imposed on everyone.

Step #2: Wait for 10 days for any response from CDSL Ventures – the Amfi-appointed agency to overview KYC requirements. If you do not receive any such letter, it means your KYC form is now legally acceptable.

Submit a copy of this acknowledgment to all the MFs that you have invested in until now so that they can update their records. Mention, in a separate letter your folio and account numbers and scheme names of all your investments in a fund house that bears your name (first, second or guardian to a minor) to which your KYC acknowledgment should be applied. Remember, KYC and PAN norms are applicable to all mode of holdings, irrespective of whether you are the first, second or third account holder, across MFs.

Step #3: In addition to the KYC compliance, you will also need to submit a copy of your PAN card as well as quote your PAN number on your MF investment forms. If you invest in MFs through an agent, he can also do your verification. But if you apply directly to MFs, carry your PAN card every time you visit your MF to submit a fresh application.

If you have a MIN already…
…you are said to be KYC-compliant already. All you need to do is submit a copy of your MIN acknowledgement letter to all your MFs and your KYC is done. A PAN copy for all your future investments though, will still be mandatory.

It’s good that compliance in investments is on a rise. What is also needed is KYC compliance across investment avenues, such as small savings and insurance, not just MFs. Market sources say some insurance companies have been luring gullible investors on the basis of an absence of KYC compliance.