As per the latest requirements, mutual fund investors will have to provide additional know your customer (KYC) details relating to their gross annual income, net worth and beneficial ownership by December 31, 2015. For the new investors, the deadline is November 1st. Only after providing this information, will investors be able to make further investments or switches in mutual funds.
Fund houses have been asked to reject the new applications if the investor fails to submit these details.
Early this year, Association of Mutual Funds of India (AMFI), issued best practices guidelines for the fund houses. In this circular, the AMFI had asked the fund houses to bring uniformity in the KYC requirements and to get ultimate “beneficial ownership” details. It further asked fund houses to ensure compliance with the new global tax avoidance law FATCA (Foreign Account Tax Compliance Act).
Under the FATCA of the US, to recognize the accounts of the US and other foreign tax payers on annual basis, India and other signatory countries have agreed that their financial institutions will comply to enhanced KYC procedures.
Fund houses have been asked to make efforts to obtain the missing KYC information from the existing investors and complete the “in-person verification” requirements by December 31st to ensure that the KYC requirements are met without any hassle to the bona-fide investors.