Know Your Customer (KYC)
KYC is an acronym for "Know your Customer", a term commonly used for Customer Identification Process. The Prevention of Money Laundering Act, 2002 ("PMLA") forms the core of the legal framework put in place by the Indian Regulators to combat money laundering to be followed by banking companies, financial institutions and intermediaries by administering KYC process and other reporting requirements such as suspicious transactions reporting, etc. SEBI has prescribed certain requirements relating to KYC norms for Financial Institutions and Financial Intermediaries (such as Mutual Funds) to 'know' their customers.
With effect from January 01, 2011 all investors (Individuals or Non Individuals) who wish to transact in mutual fund schemes should complete the CVL KYC process. KYC is applicable for the below mentioned transaction types:
New / Additional Purchases
New Systematic Investment Plan (SIP) Registrations received from effective date.
New Systematic Transfer Plan (STP) Registrations received from effective date.
This one-time KYC verification through CVL is valid for transactions across all mutual funds.
KYC is a one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc), you need not undergo the same process again when you approach another intermediary.