PAN to be mandatory for all mutual fund investments


(Guest)

 

All mutual fund investors, new as well as existing, will need to mandatorily furnish their PAN (Permanent Account Number) details from next year irrespective of the size of their investment.


The move is part of the revised Know-Your-Customer (KYC) compliance norms to be adopted by fund houses from next year in order to comply with money laundering prevention rules.


 

All the fund houses have been asked by industry body Amfi to comply with new KYC norms, which would include collecting details like PAN, address proof and photograph of all their new and existing investors, with effect from January 1, 2011.

The Amfi (Association of Mutual Funds in India) decision follows a direction from market regulator Sebi earlier this year to tighten the KYC norms to check fraudulent practices and money laundering activities.

Earlier in 2007, Sebi had made it mandatory to furnish PAN - which is allotted by the Income Tax Department - for all stock market transactions as part of efforts to check fraudulent practices.

The fresh move will lead to MF investors going through some additional paper work, but it is expected to also benefit them as the entire KYC documentation would be centralised across all the fund houses with the help of PAN details.
Subsequent to this, existing investors would not need to go through any paper work for fresh KYC compliance at the time of their new investments.

With Amfi asking all the fund houses to implement new and standardised KYC norms with effect from next month, the fund houses have started the process of collecting the required documents from their investors.

In a circular issued to all the fund houses and distributors, Amfi has said that the industry has signed up CDSL Ventures Ltd (CVL) to undertake the centralised record keeping of all KYC documents.