Funds set to expand KYC umbrella

Mutual fund houses are all set to expand the Know Your Client (KYC) norm umbrella by introducing newer requirements like asking their high net worth investors to provide details of their big investments made in the past.

Taking the lead in this regard is ABN AMRO Asset Management Company. The fund house has proposed to seek KYC compatibility from those investors who have invested more than Rs 6 lakh into various schemes during 2006.

In a bid to comply with these norms put forward by the Securities and Exchange Board of India (Sebi), under Prevention of Money Laundering Act (PMLA), the fund houses or the trustees are permitted to decide their own investment threshold for identifying KYC investors.

"All existing investors, as on December 31, 2006 of all schemes whose aggregate investments with ABN AMRO mutual fund, is above the prescribed limit of Rs 6 lakh for individuals and Rs 18 lakh for in case of non-individuals and above during the calender year 2006, are required to provide KYC confirmation and PAN before June 30, 2007," a notice-cum-addendum published by the AMC said.

At present, the investors willing to invest more than Rs 50,000 in a single fund scheme are required to submit their PAN as well as comply with the KYC documentation.

"This is our internal decision to come out with investor threshold even for past investment, as to know the details of the investors and source of investment. There has been no specific instructions from the industry-body Association of Mutual funds in India in this regard. But, the PMLA permits us to set up threshold and seek more information," Nikhil Johri, managing director ANB AMRO AMC said. Earlier, after rounds of investor dissatisfaction, the Government had replaced the Mutual Fund Investment Number (MIN) with PAN.

However, the investors putting more than Rs 50,000 have to disclose information like address, income bracket and identity, which was mandatory under MIN.

Industry sources see ABN Amro's decision as begining of expansion of KYC requirements. Compulsory PAN indentity for any MF investment has been on cards since long time and when MIN was introduced it was seen as first step towards it.