SEBI's Circular on KYC / PAN

How to get KYC Compliant verification Letter? – Here’s the Way

Check Your KYC/PAN compliant status online.

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The SEBI circular:

The SEBI (Securities & Exchange Board of India) who is the apex regulatory body for the capital markets, had issued a circular on 27th April 2007 and 25th June 2007 which specified the following guidelines / norms

• Effective from 2 July 2007, it is now mandatory to submit Copy of PAN (attested) or Copy of Acknowledged Form 49A (PAN Application Form) for anyone who is participating in securities market. The PAN will now be recognized as the “sole identification for all transactions in securities market”, which includes mutual funds.
• This will apply to all investors, irrespective of amount of investment, including NRIs, Joint Holders and Guardians (in case of minors). Further, it would be applicable for any type of fresh investment / additional investments (existing investors) in all schemes, including NFOs, through lump sum investments or SIP or MicroSIP.
• Further, for investments above Rs.50,000, in absence of PAN, the acknowledgement of Form 49A (PAN Application form) is to be submitted with Form 60

KYC Norms:

• The KYC or “Know Your Customer” norms is to be followed by all security market intermediaries, including mutual funds, under PMLA “Prevention of Money Laundering Act” as required by FIU. It is expected that the KYC verification will become mandatory for all securities participants / investors by September 2007.
• The KYC simply means that your identification is properly verified and established. The KYC verification is a very simple process and requires submission of minimal documents (PAN compulsory) and is currently done through CDSL Ventures Ltd.

The FIU or ‘Financial Intelligence Unit’ is a department under the Ministry of Finance, India.

How to get KYC Compliant verification Letter – Here’s the Way?

Check Your KYC/Pan compliant Status online.

Why is this development?

The Finance Minister, in his announcement in the Budget for year 2007-08, had proposed to make PAN the sole identification number for all participants in the securities market to distinguish a particular kind of account. In light of this and in order to strengthen the Know Your Client (KYC) norms and identify every investor in the securities market with their respective PAN, it has been decided that PAN would be the sole identification number for all participants transacting in the securities market, irrespective of the amount of transaction. This is an important & welcome step towards protecting the interests of all the participants in securities and for promoting the development of, and to properly regulate the securities market.

The Impact:

• The Securities Markets covers all investors, in all securities markets, which includes stocks, derivatives, mutual funds, debt products, commodities, etc. Thus, the guidelines are also applicable to all mutual fund investors.
• No investments in mutual funds would be possible without Copy of PAN / Form 49A Acknowledgement. Failure to provide the same with Applications would lead to rejection of Application.
• In case of existing investors, the folios where the same is missing would be blocked or freezed for additional investments till the submission of the above documents and its verification.
• For investors not having a PAN, a Copy of Acknowledgement of submission of Form 49A will be needed for immediate transactions. Such investors, however, would be required to submit a verified copy of PAN on or before 31st Dec 2007. Failure to provide the PAN would freeze such folios and no future transactions would be possible.

· The presently operational SIPs would however remain unaffected and would continue uninterrupted

· Investors who obtain KYC “Know Your Customer” Certification letter would not be required to complete PAN verification procedure.

The above guidelines, though may sound complicated to some, there really is nothing to fear or avoid. In fact, it can be seen as a very good development for all as now all investments & investor in markets would now be properly identified. Further, though some paper work is needed to be done, it would largely be a one time process. We highly recommended that you completely comply with these guidelines, including the KYC verification, immediately once and for all. Once you have obtained KYC Verification, you would not be required to submit PAN copy repeatedly for making any investments. Further, you would be ready before the actual KYC norms become mandatory, in a few months time.

As your Financial Advisors, we wish to extend to you our full co-operation and support in managing & completing these procedures. Our endeavour is to manage your compliance with convenience. Hence, we would be actively helping you to completing various procedures of PAN application, PAN Attestation and Verification, KYC submission & Verification and also help you manage the submission of same with all the AMCs. All the necessary forms and details are readily available with us.

However, to make these tasks successful, we shall need your active co-operation in completing the procedures and providing the needed details / documents to us. We will be soon contacting you for further details and documents. If you have any query or would like know more, please feel free to contact us.

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