Bank statement, passbook no longer valid KYC documents for investing in mutual funds

Individual mutual fund investors cannot use bank statements and passbooks as valid proof of identification or proof of address now for completing the Know Your Customer (KYC) process. KYC Registration Agencies (KRAs) have clarified that they will not accept bank statements and passbook copies of individual investors, including NRIs, from January 2023.

However, KRAs said they continue to accept bank statements or passbook copies with entries of at least two months as valid KYC proof for non-individual investors and Hindu Undivided Family (HUF).

KRAs have also stopped accepting copies of Aadhaar from November 2022. They are asking investors to submit eAadhaar or Aadhaar XML or virtual ID (VID).

Investors can continue to use passports, voter IDs, driving licences, NREGA job cards, National Population Register letters and proof of possession of Aadhar for completion of their KYC along with other permissible documents.

Any mutual fund house or company that provides financial services needs to do a background check on its customers. This is mainly done to prevent money laundering, fraud and criminal activities.

KYC helps in doing this.

A standard Account Opening form (AOF) is generally divided into two parts:

Part I contains the basic and uniform KYC details of the investor as prescribed by the Central KYC registry (Uniform KYC) to be used by all registered financial intermediaries and

Part II additional KYC information may be sought separately by the financial intermediary such as a mutual fund, stockbroker, or depository participant opening the investor’s account (Additional KYC), according to the Association of Mutual Funds of India (AMFI).

Yes, it is compulsory.

The process of mutual fund KYC check is required under the Prevention of Money Laundering Act (2002). Reserve Bank of India first furnished KYC guidelines in the year 2002. This has to be read with the master circular issued by the Securities and Exchange Board of India (Sebi) on Anti Money Laundering Standards, which re-emphasises the need for the same.

Investors who want to do it online can visit the fund’s or the KRA’s website and fill in all the details in the KYC form by creating their accounts. Self-attested copies of required documents can be uploaded with the form.