Transactions through some mutual fund distributors and compliance with the SEBI circular on AML
Summary
The circular reiterates that Mutual Funds and AMCs are responsible for maintaining all investor documentation, including KYC and PoA, regardless of distributor involvement. It mandates immediate steps to obtain missing documents and prohibits commission payments to non-compliant distributors until full compliance is achieved. Trustees must confirm these corrective actions to SEBI and exercise heightened care in authorizing transactions for accounts with incomplete documentation.
Text
it is prescribed that it is the responsibility of the intermediaries to ensure customer due diligence by obtaining sufficient information to identify persons, have a policy in place for acceptance of clients and client identification procedure, monitoring of transactions etc.
maintaining all the documentation pertaining to the unitholders/investor is the responsibility of the AMC.
No further payment of any commissions, fees and / or payments in any other mode should be made to such distributors till full compliance/ completion of the steps enumerated herein.
Take immediate steps to obtain all investor/ unit holders documents in terms of the AML/ CFT, including KYC documents / PoA as applicable
Take immediate steps to obtain all supporting documents in respect of the past transactions.
On a one time basis, send statement of holdings and all transactions since inception of that folio in duplicate to the investor and seek confirmation from the unit holders on the duplicate copy.
Set up a separate customer services mechanism to handle/ address queries and grievance of the above mentioned unitholders.
Pending completion of documentation, exercise great care and be satisfied of investor bonafides before authorizing any transaction, including redemption, on such accounts / folios.
The trustees shall forthwith confirm to SEBI that the steps have been taken to address the above and also send a status to SEBI as and when process is completed to satisfaction.
All mutual funds shall comply with the above requirements in letter and spirit.
These guidelines are issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 read with the provisions of Regulation 77 of SEBI (Mutual Funds) Regulations, 1996.
Source: SecMarx — Transactions through some mutual fund distributors and compliance with the SEBI circular on AML. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.