Know Your Customer, or KYC in short is the process through which a financial market intermediary collects information about its clients to ensure that the money that he/she is investing is clean in all aspects of the law. Know Your Customer ( KYC ) are the Basic Requirements for Investing in Mutual funds for any Investor to Review the Right Source of Money.

The main purpose of the KYC process is to ensure that the money invested is not to aid terrorism, has not been laundered, is not black money, or has its origin in some illegal activity. Some of the documents required to fulfill the KYC requirement are proof of identity, photo, proof of address, bank account details, income tax PAN, etc.

Each regulator in the financial market SEBI, RBI, IRDA, and other- has its own set of Know Your Customer (KYC) requirements. At times, this multiple KYC requirement, Creates inconveniences tp the investors. Thankfully, the finance minister himself has recently directed all the regulators under his ministry to look at a uniform KYC norm. Sebi was the first to move towards a uniform KYC for all is regulated entities.

Central Know Your Customers – CKYC

CKYC is the new type of KYC guidelines introduced to the MF Investors. CKYC refers to Central KYC (Know Your Customer), an initiative of the Government of India. The aim of this initiative is to have a structure in place which allows investors to complete their KYC only once before interacting with various entities across the financial sector.

CKYC will be managed by CERSAI (Central Registry of Securitization Asset Reconstruction and Security Interest of India), which is authorized by the Government of India to function as the Central KYC Registry (CKYCR).

CKYC is a 14 digit number linked with the ID proof where Customer’ data is safely stored in an electronic format. The documents submitted are verified with the issuer & all the concerned institutions are notified when there are changes in KYC details.

The existing mutual fund investors are not required to undergo the process of CKYC. However, this might change in the future. If an existing mutual fund investor decides to invest with a new mutual fund house, then he/she must mandatorily undergo the CKYC process.

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