What is Mutual Fund KYC for NRIs?

KYC (Know Your Customer) is a verification process used by financial institutions that helps confirm an individual's identity and source of funds. It ensures that your investments adhere to the regulations of SEBI, RBI, and FATCA/CRS. An NRI KYC helps verify identity, evaluate potential risks, avoid fraud, and comply with legal and regulatory requirements.

It is a mandatory verification process for all NRIs who wish to invest in Indian mutual funds. Upon successful completion of KYC, the details are stored centrally by KRAs, avoiding the need to re-do the process for every new fund you wish to invest in. Keep reading the blog further to know about mutual fund KYC for NRIs. 

What is Mutual Fund KYC and Why NRIs Need to Complete it?

Financial institutions conduct a KYC "Know Your Customer" process to verify and confirm your identity, address, and financial background before giving you the permit to invest. A KYC is mandatory for investing in mutual funds in India, enforced under the Prevention of Money Laundering Act, 2002, and governed by SEBI (Securities and Exchange Board of India) regulations. 

Here is what the KYC process does:

• Avoids financial fraud and money laundering.
• Verifies your identity using government-issued documents.
• Confirm your current address both in India and abroad.
• Creates a centralized record so you don't repeat the process. 

Your details are stored in a central database upon successful completion of KYC with one asset management company (AMC). The information is then maintained by KYC registration agencies (KRAs). It means when you invest with a different fund house, you will not have to redo KYC. 

What are the Documents Required for NRI Mutual Fund KYC?

The table below shows the required documents for NRI mutual KYC, along with the purpose and accepted proofs. 

What is the Online KYC Process for NRIs?

Choosing the online process for KYC is faster and convenient. You can complete the entire process while sitting in the comfort of your home. Here are the steps you need to follow to complete the online KYC process for NRIs:

Step 1: Select a Platform 

You need to choose one from the following three options:

• AMC Website: ICICI Prudential, HDFC Mutual Fund. 
• KRA Website: CAMS, CVL, Karvy.
• Investment Platform: Use a platform that specializes in NRI investments. 

Step 2: Complete the KYC Form

From the platform's website, download the KYC application form and fill it out with accurate information. Ensure to:

• Mark your status as "Non-Resident Indian."
• Submit both your overseas as well as Indian addresses.
• Fill in your NRE or NRO account details (you will need one of these accounts to invest). 

Step 3: Submit the Documents 

Scan and upload all the documents required in PDF or JPG format. Before submitting, ensure that:

• The size of each file is under 2MB
• Documents are clear and readable.
• All pages are included (for multi-page documents like passports). 

Step 4: Complete FATCA/CRS Declaration

To declare your tax residency status, this form is a mandatory requirement as it helps India comply with global tax treaties. You will have to submit the following documents reflecting:

• Place of birth.
• Country of tax residence.
• Tax identification number (TIN) or equivalent. 

To reduce your tax liability, mention the Double Taxation Avoidance Agreement (DTAA) (if you live in a country that has a DTAA signed with India). 

Step 5: In-Person Verification (IPV) via Video Call 

IPV is required to confirm your identity, verifying that you are the person in the documents. The IPV is done by making a video call using Zoom, Skype, or the platform's app. 

During the IPV process:

• A KRA (KYC Registration Agency) representative will call you at the scheduled time.
• You need to show the original documents on camera.
• They will ask you some questions to confirm your details.
• The call will take approximately 5-10 minutes. 

Ensure that you take the call while sitting somewhere with good lighting and a stable internet connection. 

Step 6: Receive KYC Acknowledgment 

Your details will be uploaded to the central database by the KRA upon successful verification. You will get:

• An email confirmation.
• A KYC acknowledgment number.
• Your KYC status (usually "KYC Registered"0. 

**Keep a copy of your KYC acknowledgement number readily avaiable, as you might need it when opening new folios with different AMCs.

What is the Offline KYC Process for NRIs?

Here is the process for offline KYC, if you choose offline KYC or if your chosen AMC requires it:

Step 1: Download Forms 

Visit the CDSL Ventures (CVL) website or your AMC's website and download:

• KYC application form
• IPV form (if applicable)
• FATCA/CRS declaration form. 

Step 2: Fill and Attest Documents 

Fill out the form with accurate details and get every document attested by an authorized entity.

Step 3: Submit to a KRA Point of Service (PoS)

You get two options for submission:

• In India: Submit the documents physically at any CVL PoS office or your AMCs branch if you are visiting India.
• From Abroad: Courier the documents to:
  • Your AMCs' registered office
  • The KRA's office address
  • Your mutual fund distributor or financial advisor in India. 

Ensure to use a trackable courier service (DHL, FedEx, Aramex). 

Step 4: Verification 

The AMC or distributor will arrange the IPV (In-Person Verification) if you submit the documents via courier. 

Some AMCs might permit video-based IPV even for offline submission. Others may need you to visit the Indian Embassy in your country. 

Step 5: Await Your Confirmation 

The processing time might take 7-10 business days, after which you will receive:

• KYC acknowledgement via email
• Physical acknowledgement receipt (if submitted in India)

How Can NRIs Track Their KYC Status?

An NRI can track the status of their KYC on any KRA website by following the steps below:

Option 1: CVL KRA 

• Visit CYL KRA KYC Inquiry
• Click on "KYC Inquiry"
• Fill in your PAN number and captcha
• See your KYC status. 

Option 2: CAMS KRA 

• Navigate to CAMS KRA
• Fill in your PAN details
• Check Status

Option 3: Karvy KRA 

• Go to Karvy IRA
• Enter PAN and verify with OTP
• View status

The screen will display the status as either "KYC Validated", "KYC Registered", or "On Hold". 

What Does FATCA and CRS Declaration Mean for NRIs?

FATCA (Foreign Account Tax Compliance Act) and CRS (Common Reporting Standard) are international frameworks that help in avoiding tax evasion. 

Failing to complete the FATCA and CRS declaration means your KYC process is incomplete, regardless of whether you have submitted other documents. This ensures tax transparency between India and your country of residence.

As an NRI, when you invest in Indian mutual funds, these forms notify the Indian authorities about your tax residency. Additionally, it permits regulated sharing of information with your country of residence. 

To put it plainly, FATCA applies mainly to U.S. citizens and residents, while CRS covers NRIs from all other nations. You must not skip these, as it can lead to rejection of your KYC or may impose investment restrictions in the future. 

Final Thoughts

Completing the mutual fund KYC process is an essential step for NRIs looking to invest in Indian markets. It is a crucial part of adhering to FEMA and AML (Anti-Money Laundering) regulations. It not only ensures compliance with regulatory requirements but also facilitates easier investment practices via a centralized verification system. Being aware of FATCA and CRS declarations is crucial in maintaining tax compliance. 

Additionally, if you need expert-backed assistance with an NRI mutual fund KYC process or anything related to this matter, reach out to an expert at Savetaxs. Our team of experts will provide you with real-time guidance and satisfactory results. Connect with us today as we are working 24/7 across all time zones to serve our precious clients.