Alinging with the Government’s goal to stymie black money and illegal transactions in the country, SEBI has recently issued new guidelines for documented disclosures required when investing in mutual funds. Taking into account SEBI’s guidelines, AMFI has mandated all mutual fund houses to seek information under the following categories:

 

• Information/declaration relating to US Foreign Account Tax Compliance Act (FATCA), which is an agreement India has signed to implement;


• Information/declaration under the Common Reporting Standard (CRS) developed by G20 and OCED nations for greater tax co-operation between countries;


• Additional KYC Information, and Ultimate Beneficiary Ownership (UBO) declaration from Non-Individuals.


 

This comes after the Finance minister, Arun Jaitley, addressed the Annual Commonwealth Finance Ministers Meeting at Lima, Peru; where he pressed for the implementation of Common Reporting Standards on Automatic Exchange of Information globally on a reciprocal basis, in order to tackle the international flow of black money. These new KYC disclosure requirements can be seen as a progressive step in the Government’s efforts

The following information is mandated as part of the above requirements:

• Country of Birth/Incorporation;


• Place of Birth/Incorporation;


• Address Type [Residential or Business, Registered Office] for the KYC registered address;


• Occupation; Applicant Income Slab;


• Net Worth details; Information about PEP [Politically Exposed Person & its relatives];


• Information on specific Corporate services [applicable for Non-Individuals];


• Information about Ultimate Beneficiary Owner(s)/Controlling Person(s) [applicable for select category of Non-Individuals].


 

If the tax residency of the investor is other than India, then investors have to provide the following additional information for all countries in which they are resident of for tax purposes:
 

• Country of Tax Residency [also includes the US, where the individual is a citizen/green card holder of the US];


• Tax Identification Number [If not available, its functional equivalent to be provided];


• Identification Type [TIN or Other, to be specified)].



 

To comply with the recent tax-information-sharing laws all financial intermediaries, including mutual fund houses, are mandated to seek this information from November 1, 2015 for its new investors, and from January 1, 2016, for the existing investors.

Online submission of details

The registrar and transfer agent, CAMS, is facilitating the online submission of FATCA/CRS and Supplementary KYC information, which will then be updated with all participating mutual fund houses. Investors can submit the required information online at the CAMS website. Forms are also available with mutual fund houses or the CAMS/registrar, and transfer agent branch counters, or can be downloaded from their websites.

PersonalFN is of the view that additional information sought under FATCA and CRS will help track the ownership details and sources of funds. Having said this, many investors may be uncomfortable with revealing details such as net worth. The related authorities along with the regulators will have to assure the investors about the non-misuse of information. By that same token, investors are expected to hold the moral responsibility and disclose all the necessary details while investing or transacting in mutual funds to avoid any discrepencies that may affect facilitating transactions seamlessly

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