In order to curb financial frauds played on the investors by Mutual Fund distributors/ their employees, AMFI has initiated penal actions against such distributors including suspension of their ARN, advising all the AMCs to suspend payment of commission, trail commission, incentives, etc. As one of the measures to control this situation, Securities and Exchange Board of India (SEBI) has advised AMFI to tighten the procedure for Distributor Registration. On reviewing the current procedure for registration of distributors, AMFI has decided to introduce a more stringent Know Your Distributor (KYD) process involving obtaining relevant documents and validation of such documents, personal verification and bio-metrics.
AMFI has decided to introduce Know Your Distributor (KYD) for Mutual Fund Distributors with effect from September 1, 2010, which would be similar to that of Know Your Client (KYC) for investors, requiring the distributors to submit mandatorily identity proof, address proof, PAN and bank account details with proof. It is also decided to introduce bio-metrics as a part of KYD process.
The prescribed form for KYD and updation of information such as change of address, contact details, bank account, etc. are available in the 'Distributor Related Forms'section as well as on AMFI Website.
KYD norms will be applicable for fresh ARN registration and ARN renewal effective from September 1, 2010. The existing ARN holders would also be required to comply with KYD norms within 6 months i.e. by end of February 2011, failing which AMCs shall suspend payment of commission till the distributors comply with the requirements.
AMFI has decided to use the services of CAMS for the purpose of KYD including bio-metrics as there would be better control on movement of documents and data. CAMS will be initially providing KYD facilities at 60 Point of Services (POS) which is expandable to more centers, if required. CAMS has also agreed to provide this facility on temporary basis at places other than these POS if requested by AMC and if the number of distributors are not less than 50. The details of POS will be uploaded on AMFI Website as well as on the website of CAMS shortly.