What is C-KYC?

When you invested in mutual funds for the first time, you must have come across a term called ‘mutual fund KYC’. If your bank account and Demat account’s KYC is in place, what is the need for this additional KYC? Most first-time investors find this part confusing. KYC verification is mandatory for mutual fund investments, but your need to complete a new CKYC registration depends on your existing KYC status.

Let's understand what CKYC is, why it was introduced, and why it's required when investing in mutual funds.

What Is CKYC?

CKYC stands for Central Know Your Customer. It is a centralised registry that stores your identity and address details in one central place. Financial institutions can access your KYC records, reducing the need to submit the same documents repeatedly.

The registry is managed by CERSAI (Central Registry of Securitisation Asset Reconstruction and Security Interest of India) on behalf of the Government of India. Once you register, you receive a unique 14-digit number called a KYC Identification Number or KIN. This number helps financial institutions retrieve your central KYC records when required.

Why Was CKYC Introduced?

Let’s say you want to invest in three mutual funds, open a savings account and buy a life insurance policy. You would have had to submit your identity proof, photograph and address proof to each institution separately. Five submissions of the same documents. Five rounds of verification. Five sets of paperwork sitting in five different filing systems around the country.

It was tedious for investors, expensive for institutions and since data was fragmented, the risk of identity-related fraud could increase.

CKYC fixed this by bringing everything under one roof. It was introduced through a coordinated push by the Finance Ministry, with SEBI, RBI and IRDAI aligning their respective KYC requirements to support a centralised system for storing and accessing KYC records across the financial sector.

Why Is CKYC Required For Mutual Funds?

KYC verification is mandatory for mutual fund investors under applicable regulatory requirements. CKYC requirements for new individual mutual fund investors took effect in February 2017. If you are investing for the first time, you must complete the applicable KYC verification before investing.

India's Prevention of Money Laundering Act, 2002 (PMLA), requires financial institutions to verify the identity of every customer. CYKC helps financial institutions maintain and access KYC records to support compliance with these requirements. It can help reduce the risk of identity misuse. Also mention that it does not eliminate the possibility of fraud or unauthorised access to investments.

It makes life easier for fund houses and registrars like CAMS and KFintech, who can access relevant KYC records through the applicable systems, rather than manually processing paper documents every time. In short, CKYC is one of the layers of trust that makes the entire mutual fund ecosystem more secure and more efficient.

How To Complete CKYC Registration

Follow the steps below to complete your CKYC registration online.

• Start through your mutual fund app, broker platform or bank
• Fill in your basic details, including name, PAN, date of birth and address.
• Upload the required identity and address proof documents, such as an Aadhaar document or passport, where applicable, along with a recent photograph if required.
• Submit your signature digitally or as a scanned image
• Your details are sent to the CERSAI registry for verification. If registration is successful, a 14-digit KIN is generated.

In case you prefer submitting documents, obtain the applicable CKYC form from the AMFI or CERSAI website, attach your documents and submit it at any SEBI-registered KYC Registration Agency or mutual fund office near you.

Once your KIN is issued, it stays with you. However, you may need to update your KYC records if your personal details change or further verification is required.

FAQs

What is CKYC in mutual funds?

CKYC stands for Central Know Your Customer. It stores your identity and address details in one place to make KYC verification easier.

Is CKYC mandatory for mutual fund investments?

Investors must complete the applicable KYC verification before investing in mutual funds. The process may vary depending on their existing KYC status.

How can you complete CKYC registration?

You can start the process through a mutual fund app, broker, bank, or authorised KYC centre by submitting the required details and documents.

What is a KYC Identification Number (KIN)?

A KIN is a unique 14-digit number issued after CKYC registration which helps financial institutions access your central KYC records when needed.