KYC and Unitholder Servicing
Domain 3: KYC and Unitholder Servicing
This domain tests investor identification and ongoing folio service: KYC through KRAs, CKYC, PAN, FATCA, risk categorisation, IPV, re-KYC, and servicing events such as nomination, transmission, lien/pledge and bank-mandate changes.
Core rules and concepts
- PAN is the primary identifier for mutual fund investments; KYC records are maintained by SEBI-registered KYC Registration Agencies (KRAs). CKYC number can be used where the record is validated.
- KYC is risk-based: low, medium and high risk investors have different re-KYC cycles. PEP screening, beneficial ownership identification for non-individuals, and IPV are part of onboarding.
- Nomination is a folio service, not a substitute for a will. A nominee receives units as nominee; the RTA may require KYC and bank details before transmission. Without a valid nomination or opt-out, the prescribed transmission process applies.
- Lien/pledge, change of address, bank mandate and signature changes require documentary proof and maker-checker controls. Account statements/CAS and grievance logging are part of servicing.
Worked example
A sole unitholder dies. The folio has a nominee with completed KYC. The RTA verifies the death certificate, nominee KYC and bank mandate, then transmits units to the nominee's folio. If there is no nomination, the RTA follows legal-heir documentation and may require indemnity/succession evidence.
Traps
Do not accept incomplete KYC or expired re-KYC; do not skip UBO checks for companies/trusts; do not treat a nominee as the absolute owner; do not change bank details without verification.