TaxTMI 
TaxTMI 
Know Your Client requirements for Foreign Portfolio Investors (FPIs)
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.... 11. Alternative Investment Funds (AIFs) Sir/ Madam, Subject: Know Your Client requirements for Foreign Portfolio Investors (FPIs) SEBI Board in its meeting held on September 18, 2018, has after considering the interim recommendations of SEBI Working Group under the chairmanship of Shri H R Khan (hereinafter referred as HR Khan group) in relation to the circular No CIR/IMD/FPIC/CIR/P/2018/64 dated April 10, 2018 on Know Your Client (KYC) requirements for Foreign Portfolio Investors (FPIs) and comments received from public decided that Beneficial ownership criteria in Prevention of Money-laundering (Maintenance of Records) Rules, 2005 (hereinafter referred as PMLA Rules) should be made applicable for purpose of KYC and not for de....
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....ns" as referred in SEBI Master circular No. SEBI/ HO/ MIRSD/ DOS3/ CIR/ P/ 2018/ 104 dated July 04, 2018 the intermediaries may apply lower materiality threshold of 10% for identification of BO and also ensure KYC documentation as applicable for category III FPIs. iii. The materiality threshold to identify the beneficial owner should be first applied at the level of FPI and next look through basis shall be applied to identify the beneficial owner of the intermediate shareholder/ owner entity. Beneficial owner and intermediate shareholder/ owner entity with holdings equal & above the materiality thresholds in the FPI need to be identified through the look through basis. For intermediate material shareholder/ owner entity/ies, name and per....
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....w (including change in BOs / their holdings) should be done based on risk categorization of FPIs. In case of Category III and Category II FPIs from high risk jurisdictions KYC review should be done on yearly basis. In case of all other clients, the KYC review should be conducted at the time of continuance of FPI registration. In the event of non-submission of KYC documents, if any, no further purchase transactions shall be permitted to such clients. 3. KYC documentation for Category III FPI SEBI has prescribed "Financial Data" as mandatory for Category III FPIs only. In this regard, it is clarified that audited Annual financial statement or a certificate from auditor certifying net worth may be obtained from Category III FPIs. In case....
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.... be deactivated only upon receipt of instruction from the FPI to KRA. 6. Period for maintenance of records The Custodian should maintain the KYC records in original for a minimum period of five years from the date of cessation of the transactions with the said FPI. In case any litigation is pending, these records should be maintained till the completion of the proceedings. 7. Timelines for compliance Category II and III FPIs registered prior to this circular (existing FPIs) should provide the list of BOs (as per Annexure A) and applicable KYC documentation within six months from the date of this circular. If an existing FPI fails to comply with the applicable KYC requirements by the given deadline, the concerned Custodian shall ....
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....atural persons as group, with their name & address BO Group's percentage Shareholding / Capital / Profit ownership in the FPIs Tax Residency Number/ Social Security Number/ Passport Number of BO/ any other Government issued identity document number (example driving license) (Please provide any) This List should be certified by FPI. FPI should also certify that there are no other BOs other than those referred in list. Annex B - Information of intermediate material shareholder/ owner entity Illustration: • FPI ABC, a trust, is held 75% by XYZ Ltd. ....