AMFI DSC, ARN suspension and penalties for MFDs

Annual Declaration of Self-Certification (DSC)

• Filed every financial year on the AMFI portal (Update Profile, then Self Declaration, with mobile and email OTP).
• Due 30 June. If you miss it, AMCs withhold all accrued commission from 1 July.
• Grace until 30 September. Miss that and the withheld commission is forfeited.
• Sub-brokers under national distributors may send a scanned copy to their main broker.

Suspended ARN

• All commission payable and accrued on a suspended ARN is forfeited, including trail on business done before the suspension. Nothing is paid for the suspension period.
• All purchases, switches, SIPs and STPs under a suspended ARN are processed in the Direct Plan, permanently.
• Orders through exchange platforms (BSE StAR MF, NSE MFSS and NMF II) using a suspended ARN are rejected.
• After the suspension is revoked, an investor can ask to move back to the Regular Plan under that ARN, and the AMC must honour it.
• On permanent suspension, the investor either switches to Direct (capital gains tax applies) or stays in Regular with a new MFD of their choice.
• Physical Regular Plan applications with an invalid ARN (suspended, expired, not in the AMFI database and similar) are processed in the Direct Plan of the same scheme; some non-physical cases are rejected instead.

Cancellation

Who enforces

• AMCs monitor distributors. If the Code is breached, the AMC reports to AMFI and SEBI and stops dealing with that MFD.
• AMFI can suspend or cancel an ARN for Code violations. See the AMFI Code of Conduct.

AMC due diligence: who gets checked

Applies if an MFD meets any one of these, at empanelment or during review:

1. AUM raised over ₹100 crore across the industry in the non-institutional category (including HNIs).
2. Commission over ₹1 crore a year.
3. Commission over ₹50 lakh from a single mutual fund.
4. Presence in more than 20 locations (offices, not client spread).

It is a "fit and proper" check, now run centrally by AMFI with a Due Diligence Questionnaire and risk ratings. It includes classifying customer relationships as "advisory" or "execution only".

Sales contests are banned

• Since March 2024, AMFI bars MFDs with sub-brokers or employees from running contests tied to business volume, such as trips for hitting targets.
• AMCs cannot pay anything resembling upfront commission, pick MFDs for training based on sales, or sponsor MFD events that reward sales performance.
• Penalty: temporary disempanelment from new business and new clients, and possible ARN suspension.