Aadhaar mandatory for Opening Bank Account
The government has made quoting of biometric identity number Aadhaar mandatory for opening of bank accounts as well as for any financial transaction of R 50,000 and above. Existing bank account holders have been asked to furnish the Aadhaar number issued by the Unique Identification Authority of India (UIDAI) by December 31, 2017, failing which the account will cease to be operational, according to a revenue department notification .The government in Budget 2017 has already mandated seeding of Aadhaar number with Permanent Account Number or PAN to avoid individuals using multiple PANs to evade taxes.
The notification issued ( refer below), amending the Prevention of Money-laundering (Maintenance of Records) Rules, 2005, mandated quoting of Aadhaar along with PAN or Form 60 by individuals, companies (of Directors) and partnership firms (Partners) for all financial transactions of R 50,000 or above.
The Notification also said that any reporting entity (Bankts etc), at the time of receipt of the Aadhaar number shall also carry out authentication using either e-KYC authentication facility or Yes/No authentication facility provided by Unique Identification Authority of India.
Tightening the rules for small accounts, which can be opened without having officially valid KYC documents, the amendment said such accounts – which can have maximum deposit of R 50,000, can be opened only at bank branches which have core banking solution.
It can also be opened at a branch where it is possible to manually monitor and ensure that foreign remittance are not credited to such account and stipulated limits on monthly and annual aggregate of transactions and balance are not breached, the amended PMLA rules said.
Such small account shall remain operational initially for a period of 12 months and thereafter for a similar period if the account holder provides evidence that he or she has applied for officially valid identification documents. “The small account shall be monitored and when there is a suspicion of money laundering or financing of terrorism or other high risk scenarios, the identity of claim shall be established through the production of official valid documents,” it said.
The amendment makes it mandatory for individuals, companies and partnership firms to quote Aadhaar (of Directors / Partners/ Trustees) along with PAN or Form 60 for all financial transactions of R 50,000 or above with effect from June 1.
After June 1, if a person does not have an Aadhaar number at the time of opening of account, then he or she has to furnish proof of application of enrolment for Aadhaar and submit the Aadhaar number to the bank within six months of opening of the bank account.
“In case the client, eligible to be enrolled for Aadhaar and obtain a PAN… does not submit the Aadhaar number or the PAN at the time of commencement of an account based relationship with a reporting entity, the client shall submit the same within a period of 6 months from the date of the commencement of the account based relationship. “Provided that the clients… already having an account based relationship with reporting entities prior to date of this notification, the client shall submit the Aadhaar number and PAN by December 31, 2017,” the notification said.
So far, as per the PMLA Rules it is mandatory to provide PAN number or Form 60 to banks while opening of accounts or for high value transactions. For companies opening bank accounts, Aadhaar number of managers, or employees holding an attorney to transact on the company’s behalf will have to be provided.
The Prevention of Money Laundering Act (PMLA) forms the core of the legal framework put in place by India to combat money laundering and generation of black money. The PMLA and rules impose obligation on reporting entities like banks, financial institutions and intermediaries to verify identity of clients, maintain records and furnish information to Financial Intelligence Unit of India (FIU-IND).
As per Rule 9, every reporting entity shall at the time of commencement of an account-based relationship, identify its clients, verify their identity and obtain information on the purpose and intended nature of the business relationship.
In all other cases, identity should be verified while carrying out transaction of an amount equal to or exceeding R 50,000, and in any international money transfer operation.
In case the identity information relating to the Aadhaar number or Permanent Account Number submitted by the client referre does not have current address of the client, the client shall submit an officially valid document to the reporting entity.
Official Valid documents defined in the said act read .Officially valid document as per Prevention of Money-Laundering (Maintenance of Records) Rules 2005
MINISTRY OF FINANCE
(Department of Revenue)
NOTIFICATION
New Delhi, the 1st June, 2017
[Notification No.2/F .No. P.12011/11/2016-ES Cell-DOR]
G.S.R. 538(E).—In exercise of the powers conferred by sub-section (1) read with clause (h), clause (i), clause (j) and clause (k) of sub-section (2) of section 73 of the Prevention of Money-laundering Act, 2002 (15 of 2003), the Central Government in consultation with the Reserve Bank of India hereby makes the following further amendments to the Prevention of Money-laundering (Maintenance of Records) Rules, 2005, namely:—
1. (1) These rules may be called the Prevention of Money-laundering (Maintenance of Records) Second Amendment Rules, 2017.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. In the Prevention of Money-laundering (Maintenance of Records) Rules, 2005, —