New Delhi, June 16, 2017
The government has made quoting of biometric identity number Aadhaar mandatory for opening of bank accounts as well as for any financial transaction of Rs 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 the Aadhaar number with Permanent Account Number to avoid individuals using multiple PANs to evade taxes.
The notification issued amending the Prevention of Money Laundering (Maintenance of Records) Rules, 2005, mandated quoting of Aadhaar along with PAN or Form 60 by individuals, companies and partnership firms for all financial transactions of Rs 50,000 or above.
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 Rs 50,000, can be opened only at bank branches which have the core banking solution.
It can also be opened at a branch where it is possible to manually monitor and ensure that foreign remittances are not credited to such accounts and stipulated limits on monthly and annual aggregate of transactions and balance are not breached, the amended PMLA rules said.
Such small accounts 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 along with PAN or Form 60 for all financial transactions of Rs 50,000 or above with effect from June 1.
Post June 1 if a person does not have an Aadhaar number at the time of opening an account, then he 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 six 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, according to the PMLA Rules it is mandatory to provide PAN numbers or Form 60 to banks while opening accounts or for high-value transactions.
For companies opening bank accounts, the Aadhaar number of managers, or employees holding an attorney to transact on the company’s behalf will have to be provided.
Commenting on the development, Nangia & Co Managing Partner Rakesh Nangia said: “With the amendment, obtaining Aadhaar and PAN have gained paramount importance, since the banks are now required to report Aadhaar and PAN in respect of each of its clients at the time of account opening and in case of existing accounts at the time of making transactions worth Rs 50,000 or more".
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 such as banks, financial institutions and intermediaries to verify identity of clients, maintain records and furnish information to the Financial Intelligence Unit of India (FIU-IND).
According to 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 transactions of an amount equal to or exceeding Rs 50,000, and in any international money transfer operation.
[The Hindu Business Line]