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, 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 R 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 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 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.
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 R 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 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.
Aadhaar mandatory for existing, new bank accounts. 10 facts to keep in mind:
- 1.The last date to furnish Aadhaar number issued by the Unique Identification Authority of India (UIDAI) is December 31, 2017, failing which the bank account will become non-functional.
- 2.Aadhaar details are also mandatory for opening of new bank accounts.
- 3.From June 1, 2017, citizens unable to provide Aadhaar number at the time of account opening will have to provide Aadhaar enrolment number. The Aadhaar number will then need to be provided to bank within six months of opening of the bank account.
- 4.The notification issued by revenue department also mandates the quoting of Aadhaar, popularly called "Aadhaar card", for any transaction of Rs. 50,000 or above, reports the Press Trust of India.
- 5.Going forward, small banks' accounts, with a maximum deposit of Rs. 50,000, can be opened only at branches with core banking solution, added the agency.
- 6.Small deposit bank accounts 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, reported PTI.
- 7.The new rule also applies to companies and partnership firms. They need to quote Aadhaar number along with PAN or Form 60 for all financial transactions of Rs. 50,000 or above with effect from June 1.
- 8.The move is aimed at keeping a check on small accounts. Currently, accounts can be opened without having valid KYC or Know Your Customer documents for a maximum deposit of Rs. 50,000, reported the agency.
- 9.Commenting on this development, West Bengal Chief Minister Mamata Banerjee tweeted, "The poorest of the poor, the marginalised people will be the worst sufferers if #Aadhaar is made mandatory unilaterally". "#Aadhaar has serious issues about privacy. Govt must not make it mandatory before 100% coverage is achieved," a second tweet read.
- 10.The move to link all existing bank accounts with Aadhaar number comes days after the Supreme Court of India upheld an I-T Act provision that makes Aadhaar compulsory for allotment of PAN cards and for filing Income Tax returns.
Source - http://www.ndtv.com [16-06-2017]