Aadhaar mandatory for opening bank accounts, transactions over ₹50,000

Existing bank account holders have been asked to furnish their Aadhaar number failing which the account will cease to be operational, says a Revenue Department notification.

The government has made quoting of Aadhaar mandatory for opening of bank accounts as well as for any financial transaction of ₹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 an account will cease to be operational, according to a Revenue Department notification.

The government, in Budget 2017, had mandated seeding of Aadhaar number with Permanent Account Number (PAN) to avoid individuals using multiple PANs to evade taxes.

The notification issued by amending the Prevention of Money-laundering (Maintenance of Records) Rules, 2005 mandates the quoting of Aadhaar, along with PAN or Form 60, by individuals, companies and partnership firms for all financial transactions of ₹50,000 or above with effect from June 1.

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Tightening the rules for small accounts, which can be opened without having officially valid KYC documents, the amendment said such accounts - which can have a maximum deposit of ₹50,000, can be opened only at bank branches that 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 accounts shall remain operational initially for 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.

Post June 1, if a person does not have an Aadhaar number at the time of opening of 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 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 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 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 ₹50,000, and in any international money transfer operation.