Aadhar made Mandatory for opening bank account and for transaction above 50K

Violators of Aadhaar authentication norms to be punished: Ajay Bhushan Pandey.

New Delhi, June 16: The Central Government has made Aadhaar mandatory for opening a bank account. It has also made it mandatory for financial transactions of Rs 50,000 and above. With this, all existing account holders in various banks across the country have been asked to submit Aadhaar to their respective bank branches by December 31, 2017. Banks have been instructed to invalidate those accounts which fail to submit Aadhaar card by the said date.

It has come a week after the Supreme Court upheld the government’s decision to link Aadhaar to one’s PAN card but refused to make it compulsory for those who don’t have an Aadhaar card or who have not yet applied for one, till a Constitutional Bench decides on the privacy question pending before it.

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 a maximum deposit of Rs. 50,000, can be opened only at bank branches which have the core banking solution.

The tax provision by the Centre said that those who file income tax returns without an Aadhaar-linked PAN card would have their PAN declared invalid.

Government’s latest directive comes in the backdrop of a raging debate over Aadhaar and its ‘mandatory’ usages. Earlier, the government through another resolution had made Aadhaar compulsory for filing income tax returns.

Besides, linking of Aadhaar with Permanent Account Number or PAN cards was also made a must exercise. However, India’s apex court Supreme Court in a recent ruling has given some relief to those who don’t have Aadhaar in their name.

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 an obligation on reporting entities such as banks, financial institutions and intermediaries to verify the 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.