The Ministry of Finance vide notification dated 20th August, 2019 has made some crucial amendments under the Prevention of Money Laundering Act, 2002 (PMLA) in Prevention of Money-laundering (Maintenance of Records) Rules, 2005, to allow the use of digital know your customer (KYC) verification by reporting entities including banks, telcos and regulated entities for onboarding customers.
The amendment brings in the different modes through which full customer details can be captured, Aadhaar e-KYC, electronic documents which are digitally signed and digital KYC.
The following are the key amendment made under the rule:
A. The concept of “equivalent e-document” has been introduced which means an electronic equivalent of a document, issued by the issuing authority of such document with its valid digital signature including documents issued to the digital locker account of the client as per rule 9 of the Information Technology (Preservation and Retention of Information by Intermediaries Providing Digital Locker Facilities) Rules, 2016. Such document shall be recognized as a KYC document.
Further, at several places where Permanent Account Number (PAN) was required to be submitted mandatorily, has now been replaced with the option to either submit PAN or equivalent e-document.
B. With the amendments in Rule 9, an individual will now have the following three option for submission of Aadhaar details:
- the Aadhaar number where,
- he is desirous of receiving any benefit or subsidy under any scheme notified under section 7 of the Aadhaar (Targeted Delivery of Financial and Other subsidies, Benefits and Services) Act, 2016 or
- he decides to submit his Aadhaar number voluntarily.
- the proof of possession of Aadhaar number where offline verification can be carried out; or
- the proof of possession of Aadhaar number where offline verification cannot be carried out or any officially valid document or the equivalent e-document thereof containing the details of his identity and address.
Along with any of the aforesaid options, following shall also be submitted:
- the Permanent Account Number or the equivalent e-document thereof or Form No. 60 as defined in Income-tax Rules, 1962; and
- such other documents including in respect of the nature of business and financial status of the client, or the equivalent e-documents thereof as may be required by the reporting entity
Through this amendment, Annexure 1 which describes the Digital KYC Process has been instered after rule 11.
Click here to read the Notification
