Banks to check original ID for transactions above INR 50,000

a. Transactions above INR 50,000

b. Transactions above INR 100,000

c. Transactions above INR 25,000

d. Transactions above INR 40,000

 

The Government has made it mandatory for banks and financial institutions to check the original identification documents of individuals dealing in cash above the prescribed threshold.

Individuals carrying out transactions above Rs 50, 000 will have to furnish their original identity proofs to the banks.

For this, The Department of Revenue in the Finance Ministry has issued a gazette notification making an amendment to the Prevention of Money-laundering (Maintenance of Records) Rules. Under this order, it will be necessary for all financial institutions to match the official identity card and their photocopy.

The new rule now requires the reporting entity to compare "the copy of officially valid (identification) document so produced by the client with the original and recording the same on the copy".
highlights

The Aadhaar number and other official documents are required to be obtained by the reporting entities from anyone opening a bank account as well as for any financial transaction of INR 50,000 and above.

Moreover, furnishing an ID proof is also mandatory for all cash dealing of more than INR 10 lakh or its equivalent in foreign currency, cash transactions were forged or counterfeit currency notes have been used and all suspicious transactions.

PMLA and New Gazette Notification: Know More

• To put an end to money laundering and black money menace, the Prevention of Money Laundering Act, 2002 was implemented.
• The PMLA and its rules impose an obligation on reporting entities like banks, financial institutions and intermediaries to verify the identity of clients, maintain records and furnish information to Financial Intelligence Unit of India (FIU-IND).
• The Gazette notification said in case the officially valid document furnished does not contain the updated address, a utility bill like electricity, telephone, post-paid mobile phone, piped gas or water bill which is not more than two months old can be considered as a proof of address.
• 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 as per Rule 9. Intermediaries like stockbroker, chit fund company, cooperative bank, housing finance institution and non-banking finance companies are also classified as reporting entities.
• All cross-border wire transfers of more than INR 5 lakh in foreign currency and purchase and sale of immovable property valued at INR 50 lakh or more also fall under this category, according to the reporting rules.
• RBI also confirmed that it is mandatory to link bank accounts to Aadhaar. The RBI issued a statement in the wake of some news reports quoting a reply to a Right To Information (RTI) application that Aadhaar number linkage with bank accounts is not mandatory.