Banks to now match Original IDs with photocopies – New Reporting Rules | Prevention of Money Laundering Act (PMLA)

Money Laundering Act

The Prevention of Money Laundering Act (PMLA) is the core of the legal framework that has been put in place by the Govt of India to combat money laundering and generation of black money.

As per Rule-9 of the PMLA, the reporting entities like banks, financial institutions and intermediaries have an obligation to verify the identity of clients, maintain records and furnish information to Financial Intelligence Unit of India (FIU-IND).

During this process of verification (KYC), the financial institutions have to collect the photocopies (Xerox) of the ID (Identification Document) proofs from their customers/prospective customers. For example : If you are opening a bank account, you need to submit a copy of your Identify proof and address proof like your Aadhaar card.

The Department of Revenue in the Finance Ministry has very recently issued a gazette notification making an amendment to the Prevention of Money-laundering (Maintenance of Records) Rules.

As per this latest notification, 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, to weed out the use of forged or fake copies.

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 by the authorized officer of the reporting entity“.

Prevention of Money Laundering Act original ID proof for Bank cash transactions above Rs 50000 foreign exchange property purchase 50 lakhs pic

(Click on the above image to download the Notification….)

 ID-checks are now mandatory |  Prevention of Money Laundering Act (PMLA)

As per the latest notification, all the intermediaries like ;

  • Banks,
  • Stockbrokers,
  • Chit fund companies,
  • Co-operative banks,
  • Sub-Registrar Offices,
  • Housing Finance institutions &
  • Non-banking Finance Companies (NBFCs) which are classified as reporting entities, need to perform mandatory ID-checks ;

    • At the time of opening a bank account,
    • For any Financial Transaction of Rs 50,000 and above,
    • Any cash dealing of more than Rs 10 lakh or its equivalent in foreign currency,
    • For all cross-border wire transfers of more than Rs 5 lakh in foreign currency,
    • Any purchase and sale of immovable property valued at Rs 50 lakh or more.

All the reporting entities have to now verify the photocopies of ID proofs (like Aadhaar or any other official documents) with their Originals.

In case the officially valid document furnished does not contain the updated address ;

  • Utility bill like electricity, telephone / post-paid mobile phone, piped gas or water bill which is not more than two months old can be submitted and these can be considered as a proof of address.
  • Also, property or municipal tax receipt, pension or family pension payment orders issued to retired employees by Government departments, or letter of allotment of accommodation from an employer can be considered for the same purpose.

However, you need to submit the updated valid document with current address, within a period of three months of submitting any of the above documents.

So, its time to carry your original IDs along with the photocopies, to bank / financial institutions for transactions of over Rs 50,000.

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(Image courtesy of Sira Anamwong at (Reference & Source : PTI & Govt Gazette Notification) (Post published on : 23-October-2017)

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  • Pranav says:

    Can you link the original notification where it says that for transactions above 50,000, Aadhar card is mandatory? I can’t seem to find it in any notification.

    • Dear Pranav .. Aadhaar is not mandatory.. Any document which is officially required / accepted for such transactions is mandatory for cross-verification with the photocopies

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