PMLA: Banks to now match original IDs with photocopies

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 department of revenue in the finance ministry has issued a notification making an amendment to the Prevention of Money-laundering (Maintenance of Records) Rules.

The new rule 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”.

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.

PMLA and its 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.

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 relationship.

Intermediaries like stock brokers, chit fund companies, cooperative banks, housing finance institution and nonbanking finance companies are also classified as reporting entities. Biometric identification number Aadhaar and other official documents are required to be obtained by the reporting entities from anyone opening a bank account and for any financial transaction of ~50,000 and above.