Original IDs are Mandatory for Transactions Above Rs 50 Thousand

Individuals dealing in cash above the prescribed limit will now have to submit original identification documents to banks and financial institutions.

The move, aimed at sweeping out use of fabricated and forged identification documents from monetary transactions , follows issuance of a gazette notification by the Department of Revenue in the Finance Ministry, making an amendment to the Prevention of Money-laundering (Maintenance of Records) Rules.

It has now made it mandatory for such financial institutions to check the original identification documents of individuals dealing with them.

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

The Gazette notification said in case the officially valid document furnished does not contain 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.

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 employer can be considered for the same purpose, the notification said.

The Prevention of Money Laundering Act (PMLA) forms the core of the legal framework put in place by government to combat money laundering and generation of black money.

The 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.
Intermediaries like stock broker, chit fund company, cooperative bank, housing finance institution and non-banking 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 as well as for any financial transaction of Rs 50,000 and above.