The Department of Revenue made it compulsory for the banks and financial institutions to verify photocopies of identity proofs submitted by the individual with the original ID proof if they are conducting cash transactions above the prescribed limit.
The new regulation is a fresh amendment under the Prevention of Money Laundering Act (PMLA) to curb the use of fake or forged photocopies of ID proofs.
As per the new rule, which is Rule 9 in PMLA, all the reporting entities, including financial institutions, banks and other intermediaries need to authenticate their clients by identifying them and also verifying their valid identification proofs, while conducting account based transactions.
Banks will match the photocopies of ID proofs with the original documents and mention the same on the photocopy.
The new rule mandates submission of Aadhaar and other proofs for cross-border wire transfers exceeding Rs.5 lakh in any foreign currency and also for transactions involving buying or selling of immovable property whose value exceeds more than Rs.50 lakh.
The same applies for any individual opening a new bank account or conducting a financial transaction of Rs.50,000 or above. It is the same for any cash transactions exceeding Rs.10 lakh and for suspicious operations including use of fake currency.
If the current address of the individual is different from the address mentioned on the submitted ID proof, the reporting entities will collect another supporting document containing the current address of the individual such as an electricity bill, telephone bill, postpaid mobile invoice, or water bill of the latest month, stated the notification.
Stock brokers, chit fund companies, cooperative banks, housing finance institutions and non-banking finance companies also fall under the category of reporting entities and should follow the above regulation.
Enacted in 2002, the PMLA is a legal framework to prevent money laundering and generation of black money in India.
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