The government, last week, had notified amendments to the Prevention of Money-Laundering (Maintenance of Records) rules to allow voluntary use of the biometric identifier for opening of bank accounts, and had also spelt out the detailed procedure for ‘digital KYC’ to be performed in case of verification done via documents like voter ID and driving licence.
The notification now paves the way for use of various verification mechanisms — Aadhaar eKYC where Aadhaar documents are given voluntarily, offline verification and Digital KYC (Know Your Customer) for opening bank accounts.
The same procedure will also be applicable for investment in mutual funds and opening of demat accounts.
“Digital KYC has been successful in telecom sector for issuing mobile connections. For bank accounts too, now if someone has paper Aadhaar, voter ID or driving licence, then the person can go for Digital KYC, like in the telecom sector,” Unique Identification Authority of India (UIDAI) CEO Ajay Bhushan Pandey told PTI.
Digital KYC will involve capturing the live photo of the customer and officially valid documents or proof of possession of Aadhaar where offline verification cannot be carried out, along with latitude and longitude of the location where such live photo is being taken by an authorised officer of the bank. A step-by-step procedure has been laid down for performing Digital KYC.
“The process which has been laid down for Digital KYC makes it convenient, safe, secure and fraud-proof. Earlier, someone could have perhaps misused someone else’s ID documents, without that person’s knowledge for opening bank account. The stringent process that has been outlined will ensure that doing so will not be possible,” Pandey added.
He noted that Digital KYC will ensure a smooth process for those who do not want to share their Aadhaar number for opening bank account.
Parliament recently passed an amendment bill which allows voluntary use of Aadhaar as proof of identity for opening bank accounts and getting mobile phone connections.
The Aadhaar and Other Laws (Amendment) Bill proposed changes in the Aadhaar Act, Indian Telegraph Act and the Prevention of Money Laundering Act (PMLA) to comply with a Supreme Court judgement pronounced on September 26 last year in which it upheld the constitutional validity of unique identification project, with certain restrictions and changes.
The compulsory use of Aadhaar-based KYC for mobile connections and bank accounts was prohibited by the apex court.