Identity checks to be mandatory for cash dealings of above Rs. 50,000

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Identity checks to be mandatory for cash dealings of above Rs. 50,000

24 October 2017
Banks and financial institution are now required to check IDs for cash transactions above Rs. 50,000. Here's what you need to know about the changes
 
 

The government has recently made it mandatory to check original identification proof of individuals carrying out cash transaction above the prescribed threshold limit.

This move is an amendment to the Prevention of Money-laundering rules, also called 'Maintenance of records'. The move has been initiated by the Revenue Department, under the administrative control of the Finance Ministry. The Prevention of Money Laundering Act (PMLA), governed by legal bodies of state, was brought up to combat money laundering and rising of black money. 

Related: Government makes linking Aadhaar number mandatory with several investments

What the new rule says
The reporting entity such as banks, financial institutions and intermediaries, will verify the copy of the valid identification document with the original copy. They will also maintain records and furnish information to the Financial Intelligence Unit of India (FIU-IND). 

Who all are classified as reporting entities?
Intermediaries like stockbrokers, chit fund companies, cooperative banks, housing finance institutions and non-banking finance companies are qualified as reporting entities.  

You would need to provide Aadhaar card number (or biometric identification) and other official documents to reporting entities at the time of opening an account, and also while dealing with cash transactions of Rs. 50,000 or above. 

 

Suspicious transactions
This identification will also be verified for cash transactions of more than Rs. 10 lakhs or foreign currency of the same amount. The same will be required for cash transactions involving counterfeit or forged currency notes, and suspicious transactions. 

Related: What do to do if you find yourself with fake cash

Dealing in foreign currency
You will also have to provide your identification details when carrying out wire transfers of more than Rs. 5 lakhs across countries, or purchasing or selling immovable property that is worth Rs. 50 lakhs or more. 

Prevention of Money Laundering: Rule 9
The rule states that when setting up an account-based relationship with a client, every reporting entity will have to verify their client's identity and obtain information for the same. The entity must also acknowledge the intended nature of the business relationship. 

What you need to know about linking your Aadhaar and PAN card?

Additionally, property or municipal tax receipt, pension or family pension payment orders that are given to retirees by a government body or letter of allotment of accommodation given by an employer can be used as address proof for the same. 

 

 
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