Govt Allows Aadhaar Authentication for Reporting Entities under Money-laundering Act

Introduction: The Ministry of Finance, in a recent notification dated January 16, 2024, has granted permission to certain reporting entities to utilize Aadhaar authentication for compliance with privacy standards under the Prevention of Money-laundering Act, 2002. This move aims to enhance security and streamline processes in financial transactions.

Detailed Analysis: The notification, S.O. 180(E), invokes the power conferred by the proviso to sub-section (1) of section 11A of the Money-laundering Act. It specifically identifies reporting entities listed in the provided table. Noteworthy entities include Kisetsu Saison Finance (India) Private Limited, Muthoot Capital Services Limited, Whizdm Finance Private Limited, Samavesh Finserve Private Limited, Quadrillion Finance Private Limited, and Aadhar Housing Finance Limited.

The decision to allow Aadhaar authentication aligns with the standards set by the Aadhaar (Targeted Delivery of Financial and Other Subsides, Benefits and Services) Act, 2016. The Central Government, in consultation with the Unique Identification Authority of India and the Reserve Bank of India, deems it necessary and expedient to permit these reporting entities to perform Aadhaar authentication for the purposes outlined in section 11A of the Money-laundering Act.

This strategic alignment of acts ensures a robust framework for reporting entities to adhere to privacy and security standards while carrying out financial transactions. The consultation with regulatory bodies like the Unique Identification Authority of India and the Reserve Bank of India adds credibility to the decision, ensuring that it is well-informed and in the best interest of the financial ecosystem.

Conclusion: In conclusion, the Ministry of Finance’s decision to allow reporting entities to utilize Aadhaar authentication under the Money-laundering Act is a progressive step towards enhancing the security and efficiency of financial transactions. The alignment with Aadhaar Act standards, coupled with consultation with relevant authorities, signifies a balanced approach to address privacy concerns while maintaining the integrity of the financial system. This move is expected to have a positive impact on the reporting entities mentioned, streamlining their operations and contributing to a more secure financial landscape.

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MINISTRY OF FINANCE

(Department of Revenue)

NOTIFICATION

New Delhi, the 16th January, 2024

S.O. 180(E).—In exercise of the power conferred by proviso to sub-section (1) of section 11A of the Prevention of Money-laundering Act, 2002 (15 of 2003) (hereinafter referred to as the Money-laundering Act), the Central Government being satisfied that the reporting entities mentioned in the TABLE below shall comply with the standards of privacy and security under the Aadhaar (Targeted Delivery of Financial and Other Subsides, Benefits and Services) Act, 2016 (18 of 2016) (hereinafter referred to as the Aadhaar Act), and it is necessary and expedient to do so, after consultation with the Unique Identification Authority of India established under sub-section (1) of section 11 of the Aadhaar Act and the appropriate regulator, namely, the Reserve Bank of India, hereby permits the said reporting entities to perform authentication under the Aadhaar Act for the purposes of section 11A of the Money- laundering Act, namely:-

TABLE 

[F. No. P-12011/11/2021-ES Cell-DOR-Part(1)]

MANOJ KUMAR SINGH, Director (Headquarter)