Prevention of Money-laundering (Maintenance of Records) Third Amendment Rules, 2019.

MINISTRY OF FINANCE
(Department of Revenue)
NOTIFICATION
New Delhi, the 19th August, 2019

G.S.R.582(E).— In exercise of the powers conferred by sub-section (1), read with clauses (i), (j), (jj), (jjj) and (k) of sub-section (2) of section 73 of the Prevention of Money-laundering Act, 2002 (15 of 2003), the Central Government hereby makes the following rules further to amend the Prevention of Money-laundering (Maintenance of Records) Rules, 2005, namely:—

1. (1) These rules may be called the Prevention of Money-laundering (Maintenance of Records) Third Amendment Rules, 2019.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Prevention of Money-laundering (Maintenance of Records) Rules, 2005 (hereinafter referred to as the said rules), in the opening portion, after the words “conferred by”, for the words, figures and letters “sub-section (1), read with clauses (i), (j), (jj), (jjj) and (k) of sub-section (2) of section 73”, the words, figure and letters “section 73 read with section 1 1A and section 12AA” shall be substituted.

3. In the principal rules, in rule 2, in sub-rule (1),-

(i) the clauses (aa), (aaa), (aab), (aae), (aaf), (ca), (cb), (cc), (cd), (faa) and clause (fb) shall be re­numbered as clauses (ac), (aa), (ab), (ca), (i), (cc), (cd), (ce), (cf), (fb) and clause (fc) respectively;

(ii) after clause (bb), the following clauses shall be inserted, namely:

‘(bba) “digitial KYC” means the capturing live photo of the client and officially valid document or the proof of possession of Aadhaar, where offline verification cannot be carried out, along with the latitude and longitude of the location where such live photo is being taken by an authorised officer of the reporting entity as per the provisions contained in the Act;

(bc) “Digital Signature” shall have the same meaning as assigned to it in clause (p) of sub‑section (1) of section (2) of the Information Technology Act, 2000 (21 of 2000);’;

(iii) after clause (ca), the following clause shall be inserted namely;

‘(cb) “equivalent e-document” means an electronic equivalent of a document, issued by the issuing authority of such document with its valid digital signature including documents issued to the digital locker account of the client as per rule 9 of the Information Technology (Preservation and Retention of Information by Intermediaries Providing Digital Locker Facilities) Rules, 2016;’;

(iv) in clause (d), in the first proviso and in the second proviso, after the words “documents shall”, the word “also”, shall be inserted;

(v) after clause (d), the following clause shall be inserted, namely:-

“(da) “offline verification” shall have the same meaning as assigned to it in clause (pa) of section 2 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 (18 of 2016);”;

(vi) in clause (fa), in sub-clause (ii), for the brackets and letters “(aa)”, the brackets and letters “(ac)” shall be inserted;

4. In the principal rules, in rule 9,-

(i) for sub-rule (4), the following sub-rule shall be substituted, namely:-

“(4) Where the client is an individual, he shall for the purpose of sub-rule (1) submit to the reporting entity,—

(a) the Aadhaar number where,

(i) he is desirous of receiving any benefit or subsidy under any scheme notified under section 7 of the Aadhaar (Targeted Delivery of Financial and Other subsidies, Benefits and Services) Act, 2016 (18 of 2016); or

(ii) he decides to submit his Aadhaar number voluntarily to a banking company or any reporting entity notified under first proviso to sub-section (1) of section 11A of the Act; or

(aa) the proof of possession of Aadhaar number where offline verification can be carried out; or

(ab) the proof of possession of Aadhaar number where offline verification cannot be carried out or any officially valid document or the equivalent e-document thereof containing the details of his identity and address; and

(b) the Permanent Account Number or the equivalent e-document thereof or Form No. 60 as defined in Income-tax Rules, 1962; and

(c) such other documents including in respect of the nature of business and financial status of the client, or the equivalent e-documents thereof as may be required by the reporting entity:

(ii) in sub-rule (5),-

(a) after the words, brackets and figure “contained in sub-rule (4)”, the words, “and as an alternative thereto”, shall be inserted;

(b) in clause (iv), for the words, brackets and figures “through the production of officially valid documents, as referred to in sub-rule (4) and Permanent Account Number or Form No.60, as the case may be,”, the words, brackets and figure “as per the provisions of sub-rule (4)” shall be substituted;

(c) for clause (v), the following clause shall be substituted, namely:-

“(v) the foreign remittance shall not be allowed to be credited into the small account unless the identity of the client is fully established as per provision of sub-rule (4):”;

(iii) in sub-rule (6),-

(a) after the words “following documents”, the words “or the equivalent e-documents thereof”, shall be inserted;

(b) in clause (iv), after the word “behalf;”, the word “and”, shall be inserted;

(c) for clause (v), the following clause shall be substituted, namely:-

“(v) such documents as are required for an individual under sub-rule (4) relating to beneficial owner, managers, officers or employees, as the case may be, holding an attorney to transact on the company’s behalf;”;

(iv) in sub-rule (7),-

(a) after the words “following documents”, the words “or the equivalent e-documents thereof”, shall be inserted;

(b) for clause (iv), the following clause shall be substituted, namely:-

“(iv) such documents as are required for an individual under sub-rule (4) relating to beneficial owner, managers, officers or employees, as the case may be, holding an attorney to transact on its behalf;”;

(v) in sub-rule (8),-

(a) after the words “following documents”, the words, “or the equivalent e-documents thereof”, shall be inserted;

(b) for clause (iv), the following clause shall be substituted, namely:-

“(iv) such documents as are required for an individual under sub-rule (4) relating to beneficial owner, managers, officers or employees, as the case may be, holding an attorney to transact on its behalf;”;

(vi) in sub-rule (9),-

(a) after the words “following documents”, the words “or the equivalent e-documents thereof”, shall be inserted;

(b) in clause (iii), after the word “behalf;”, the word, “and”, shall be inserted;

(c) for clause (iv), the following clause shall be substituted, namely:-

“(iv) such documents as are required for an individual under sub-rule (4) relating to beneficial owner, managers, officers or employees, as the case may be, holding an attorney to transact on its behalf;”;

(vii) in sub-rule (14), in clause (ia),-

(a) in sub-clause (A), the word “and” occurring at the end shall be omitted;

(b) in sub-clause (B), after the figures 60” occurring at the end, the word “and” shall be inserted;

(c) after sub-clause (B) and before the long line, the following sub-clause shall be inserted,
namely:-

“(C) exemption, limitations and conditions and alternate and viable means of identification, to provide account based services of clients who are unable to undergo Aadhaar authentication for receiving any benefit or subsidy under any scheme notified under section 7 of the Aadhaar (Targeted Delivery of Financial and Other subsidies, Benefits and Services) Act, 2016 (18 of 2016);”;

(viii) for sub-rule (15), the following sub-rule shall be substituted, namely:-

“(15) Where the client has submitted—

(a) his Aadhaar number under clause (a) of sub-rule (4) to the banking company or a reporting entity notified under first proviso to sub-section (1) of section 1 1A, such banking company or reporting entity shall carry out authentication of the client’s Aadhaar number using e-KYC authentication facility provided by the Unique Identification Authority of India;

(b) proof of possession of Aadhaar under clause (aa) of sub-rule (4) where offline verification can be carried out, the reporting entity shall carry out offline verification;

(c) an equivalent e-document of any officially valid document, the reporting entity shall verify the digital signature as per the provisions of the Information Technology Act, 2000 (21 of 2000) and any rules issues thereunder and take a live photo as specified under Annexure 1.

(d) any officially valid document or proof of possession of Aadhaar number under clause (ab) of sub-rule (4) where offline verification cannot be carried out, the reporting entity shall carry out verification through digital KYC as specified under Annexure 1:

Provided that for a period not beyond such date as may be notified for a class of reporting entity, instead of carrying out digital KYC, the reporting entity pertaining to such class may obtain a certified copy of the proof of possession of Aadhaar number or the officially valid document and a recent photograph where an equivalent e-document is not submitted.

Explanation.— Obtaining a certified copy by the reporting entity shall mean comparing the copy of the proof of possession of Aadhaar number where offline verification cannot be carried out or officially valid document so produced by the client with the original and recording the same on the copy by the authorised officer of the reporting entity as per the provisions contained in the Act.;

(ix) in sub-rule (16), for the words “submits his Aadhaar Number, ensure such client to redact or black out”, the words “submits a proof of possession of Aadhaar Number containing Aadhaar Number, ensure that such client redacts or blacks out” shall be substituted;

(x) in sub-rule (17),-

(a) in clause (i) and clause (ii), after the words “Permanent Account Number”, the words “or equivalent e-document thereof”, shall be inserted;

(b) in Explanation, for the words, “in relation an account”, the words, “in relation to an account” shall be substituted;

(xi) in sub-rule (18),

(a) after words “following documents”, the words, “or their equivalent e-documents thereof” shall be inserted;

(b) in the proviso, after the words “officially valid document”, the words, “or their equivalent e-documents thereof” shall be inserted;

5. After rule 11 of the principal rules, the following Annexure shall be inserted namely:-

“Annexure 1

Digital KYC Process

A. The reporting entities shall develop an application for digital KYC process which shall be made available at customer touch points for undertaking KYC of their customers and the KYC process shall be undertaken only through this authenticated Application of the Reporting Entities.

B. The access of the Application shall be controlled by the Reporting Entities and it should be ensured that the same is not used by unauthorized persons. The Application shall be accessed only through login-id and password or Live OTP or Time OTP controlled mechanism given by Reporting Entities to its authorized officials.

C. The client, for the purpose of KYC, shall visit the location of the authorized official of the Reporting Entity or vice-versa. The original Officially Valid Document (OVD) shall be in possession of the client.

D. The Reporting Entity must ensure that the Live photograph of the client is taken by the authorized officer and the same photograph is embedded in the Customer Application Form (CAF). Further, the system Application of the Reporting Entity shall put a water-mark in readable form having CAF number, GPS coordinates, authorized official’s name, unique employee Code (assigned by Reporting Entities) and Date (DD:MM:YYYY) and time stamp (HH:MM:SS) on the captured live photograph of the client.

E. The Application of the Reporting Entities shall have the feature that only live photograph of the client is captured and no printed or video-graphed photograph of the client is captured. The background behind the client while capturing live photograph should be of white colour and no other person shall come into the frame while capturing the live photograph of the client.

F. Similarly, the live photograph of the original officially valid document or proof of possession of Aadhaar where offline verification cannot be carried out (placed horizontally), shall be captured vertically from above and water-marking in readable form as mentioned above shall be done. No skew or tilt in the mobile device shall be there while capturing the live photograph of the original documents.

G. The live photograph of the client and his original documents shall be captured in proper light so that they are clearly readable and identifiable.

H. Thereafter, all the entries in the CAF shall be filled as per the documents and information furnished by the client. In those documents where Quick Response (QR) code is available, such details can be auto-populated by scanning the QR code instead of manual filing the details. For example, in case of physical Aadhaar/e-Aadhaar downloaded from UIDAI where QR code is available, the details like name, gender, date of birth and address can be auto-populated by scanning the QR available on Aadhaar/e-Aadhaar.

I. Once the above mentioned process is completed, a One Time Password (OTP) message containing the text that ‘Please verify the details filled in form before sharing OTP’ shall be sent to client’s own mobile number. Upon successful validation of the OTP, it will be treated as client signature on CAF. However, if the client does not have his/her own mobile number, then mobile number of his/her family/relatives/known persons may be used for this purpose and be clearly mentioned in CAF. In any case, the mobile number of authorized officer registered with the Reporting Entity shall not be used for client signature. The Reporting Entity must check that the mobile number used in client signature shall not be the mobile number of the authorized officer.

J. The authorized officer shall provide a declaration about the capturing of the live photograph of client and the original document. For this purpose, the authorized official shall be verified with One Time Password (OTP) which will be sent to his mobile number registered with the Reporting Entity. Upon successful OTP validation, it shall be treated as authorized officer’s signature on the declaration. The live photograph of the authorized official shall also be captured in this authorized officer’s declaration.

K. Subsequent to all these activities, the Application shall give information about the completion of the process and submission of activation request to activation officer of the Reporting Entity, and also generate the transaction-id/reference-id number of the process. The authorized officer shall intimate the details regarding transaction-id/reference-id number to client for future reference.

L. The authorized officer of the Reporting Entity shall check and verify that:-

(i) information available in the picture of document is matching with the information entered by authorized officer in CAF.

(ii) live photograph of the client matches with the photo available in the document.; and

(iii) all of the necessary details in CAF including mandatory field are filled properly.;

M. On Successful verification, the CAF shall be digitally signed by authorized representative of the Reporting Entity who will take a print of CAF, get signatures/thumb-impression of customer at appropriate place, then scan and upload the same in system. Original hard copy may be returned to the customer.”.

[F. No. P.12011/24/2017-ES Cell-DoR]

DINESH BOUDDH, Director

Note:- The principal rules were published in Gazette of India, Extraordinary, Part-II, Section 3, Sub-section (i) vide numbers G.S.R. 444 (E), dated the 1st July, 2005 and were last amended vide G.S.R. 381(E), dated the 28th May, 2019.

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