Insurance, stock firms can use Aadhaar authentication for KYC

New Delhi: The finance ministry has allowed 29 insurance companies and 9 securities entities to collect Aadhaar for the purpose of know your customer (KYC), a move aimed at checking money laundering and routing investments into shell companies.

Finance Secretary Ajay Bhushan Pandey said that the two notifications issued in this regard by the Ministry of Finance "to allow these entities to use Aadhaar authentication services under Aadhaar Act with necessary standard security and privacy measures would help these entities to perform in real time, do e-KYC and would also reduce their cost of transaction".

"This would also be beneficial to the customers or the investors, especially the small and retail investors, as they need not submit physical papers or documents for KYC," Pandey, who is also the Revenue Secretary, said.

The move is aimed at checking laundering of funds into insurance companies and shell companies. An official said use of Aadhaar authentication service by these entities is voluntary and if an investor gives Permanent Account Number (PAN), he or she does not need to go for Aadhaar authentication. Through two notifications, the finance ministry has allowed 29 insurance companies and 9 stock/securities entities to undertake Aadhaar authentication services of Unique Identification Authority of India (UIDAI) under section 11A of the Prevention of Money Laundering Act (PMLA), 2002.

The BSE, National Securities Depository Ltd (NSDL), Central Depositary Services (India) Ltd, CDSL Ventures Ltd, NSDL Database Management Ltd, NSE Data and Analytics Ltd, CAMS InvestorsServices Ltd, Computer Age Management Services Pvt Ltd and Link Intime India Pvt Ltd are the 9 stock/securities related entities.

The 29 insurance companies include Bajaj Allianz Life Insurance, Bharti AXA Life Insurance, ICICI Prudential Life Insurance, HDFC Life Insurance, HDFC Ergo General Insurance and SBI General Insurance.

The ministry has allowed these insurance and securities entities to use Aadhaar authentication services under the PMLA subject to the satisfaction of their regulatory authorities, namely - the Insurance Regulatory Authority of India (IRDAI) and the Securities and Exchange Board of India (SEBI), respectively that they are complying with the standard of privacy and security as per Aadhaar Act. "This would ease their KYC process and reduce cost and time besides preventing money laundering activities, if any," the ministry said.

Source: One India