New Delhi: The Finance Ministry has made some new changes to the Prevention of Money Laundering Act, 2002 (PMLA), that can potentially transform the way banks, telcos, money lenders, and investment platforms are regulated.
The Union government has introduced several reforms in the finance sector to push growth in the economy which has been slowing down due to the falling demand in the market. The latest amendments are an extension to the changes in KYC rules brought in by telecom and banking regulators. This is a step towards the formalisation of the entire process.
What is PMLA?
PMLA is an Act of the government through which lenders, investment platforms and telecom companies are authorized to capture details of customers before onboarding them on to their platforms.
What are the latest amendments?
Under the latest amendments, regulators such as Reserve Bank of India (RBI) will be introduced with new guidelines regarding digital verification processes, including e-KYC and video KYC for Aadhaar, as well as digitally signed documents.
“The notification from the government brings in the different modes through which full customer details can be captured, Aadhaar eKYC, electronic documents which are digitally signed and digital KYC,” Wriju Ray, co-founder of IDfy, a KYC solutions provider, told The Economic Times.
Moreover, the government’s amendments will allow the use of digital safes in the form of secured digital folders with a remote access provision, making the entire process paperless with no need for photographs as well.
The digitization of the KYC process will also help mutual fund companies, internet banking companies and online wallets like Paytm. Further, it will enable customers to submit Aadhaar details voluntarily to companies, paving a way for remote onboarding, a move that was stopped by a Supreme Court order last year.