Publication of notification under the Prevention of Money laundering Act 2002

## Report on Notification G.S.R. 651(E) concerning Aadhaar Authentication under the Prevention of Money-laundering Act, 2002 **1. Executive Summary:** This report analyzes Notification G.S.R. 651(E), published on September 22, 2021, which pertains to the Prevention of Money-laundering Act (PMLA), 2002. The notification allows specific reporting entities, namely Ms. SBI Cards and Payment Services Limited and Ms. PhonePe Private Limited, to undertake Aadhaar authentication services. This authorization is granted after the Central Government determined that these entities meet the required privacy and security standards under the Aadhaar Act, 2016 and consulted with the Unique Identification Authority of India (UIDAI) and the Reserve Bank of India (RBI). This policy is new. **2. Introduction:** This report aims to provide a detailed overview of Notification G.S.R. 651(E), focusing on its objectives, key provisions, target audience, implementation aspects, and expected outcomes, based solely on the information provided in the notification text. **3. Policy Overview:** * **Core Objective(s):** The core objective of this notification is to authorize specific reporting entities to perform Aadhaar authentication services under Section 11A of the Prevention of Money-laundering Act, 2002. This authorization is contingent upon the entities meeting privacy and security standards mandated by the Aadhaar Act, 2016. **4. Background and Rationale:** * **New Policy:** The policy likely addresses the need for secure and reliable methods for verifying the identity of individuals, particularly in financial transactions, to combat money laundering. By allowing reporting entities to use Aadhaar authentication, the government aims to strengthen identity verification processes and enhance compliance with PMLA regulations. The rationale involves leveraging the Aadhaar infrastructure for more robust and efficient identity checks. **5. Key Provisions / Changes:** * This notification formally authorizes Ms. SBI Cards and Payment Services Limited and Ms. PhonePe Private Limited to undertake Aadhaar authentication services under Section 11A of the PMLA, 2002. The permission is contingent on meeting the standards for privacy and security. This enables these entities to use Aadhaar as a means of verifying the identity of their customers for purposes related to preventing money laundering. **6. Target Audience and Stakeholders:** The primary target audience and stakeholders are: * Ms. SBI Cards and Payment Services Limited. * Ms. PhonePe Private Limited. * The Unique Identification Authority of India (UIDAI). * The Reserve Bank of India (RBI). * Customers of SBI Cards and Payment Services Limited and PhonePe Private Limited. **7. Implementation Aspects (Inferred):** * **Responsible Agency/Bodies:** * The Central Government (Ministry of Finance, Department of Revenue) is responsible for issuing the notification and granting authorization. * The Unique Identification Authority of India (UIDAI) is consulted in the process. * The Reserve Bank of India (RBI) is also consulted. * **Timelines/Procedures:** * The notification is effective from September 22, 2021 (date of publication). * The notification implies that SBI Cards and Payment Services Limited and PhonePe Private Limited have already demonstrated compliance with the privacy and security standards under the Aadhaar Act. **8. Expected Outcomes / Impact of Changes:** The likely intended outcomes of this notification are: * Enhanced identity verification processes for SBI Cards and Payment Services Limited and PhonePe Private Limited, leading to improved compliance with PMLA regulations. * Strengthened measures to prevent money laundering through more reliable and secure customer identification. * Streamlined customer onboarding and transaction processes by leveraging Aadhaar authentication. **9. Conclusion:** Notification G.S.R. 651(E) signifies a move towards leveraging Aadhaar authentication for strengthening anti-money laundering measures within the financial sector. By authorizing Ms. SBI Cards and Payment Services Limited and Ms. PhonePe Private Limited to use Aadhaar for identity verification, the government aims to enhance the security and efficiency of financial transactions and combat financial crimes. The notification underscores the importance of adhering to privacy and security standards while utilizing Aadhaar for authentication purposes.

Key Entities Referenced