The move is part of the govt’s effort to curb generation of black money and money laundering
The Supreme Court-appointed SIT looking into ways to tackle the black money menace had recommended establishing such a central KYC and allowing all law enforcement agencies and financial institutions to access its database. Photo: Hemant Mishra/Mint
New Delhi: The government will soon notify rules to set up a central Know Your Customer (KYC) registry that will link different identity proofs of an individual and thereby collate details of all financial transactions at one place. The move is part of the government’s effort to curb generation of black money and money laundering.
The Supreme Court-appointed special investigative team (SIT) looking into ways to tackle the black money menace, had in a report which was made public on Friday, recommended establishing such a central KYC and allowing all law enforcement agencies and financial institutions to access its database.
The SIT had recommended that the rules are notified at the earliest.
“At present, for entering into financial/business transactions, persons have the option to quote their PAN or UID (unique identification number or Aadhaar) or passport number or driving licence or any other proof of identity. However, there is no mechanism/system at present to connect the data available with each of these independent proofs of ID. It is suggested that these databases be interconnected. This would assist in identifying multiple transactions by one person with different IDs,” the SIT said in its report.”A central KYC Registry should be established with all law enforcement agencies, Registrar of Companies and financial institutions having access to its database,” the SIT said.
Instances of individuals using multiple PAN cards for different financial transactions have been reported in the past. The KYC registry will help track such transactions to an individual with the help of another identity proof like a passport. Typically, it is easier to obtain multiple PANs as compared to multiple passports.
Also, a linkage between passport and PAN will help the tax department track foreign trips undertaken by an individual which are not explained by known sources of income.
A central KYC registry will also help reduce paperwork. Individuals may not need to provide their identity and address proofs every time while conducting a financial transaction once they are part of the registry.
A concept of central KYC registry was initially introduced in the 2012 budget by then finance minister Pranab Mukherjee for implementation in 2012-13.
The department of revenue has framed rules for this registry under the prevention of money laundering rules and is awaiting the legal department’s nod before notifying the same.
“The rules will address how the registry will collate and maintain information, the agencies that will be given access to this database and how to prevent misuse of this information,” said a finance ministry official, who did not wish to be identified.
FIRST PUBLISHED: MON, JUL 27 2015. 11 02 AM IST