corporate law
On January 16, 2024, the Ministry of Finance issued a notification permitting certain reporting entities to utilize Aadhaar authentication in compliance with privacy standards established under the Prevention of Money-laundering Act, 2002. This initiative aims to bolster security and enhance the efficiency of financial transactions.
The notification, identified as S.O. 180(E), is issued under the authority of the proviso to sub-section (1) of section 11A of the Money-laundering Act. It explicitly lists the reporting entities entitled to this provision, which includes:
The allowance for Aadhaar authentication aligns with the regulations specified in the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016. The Central Government, in coordination with the Unique Identification Authority of India and the Reserve Bank of India, has determined that it is necessary and expedient for these entities to conduct Aadhaar authentication as authorized under section 11A of the Money-laundering Act.
This strategic integration of relevant acts provides a solid framework for reporting entities to comply with privacy and security standards during financial transactions. The collaboration with regulatory bodies, including the Unique Identification Authority of India and the Reserve Bank of India, enhances the credibility of the decision, ensuring it is informed and serves the financial ecosystem's best interests.
The Ministry of Finance’s initiative to permit reporting entities to implement Aadhaar authentication under the Money-laundering Act marks a significant advancement in strengthening the security and efficiency of financial transactions. By aligning with the standards of the Aadhaar Act and engaging with appropriate regulatory authorities, this approach effectively addresses privacy concerns while upholding the integrity of the financial system. The anticipated positive impact on the listed reporting entities supports operational streamlining and contributes to a more secure financial landscape.