Section 12A. Access to information

CHAPTER IV OBLIGATIONS OF BANKING COMPANIES, FINANCIAL INSTITUTIONS AND INTERMEDIARIES 4[11A. Verification of Identity by Reporting Entity . — (1) Every Reporting Entity shall verify the identity of its clients and the beneficial owner, by— (a) authentication under the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 (18 of 2016) if the reporting entity is a banking company; or 1. Subs. by Act 2 of 2013, s. 7, for "Adjudicating Authority" (w.e.f. 15-2-2013). 2. Ins. by s.7, ibid . (w.e.f. 15-2-2013). 3. Subs. by s. 8, ibid ., for "sub-section (6) of section 8" (w.e.f. 15-2-2013). 4. Ins. by Act 14 of 2019, s. 27 (w.e.f. 25-07-2019). (b) offline verification under the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 (18 of 2016); or (c) use of passport issued under section 4 of the Passports Act, 1967 (15 of 1967); or (d) use of any other officially valid document or modes of identification as may be notified by the Central Government in this behalf: Provided that the Central Government may, if satisfied that a reporting entity other than banking company, complies with such the standards of privacy and security under the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 (18 of 2016), and it is necessary and expedient to do so, by notification, permit such entity to perform authentication under clause (a): Provided further that no notification under the first proviso shall be issued without consultation with the Unique Identification Authority of India established under sub-section (1) of section 11 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 (18 of 2016) and the appropriate regulator. (2) If any reporting entity performs authentication under clause (a) of sub-section (1), to verify the identity of its client or the beneficial owner it shall make the other modes of identification under clauses (b), (c) and (d) of sub-section (1) also available to such client or the beneficial owner. (3) The use of modes of identification under sub-section (1) shall be a voluntary choice of every client or beneficial owner who is sought to be identified and no client or beneficial owner shall be denied services for not having an Aadhaar number. (4) If, for identification of a client or beneficial owner, authentication or offline verification under clause (a) or clause (b) of sub-section (1) is used, neither his core biometric information nor his Aadhaar number shall be stored. (5) Nothing in this section shall prevent the Central Government from notifying additional safeguards on any reporting entity in respect of verification of the identity of its client or beneficial owner. Explanation .—The expressions "Aadhaar number" and "core biometric information" shall have the same meanings as are respectively assigned to them in clauses (a) and (j) of section 2 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 (18 of 2016). ] 1[ 12. Reporting entity to maintain records.— (1) Every reporting entity shall— (a) maintain a record of all transactions, including information relating to transactions covered under clause (b), in such manner as to enable it to reconstruct individual transactions; (b) furnish to the Director within such time as may be prescribed, information relating to such transactions, whether attempted or executed, the nature and value of which may be prescribed; 2* * * * * (e) maintain record of documents evidencing identity of its clients and beneficial owners as well as account files and business correspondence relating to its clients. (2) Every information maintained, furnished or verified, save as otherwise provided under any law for the time being in force, shall be kept confidential. (3) The records referred to in clause (a) of sub-section (1) shall be maintained for a period of five years from the date of transaction between a client and the reporting entity. (4) The records referred to in clause (e) of sub-section (1) shall be maintained for a period of five years after the business relationship between a client and the reporting entity has ended or the account has been closed, whichever is later. (5) The Central Government may, by notification, exempt any reporting entity or class of reporting 1. Subs. by Act 2 of 2013, s. 9, for section 12 (w.e.f. 15-2-2013). 2. Clauses (c) and (d) omitted by Act 14 of 2019, s. 28 (w.e.f. 25-07-2019). entities from any obligation under this Chapter.] 1[ 12A. Access to information.— (1) The Director may call for from any reporting entity any of the records referred to in[2] [section 11A, sub-section (1) of section 12, sub-section (1) of section 12AA] and any additional information as he considers necessary for the purposes of this Act. (2) Every reporting entity shall furnish to the Director such information as may be required by him under sub-section (1) within such time and in such manner as he may specify. (3) Save as otherwise provided under any law for the time being in force, every information sought by the Director under sub-section (1), shall be kept confidential.] 3 [12AA. Enhanced due diligence.— (1) Every reporting entity shall, prior to the commencement of — each specified transaction, (a) verify the identity of the clients undertaking such specified transaction by authentication under the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 (18 of 2016) in such manner and subject to such conditions, as may be prescribed: under the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Provided that where verification requires authentication of a person who is not entitled to obtain an Aadhaar number under the provisions of the said Act, verification to authenticate the identity of the client undertaking such specified transaction shall be carried out by such other process or mode, as may be prescribed; (b) take additional steps to examine the ownership and financial position, including sources of funds of the client, in such manner as may be prescribed; (c) take additional steps as may be prescribed to record the purpose behind conducting the specified transaction and the intended nature of the relationship between the transaction parties. (2) Where the client fails to fulfill the conditions laid down under sub-section (1), the reporting entity shall not allow the specified transaction to be carried out. (3) Where any specified transaction or series of specified transactions undertaken by a client is considered suspicious or likely to involve proceeds of crime, the reporting entity shall increase the future monitoring of the business relationship with the client, including greater scrutiny or transactions in such manner as may be prescribed. (4) The information obtained while applying the enhanced due diligence measures under sub-section (1) shall be maintained for a period of five years from the date of transaction between a client and the reporting entity. Explanation . — For the purposes of this section, "specified transaction" means — (a) any withdrawal or deposit in cash, exceeding such amount; (b) any transaction in foreign exchange, exceeding such amount; - (c) any transaction in any high value imports or remittances; (d) such other transaction or class of transactions, in the interest of revenue or where there is a high risk or money-laundering or terrorist financing, as may be prescribed.]