Aadhaar Compulsory For Stock Markets, Submit Details by December 31

India.com Business Desk
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Aadhaar Compulsory For Stock Markets, Submit Details by December 31

The existing clients will have to submit their Aadhaar details by December 31, 2017 whereas the new clients have to submit it within six months from opening their demat accounts.

Mumbai, August 22: In a bid to curb money laundering and tax evasion through the stock markets, market regulator Securities and Exchange Board of India (SEBI) has asked the key Indian domestic indices-BSE Sensex and NSE Nifty to notify if the brokers are prepared to take Aadhaar card details from their clients before December 31. Aiming to make Aadhaar compulsory for stock trading, the stock exchanges directed brokers to close the accounts of clients who fail to submit Aadhaar details by the end of this year. It has to be noted that the existing clients will have to submit their Aadhaar details by December 31, 2017 whereas the new clients have to submit it within six months from opening their demat accounts. A demat account is to your shares what a bank account is to your money. A demat account is similar to a savings account where share gets electronically saved.

SEBI has come down heavily on individuals and entities who have used the stock exchange platform to convert their illegal money into legal tender. In a notice last week, the stock exchanges said that it wants brokers’ clients who have opened trading accounts after 1 June 2017, to submit Aadhaar details within six months. BSE has issued circular asking brokers for their comments on the matter by 23 August.

Why is Aadhaar number mandatory in stock exchanges?

Until now, the permanent account number (PAN) was furnished for any share transactions. But the issue of multiple PANs and fake demat accounts have forced the regulator take this decision. In the recent past, fake PAN accounts were used to earn illegal money using the stock exchange platform. The government too is of the opinion that although PAN is a unique identification proof for every individual, it is not really enough to curb money laundering via BSE and NSE. With Aadhaar being mandatory, it is believed that the menace of money laundering will be uprooted. However, brokers have asked for more time to shift to Aadhaar and said they won’t be able to meet the deadline for compliance.

What will happen if clients fail to submit Aadhaar?

  • The BSE notice said that any client who is already having an account based relationship with reporting entities, prior to the date of notification, and has not submitted Aadhaar number, as per the PMLA requirement, to the reporting entity, then the client shall submit the same by December 31, 2017.
  • “In case of failure to submit the documents within the aforesaid time limit, the account shall cease to be operational till the time Aadhaar number is submitted by the client,” BSE said in a notice dated August 18, 2017”, the notice added.

Earlier this month, State for finance Santosh Kumar Gangwar informed the Rajya Sabha that over 11 lakh PAN cards were deactivated by the government mostly because of duplication. Gangwar informed that 11,44,211 PANs have been identified and deleted or deactivated in cases where multiple PANs were found allotted to one person as on 27 July. The Upper House was also informed that 1,566 PAN cards have been identified as ‘fake’ which were allotted to either non- existent person or in the names of persons with false identities.