Govt. Permits Specified Reporting Entities to Undertake Aadhaar Authentication

The Central Government has issued a notification permitting specified reporting entities under Section 11A of the Prevention of Money-laundering Act, 2002 (PMLA) to undertake authentication under the Aadhaar Act, 2016 for compliance purposes.

The permission has been granted after consultation with the Unique Identification Authority of India (UIDAI) and the Reserve Bank of India (RBI).

1. Aadhaar Authentication Permitted Under Section 11A of PMLA

The notification enables specified reporting entities covered under Section 11A of the Prevention of Money-laundering Act, 2002 to carry out Aadhaar authentication for identity verification and compliance-related requirements.

The measure is intended to support customer due diligence and Know Your Customer (KYC) obligations under the anti-money laundering framework.

2. Reporting Entities Covered Under the Notification

The notification covers specified reporting entities including:

• Non-Banking Financial Companies (NBFCs)
• Housing Finance Companies (HFCs)
• Financial service providers and other specified reporting entities

These entities may undertake Aadhaar authentication in accordance with applicable legal and regulatory requirements.

3. Consultation With UIDAI and RBI

The Government has clarified that the permission has been granted after consultation with:

• Unique Identification Authority of India (UIDAI); and
• Reserve Bank of India (RBI)

The consultation requirement is prescribed to ensure regulatory alignment and appropriate safeguards in use of Aadhaar-based authentication mechanisms.

4. Purpose of Aadhaar Authentication

The Aadhaar authentication facility is intended to support compliance under the Prevention of Money-laundering Act, 2002, particularly in relation to:

• Customer identification
• KYC compliance
• Verification of identity
• Anti-money laundering due diligence measures

The framework is expected to facilitate faster and more reliable customer onboarding and verification processes.

5. Compliance Under the PMLA Framework

The permission is specifically linked to compliance obligations under the Prevention of Money-laundering Act and related rules governing reporting entities.

Entities undertaking Aadhaar authentication will be required to comply with applicable provisions of:

• The Prevention of Money-laundering Act, 2002
• The Aadhaar Act, 2016
• Relevant regulatory directions and safeguards

6. Objective of the Notification

The notification aims to facilitate secure and efficient identity verification for specified reporting entities while strengthening anti-money laundering compliance and customer due diligence mechanisms.

The move is expected to improve operational efficiency in onboarding and KYC processes while maintaining regulatory safeguards relating to Aadhaar authentication and data protection.