India: Aadhaar biometric KYC authentication considered for fintechs

Monday 20 May 2019 11:14 CET | News

Digital financial services companies in India have been given the possibility to soon be able to authenticate customers with biometrics using Aadhaar.

The Economic Times reports a memo circulated by the finance ministry’s department of revenue, showing that the central government is considering allowing them to use Aadhaar for e-KYC checks. As per the note, if non-bank financial service companies follow the privacy and security standards of Aadhaar, they could be given access to the database.

Moreover, fintech companies are bound by the Prevention of Money Laundering Act of 2002, and according to ET, which reviewed a copy of the note, any reporting entity that wishes to carry out authentication of the client’s Aadhaar number using eKYC authentication facility needs to be notified under these provisions. The note has been sent to the Governor of the Reserve Bank of India (RBI), the chairman of India’s Securities and Exchange Board, and other financial regulators.

Also, the so-called ‘reporting entities’ would have to undergo a three-step process to satisfy regulators and the UIDAI (Unique Identification Authority of India). They would need to first obtain permission from the body that regulates them, such as the RBI for payment and lending companies, and Sebi for stock brokers, and separately from the UIDAI, and then from the finance ministry.

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Keywords: India, Aadhaar, biometrics KYC, authentication, fintechs, government, digital financial services, non-bank financial service, security, ML, RBI, financial regulators, regulations, UIDAI
Countries: World

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