Aadhaar will now be compulsory for stock trades, says SEBI
SEBI has asked the bourses to notify if the brokers are prepared to take Aadhaar card details from their clients before December 31. BSE has asked brokers to provide their feedback on this matter by August 23. Existing clients have until December 31 to submit Aadhaar details and new clients have to submit it within six months from opening their demat accounts. Here's more.
What happens if you don't?
BSE-issued circular clearly states that "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." The capital markets regulator and the government are making Aadhaar compulsory to bolster their Prevention of Money Laundering (PML) rules that are directed towards curbing illegitimate money.
Why this move was needed?
In the recent past, SEBI has come down heavily on individuals and entities, who have used the stock exchange platform to convert their illegal money into legal tender. Until now, permanent account number (PAN) was taken for share transactions. However, the government believes that although PAN is unique for every individual, it is not enough to stop money laundering via bourses.
Aadhaar to check fraudulent practices
There have been instances, where multiple PANs and fake demat accounts have been used to inject illegal money into the bourses. It's expected that making Aadhaar mandatory for transactions would put an end to this practice. Brokers said that the new directive would be an arduous process and it would also put an additional cost on their shoulders. Nonetheless, they would comply with it.
