Economic Survey Pushes For Interlinking and Selling Citizens' Data for Private Purposes: Rethink Aadhaar
The government’s vision to collate comprehensive, exhaustive data about every citizen and making it available for commercial use by private entities as stated in the budget document the Economic Survey 2018-19 is quite alarming, says Rethink Aadhaar. 
 
Here is what the Rethink Aadhaar Campaign says about interlinking and selling of citizens’ data for private purposes…
 
Chapter 4 of the Economic Survey (a budget document laid before parliament)’s chapter 4 ‘Data “Of the People, By the People, 04 For the People’ argues for expanding collection and interlinking of comprehensive data on citizens, violating Supreme Court judgments on privacy and Aadhaar overturning constitutional requirements for transparency from governments, not citizens. 
 
It makes a case for integrating citizens’ data for commercial purposes even when no legal framework provides for this. It assumed  privacy concerns will be taken care of by a forthcoming privacy law and data protection law which have been in fact been pending on the drawing board for years. 
 
Already, in the government’s coercive and callous interlinking of Aadhaar in existing databases, we have witnessed alarming data leaks that have had substantial financial implications and legal consequences for ordinary citizens. It makes blanket assertions that technology measures would protect privacy in the future, claiming “technology has largely kept pace to mitigate” (data leaks) when the government is yet to provide any redressal or compensation to those who have suffered from data leaks.
 
It states the example of how Telangana has integrated multiple points of information and data on thousands of its residents and their relatives in its ‘Samagra’ without stating how this was done in the absence of privacy and data protection laws. The document argues for using Aadhaar numbers to create a health registry to sell sensitive medical data to commercial entities for a profit. It argues “people can always opt out of divulging data to the government where possible”, but so far the government has put all its energies in coercing citizens to give their data, cutting them off from essential services if they do not provide data. 
 
It erroneously claims that increased data collection and integrating databases will reduce inclusion errors and rectify exclusion errors. This is a wrong claim to make. In the past few years, both UPA and NDA governments have pushed for Aadhaar enrolment by claiming this will help improve welfare services. This has led to denial of wage payments, food grains, vital social security pensions to thousands of individuals, especially the elderly and those who work with their hands manual workers, who face faulty data entry, network errors, servers and network errors, and biometric authentication failures because of changes while working with their hands over time.
 
Since 2017, the Right to Food Campaign has recorded more than 40 deaths when the most vulnerable got cut from any social security in the fault-ridden transition to Aadhaar. One such death was recorded in Jharkhand’s Latehar last month when an Adivasi farmer 65 year old Ramcharan Munda died after he was denied food rations for three months. The government has failed to act responsibly and provide any relief and voluntary alternatives for those facing such problems because of its manic focus on data linking. Yet, in this new document it again pushes for more of the same.
 
It is worrying that the budget document of the vision for the Indian economy once again states two different standards of privacy rights for India’s poor and rich. It declares: “care must also be taken to not impose the elite’s preference of privacy on the poor, who care for a better quality of living the most”, thus imposing its own assumptions that the poor can do with fewer privacy protections than the rich. It falsely pits welfare rights against privacy rights. 
 
Justice DY Chandrachud had warned against this in the Aadhaar judgement, noting: "The refrain that the poor need no civil and political rights and are concerned only with economic well being has been utilised through history to wreak the most egregious violations of human rights." In fact the vulnerable poor need stronger privacy rights at a time of heightened profiling of citizens based on their religion and caste for political purposes, as seen with the NRC in Assam, and lynchings all over the country. They challenge state authorities to assert for their rights over land, resources, social welfare and take part in demonstrations. 
 
Further advocating for unchecked collecting and collating of data on citizens will only lead to further undermining of our rights, and to worse levels of surveillance and data breaches.
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    Aadhaar: No Individual Can Be Compelled to Provide the UID Number Unless Provided By Law
    The Cabinet has approved the Aadhaar and Other Laws (Amendment) Bill, 2019, which establishes that no individual can be compelled to provide proof of Aadhaar number unless provided by law, and the Aadhaar number on voluntary basis shall be accepted as KYC document.
     
    The Bill replaces Aadhaar and Other Laws (Amendment) Ordinance, 2019, and it will be introduced in the scheduled Parliament session in June. 
     
    Claiming the Bill people-friendly and citizen-centric, the government said it will enable UIDAI to have a more robust mechanism to serve public interest and act as a deterrent against the misuse of Aadhaar. 
     
    "Subsequent to this amendment, no individual shall be compelled to provide proof of possession of Aadhaar number or undergo authentication for the purpose of establishing his identity unless it is so provided by a law made by Parliament", said a statement by the government.
     
    The Bill will help public, in opening bank accounts, to use of Aadhaar number for authentication on voluntary basis as acceptable KYC document.
     
    The amendment will allow voluntary use of Aadhaar number in physical or electronic form by authentication or offline verification with the consent of Aadhaar number holder. And, it also allows the use of twelve-digit Aadhaar number and its alternative virtual identity to conceal the actual Aadhaar number of an individual. The Bill provides option to children, who are Aadhaar number holders, to cancel it on attaining adult-age.
     
    In a major improvement, the Bill will permit the entities to perform authentication only when they are compliant with the standards of privacy and security specified by the Authority, and the authentication is permitted under any law made by Parliament.
     
    "Prevents denial of services for refusing to, or being unable to, undergo authentication; Provides for establishment of Unique Identification Authority of India Fund; and provides for civil penalties, its adjudication, appeal thereof in regard to violations of Aadhaar Act and provisions by entities in the Aadhaar ecosystem", said the statement by the government.
     
    The Bill is strengthening of the Aadhaar Act as per the directions of the Supreme Court and recommendations of former Justice B.N.Srikrishna Committee.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    COMMENTS

    Ishwar Dass

    3 months ago

    Rajkumari

    SARAH BERT SEVER

    3 months ago

    Does that mean to file taxes, an Indian resident, does not need Aadhar?

    RBI Amends KYC Master Directions: Aadhaar to Be Officially Valid Document Now
    The striking down of Section 57 of the Aadhaar Act was a major setback for the FinTech entities and payment systems. These companies were highly dependent on Aadhaar for verifying their customers. The Aadhaar verdict caused an adverse impact on the FinTech companies as compliance with the know your customer (KYC) guidelines for these companies became ambiguous. Earlier private entities and corporate bodies were allowed to use Aadhaar number for establishing identities of the customers, however, after the landmark judgement, private entities could not demand Aadhaar for verification of identity unless the same was pursuant to any law. Therefore, this unsettled the very basis on which these FinTech entities built their businesses.  
     
    Subsequently, necessary amendments were made in the Prevention of Money Laundering (Maintenance of Records) Rules, 2005, vide the notification of Prevention of Money-Laundering (Maintenance of Records) Amendment Rules, 2019  issued on 13 February 2019 (‘PMLA Notification’) so as to allow the use of Aadhaar as a proof of identity, albeit in a manner that protected the private and confidential information of the borrowers. However, despite the changes in the PMLA Rules and the Aadhaar and Other Laws (Amendment) Ordinance, 2019  issued on 2 March 2019 (“Ordinance”), the RBI did not bring changes in its operative guidelines. As a result, ambiguity with respect to usage of Aadhaar number for KYC purposes increased.
     
    On 29 May 2019 , the RBI brought the much awaited amendments in the KYC Master Directions. 
     
    Before we delve further into the issue, it is important to be mindful of the following:
     
    ---------------------------------------------------------------------------
     
    The definition of Aadhaar number under the KYC Master Directions has been borrowed from the Ordinance, which means an identification number issued to an individual under sub-section (3) of section 3 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 (18 of 2016), and includes any alternative virtual identity generated under sub-section (4) of that section.
     
    Further, sub-section (4) provides that the Aadhaar number issued to an individual under sub-section (3) shall be a twelve-digit identification number and any alternative virtual identity as an alternative to the actual Aadhaar number of an individual that shall be generated by the Authority in such manner as may be specified by regulations.
     
    Acceptance of Aadhaar as an ‘officially valid document’
     
    The PMLA Notification, recognises proof of possession of Aadhaar number as an 'officially valid document' (OVD). As per the proviso to Rule 2(1)(d) of the said notification, whoever submits “proof of possession of Aadhaar number” as an officially valid document, has to do it in such a form as are issued by the Authority.
     
    Pursuant to the amendment in KYC Master Directions, ‘Proof of possession of Aadhaar number’ has been added to the list of OVD with a proviso that where the customer submits ‘Proof of possession of Aadhaar number’ as OVD, he may submit it in such form as are issued by the Unique Identification Authority of India (UIDAI). 
     
    Regulation 15 of the Aadhaar (Enrolment and Update) Regulations, 2016 (“Enrolment Regulations”) which deals with delivery of Aadhaar number stipulates that:
     
    “Aadhaar number may be communicated to residents in physical form (including letters or cards) and/or electronic form (available for download through the Authority’s website or through SMS).”
     
    The Authority in exercise of the provisions under Regulation 35 of the Enrolment Regulations has on 4 April 2019  notified that delivery of Aadhaar number under Regulation 15 shall mean and include the following:
     
    (a) Aadhaar letter: Issued by the Authority carries name, address, gender, photo and date of birth details of the Aadhaar number holder.
     
    (b) Downloaded Aadhaar (e-Aadhaar): Carries name, address, gender, photo and date of birth details of the Aadhaar number holder in similar form as in printed Aadhaar letter.
     
    (c) Aadhaar Secure QR Code: A quick response code generated by the Authority containing name, address, gender, photo and date of birth details of the Aadhaar number holder.
     
    (d) Aadhaar Paperless Offline e-KYC: An XML document generated by the Authority containing name, address, gender, photo and date of birth details of the Aadhaar number holder. 
     
    It has been specified that the Aadhaar number holder can use any of the documents above to prove possession of Aadhaar number subject to the concerned entity’s right to verify the genuineness of the above mentioned documents. 
     
    Further, as per the KYC Master Directions, in case an OVD, including Aadhaar, furnished by the individual does not contain updated address, certain deemed OVDs for the limited purpose of proof of address can be submitted, provided that the OVD updated with current address is submitted within three months.
     
    Obtaining certified true copy 
     
    As per the requirement of the amended KYC Master Directions, for undertaking Customer due-diligence (CDD), non-banking financial companies (NBFCs) shall have to obtain the following from an individual while establishing an account-based relationship or while dealing with the individual who is a beneficial owner, authorised signatory or the power of attorney holder related to any legal entity (section 16): 
     
    ---------------------------------------------------------------------------
     
    (a) a certified copy of any OVD containing details of his identity and address 
     
    (b) one recent photograph 
     
    (c) the Permanent Account Number (PAN) or Form No. 60 as defined in Income-tax Rules, 1962, and 
     
    (d) such other documents pertaining to the nature of business or financial status specified by the reporting entities (REs) in their KYC policy
     
    Here, obtaining a certified copy by regulated entity shall mean comparing the copy of officially valid document so produced by the customer with the original and recording the same on the copy by the authorised officer of the regulated entity.
     
    It has been clearly specified by the RBI that the individuals (apart from those desirous of receiving any benefit or subsidy under any scheme notified under section 7 of the Aadhaar (Targeted Delivery of Financial and Other subsidies, Benefits and Services) Act, 2016) while submitting Aadhaar for Customer Due Diligence, shall redact or blackout their Aadhaar number in terms of sub-rule 16 of Rule 9 of the amended PML Rules, as per the PMLA Notification.
     
    The relevant provision of the sub-sections is reproduced herein below:
     
    “(16) Every reporting entity shall, where its client submits his Aadhaar number, ensure such client to redact or blackout his Aadhaar number through appropriate means where the authentication of Aadhaar number is not required under sub-rule (15).”;
     
    In case where simplified procedure have been followed for opening accounts by NBFCs, the CDD as mentioned above (as per section 16 of the KYC Master Directions) must be carried out within a period of twelve months. Even at the time of periodic verification, CDD as per section 16 has to be carried out.
     
    Offline Verification
     
    The Ordinance defined the term “offline verification”. Section 2 (pa) states – 
     
    “offline verification” means the process of verifying the identity of the Aadhaar number holder without authentication, through such offline modes as may be specified by regulations.
     
    It is pertinent to note that the offline modes are not specified in the regulations. However, Unique Identification Authority of India (UIDAI) had proposed two methods of using offline Aadhaar verification–
     
    1. Using the Quick Response (QR) codes
    Companies may seek the Aadhaar QR code from the customers. The same has to be downloaded and printed by the customer and submitted to the company who shall read it using a QR code reader. Scanning of QR code, from the QR code reader will provide the name, address and photograph of the customer, without providing the Aadhaar number. 
     
    2. Using paperless local e-KYC
    The paperless local e-KYC involves generation of a digitally signed XML which can be stored in a laptop or phone and be communicated by the customer to the company, as and when required. Companies can receive the Aadhaar Paperless Offline e-KYC XML from the customers. The XML file provides the name, address and photograph of the customer, without providing the Aadhaar number. 
     
    Further, section 8A of the Ordinance specifies the process of offline verification to be conducted by the offline-verification seeking entity. The entity seeking offline verification must obtain the consent of the customer before performing such offline verification. The entity must also ensure that the demographic information or any other information collected from the customer is used only for the purpose of such verification.
     
    RBI has also specified in the KYC Master Directions that the NBFCs may identify a customer through offline verification under the Aadhaar Act with his/her consent, for identification purpose.
     
    The Ordinance provides that banking companies shall verify the identity of the customers by authentication under the Aadhaar Act or by offline verification or by use of passport or any other officially valid documents. Further distinguishing the access, the Ordinance permits only banks to authenticate identities using Aadhaar. Other reporting entities, like NBFCs, are permitted to use the offline tools for verifying the identity of customers provided they comply with the prescribed standards of privacy and security. The use of Aadhaar shall be a voluntary choice of every customer who is sought to be identified. In order to safeguard the interests of the customers, the reporting entity must inform the customer of the other alternatives available to them. 
     
    PAN submission
     
    The KYC Master Directions require non-individual customers such as legal entities, to submit either PAN or Form No. 60 of the entity apart from other entity related documents as a mandatory KYC document. Further, in case of companies and partnership firms, the PAN itself is mandatory. Additionally, the PAN or Form No. 60 of the authorised signatories shall also be obtained by the reporting entities.
     
    In case of existing customers also the PAN or Form No.60, shall be obtained by such date as may be notified by the Central government, failing which the reporting entities shall temporarily cease operations in the account till the time the PAN or Form No. 60 is submitted by the customer. In case of asset accounts such as loan accounts, for the purpose of ceasing the operation in the account, only credits shall be allowed. However, before temporarily ceasing operations for an account, the customer shall be given an accessible notice and a reasonable opportunity to be heard. 
     
    Conclusion
     
    The amendments in the KYC Master Directions allow verification of customers by offline modes and it permits NBFCs to take Aadhaar for verifying the identity of customers if provided voluntarily by them, after complying with the conditions of privacy to ensure that the interests of the customers are safeguarded. The amendments clearly specify the regulatory approach to resume the KYC process by using Aadhaar through offline modes.
     
    (The writer is senior manager, Vinod Kothari Consultants P. Ltd.)
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    COMMENTS

    Anil Kumar

    3 months ago

    Thanks. Appreciate the conclusion section too

    SHIVSHAKTI PANDEY

    4 months ago

    Nic

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