The drive to thrust such unique numbers on hapless investors has been led by the country's financial sector players such as mutual funds, banks, financial institutions and insurance firms that want to protect their backs in the event of the Financial Intelligence Unit (FIU), which has been assigned the job of preventing money laundering and finding shortcomings in Know Your Client guidelines, later.
Many would argue that the PAN issued by the income-tax department should be good enough to satisfy the requirements of financial intermediaries. But obviously not. For, the PAN does not contain details of the permanent address of an investor or a tax assesse, which under the rules of the Prevention of Money Laundering Act is mandatory for a bank, financial institution or financial intermediaries to verify and maintain.
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By djain128, Section SEBI & Share Market
Posted on Sat Jan 13, 2007 at 06:40:59 PM EST
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In 1960's, the Inland Revenue Service started using these social security numbers to keep track of transactions in the financial sector. On the way, the Social Security administration has co-ordinated with several agencies in the US to verify documents by sharing of data and to exercise due caution in verifying the identity of individuals.
It has now moved to another plane. The administration is now at work on a strategic plan that will run until 2011. Having covered a lot of ground in ensuring the integrity and security of such social security numbers, it has now identified the challenges ahead -- misuse of these social security numbers through use of fraudulent documents to establish a new fake identity besides illegal acquisition of someone else's social security number. And this is just one unique number that affects the lives of millions in that country. Now, with unique numbers for a range of economic activities in India, there could well be risks emanating from potential misuse of such numbers.
In India, banks warehouse customer data independently. So do mutual funds, which have close to 1.5 crore investors. The Rural Development Ministry, which administers the rural employment guarantee programme, is privy to plenty of data on the rural poor. So is the election commission, which has issued lakhs of cards. The transport departments, passport offices, the employees provident fund organisation and the social justice and empowerment ministry are also not short on data.
But getting them all to share it on a nation-wide scale has proved to a singular failure. Using this information culled from all these agencies by a single agency could help develop what then could be a permanent number, which could be used as a single source identity document for all transactions and economic activities.
At one time, a feeble effort was mounted by the previous regime. But the effort never took off after howls of protest from secular-minded political parties suspicious of the intent of the exercise. The UPA government has talked of a legislation for social security. But there is no mention whatsoever of how the government intends to go ahead with a social security number.
Not surprising, considering that anyone advocating such a identity card faces the risk of being branded as a knickerwallah. The department of posts had said many years ago when a social security scheme was being talked of that hooking up to a nation-wide scheme using technology would help lower transaction costs. Given the country's technological strengths, developing an identity card or document, which could be the true unique number by making it mandatory for many of these agencies and government departments to share data, ought not be such a difficult task.
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