AePS Frauds: RBI Suggests Due Diligence and Restrictions on Touchpoint Operators

Moneylife Digital Team 31 July 2024

Investor Interest

Acknowledging the number of frauds taking place through Aadhaar-enabled payment system (AePS) due to identity theft or compromise of customer credentials, Reserve Bank of India (RBI) released draft directions for due diligence of AePS touchpoint operators.

RBI says, "To protect bank customers from such frauds and to maintain trust and confidence in the safety and security of the system, a need is felt to enhance the robustness of AePS. Accordingly, as announced in the statement on developmental and regulatory policies on 8 February 2024, it has been decided to issue directions for streamlining the process for onboarding of AePS touchpoint operators and ongoing due diligence. Banks and NPCI shall ensure compliance to these directions within three months from the date of issue."

AePS is a payment system operated by National Payment Corporation of India (NPCI) that facilitates interoperable financial transactions through the business correspondent (BC) or bank mitra of any bank, using the Aadhaar authentication.

For on-boarding AePs touchpoint operators, RBI says the bank shall carry out due diligence of all AePS touchpoint operators onboarded by it, in accordance with the customer due diligence procedure for individuals, stipulated in Part-I, Chapter-VI of the Master Direction– Know Your Customer Direction, 2016 (as updated from time to time).

"The acquiring bank shall carry out updation of KYC in cases where an AePS touchpoint operator has not performed any financial transaction for a continuous period of six months, before enabling him or her to transact further. NPCI and acquiring banks shall ensure that any AePS touchpoint operator is onboarded only by one acquiring bank," RBI says.

Further, the central bank asks the acquiring bank to monitor the activities of AePS touchpoint operators on an ongoing basis and set operational parameters. It includes setting up transaction limits for AePS touchpoint operators based on their risk profile and ensuring that the transactions are consistent with the location of operation and risk profile of the AePS touchpoint operator.

Comments or feedback on the draft directions can be sent by email ([email protected]) or by post to the chief general manager-in-charge, department of payment and settlement systems, RBI, Central Office, 14th Floor, Shahid Bhagat Singh Marg, Mumbai-400001, on or before 31 August 2024.

Comments