Forcing the middlemen to come up with new ways of cheating the system would be a huge step-up from the status quo. Presently they don't even need to think!
This will atleast make it costly for the middle men to cheat. It will be difficult to replicate the retina / finger print scan. And that will surely reduce the low level corruption that directly affects the poor. Surely, this will not remove the high level corruptions (2g scandal etc).
Things will certainly get more difficult for these "middle men", but not by all that much. There is no need for them to replicate the retina/fingerprint scans or do anything hi-tech/expensive like that. The poor will still need to exchange the money paid into their accounts for actual goods and supplies like food and clean water. Simply giving the money directly to the poor will not affect the scarcity of these resources.
What will happen is that the poor will simply withdraw the entire sum the day it has been paid in to their accounts, and give it to these "middle men". All that changes is the direction. Instead of the welfare money flowing down from the government to the individual programs to the "middle men", it will be flowing up from the poor through the individual traders to these same "middle men".
But this will solve the issue about people that do not exist at all. The ones that is artificially created by the middle men to scoop the money off and who only exist on paper.