In this Article the author shall discuss about Latest amendment made by Central Government in Prevention of Money Laundering Act (PMLA) vide notification No. S.O. 2036(E) Dated: 03/05/2023. This notification has been issued under sub-clause (vi) of clause (sa) of sub-section (1) of section 2 of the Prevention of Money-laundering Act, 2002 (15 of 2003).
EFFECTS OF THE NOTIFICATION:
The Centre has taken another big step towards tightening the enforcement rigors of the anti-money laundering law. The Purpose of notification to prevent money laundering and terrorist financing by ensuring that practicing professionals in these fields comply with the PMLA when executing financial transactions on behalf of clients.
Setting up a company, buying property and financial transactions executed by chartered accountants, company secretaries, and cost and works accountants on behalf of clients will now be covered under the anti-money laundering law.
A. DEFINITION of Person shall Includes “Relevant Person’. Relevant person individuals who obtained a certificate of practice under section 6 of the
- Chartered Accountants Act, 1949,
- Company Secretaries Act, 1980, and
- Cost and Works Accountants Act, 1959, and are practicing individually or through a firm, in whatever manner it has been constituted.
Note: One can opine that, Obligations have now been cast under the PMLA Act on these practising professionals — CAs, CS and Cost accountants — to do Know-your-client (KYC) norms of all clients.
B. TYPE OF TRANSACTIONS:
The following financial transactions carried out by a relevant person on behalf of his or her client, in the course of his or her profession, will be considered an activity for the purposes of the PMLA:
- Buying and selling of any immovable property.
- Managing of client money, securities, or other assets.
- Management of bank, savings, or securities accounts.
- Organization of contributions for the creation, operation, or management of companies.
- Creation, operation, or management of companies, limited liability partnerships, or trusts, and buying and selling of business entities.
IN OTHER WORDS,
the Finance Ministry has brought in practicing CS, CA, CMA carrying out financial transactions on behalf of their clients into the ambit of the money laundering law.
Lawyers and legal professionals, however, seem to have been kept out in the new definition of entities covered under the PMLA.
CONCLUSION:
The services such as setting up companies by CA, CS and CWA have come under PMLA. The amendments are expected to aid investigative agencies further in their probe against dubious transactions involving shell companies and money laundering.
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Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com).
Also Read:
CA, CS & CMA brought under PMLA net if they manage client assets
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