Practicing Professionals are Now Under PMLA Ambit

On May 3rd, 2023, the Central Government issued a notification bringing practicing professionals in the field of Chartered Accountancy, Company Secretaries, and Cost and Works Accountants under the ambit of the Prevention of Money Laundering Act (PMLA) if they execute any financial transactions on behalf of clients. 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).

Read Notification dated May 3rd, 2023 : CA, CS & CMA brought under PMLA net if they manage client assets

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:

1. Buying and selling of any immovable property.

2. Managing of client money, securities, or other assets.

3. Management of bank, savings, or securities accounts.

4. Organization of contributions for the creation, operation, or management of companies.

5. Creation, operation, or management of companies, limited liability partnerships, or trusts, and buying and selling of business entities.

Explanation 1 of the notification specifies that the term “relevant person” includes 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.

Explanation 2 defines the term “firm” as having the same meaning assigned to it in sub-clause (i) of clause (23) of section 2 of the Income-tax Act, 1961.

The notification aims 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. The PMLA requires reporting entities to maintain records of transactions, verify the identity of clients, and report suspicious transactions to the authorities.

Practicing professionals in the field of Chartered Accountancy, Company Secretaries, and Cost and Works Accountants will need to take note of this notification and ensure that they comply with the PMLA when executing financial transactions on behalf of clients. Non-compliance with the PMLA can lead to penalties and criminal prosecution.

In conclusion, the inclusion of practicing professionals in the field of Chartered Accountancy, Company Secretaries, and Cost and Works Accountants under the ambit of the Prevention of Money Laundering Act is a significant step in the fight against money laundering and terrorist financing. It will help ensure that these professionals comply with the PMLA and take necessary precautions to prevent such activities.

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