Central Government’s Notification on Further Activities Considered as Money-Laundering under Prevention of Money-Laundering Act, 2002
The Central Government has issued a notification regarding the activities that are considered as money-laundering under sub-clause (vi) of clause (sa) of sub-section (1) of section 2 of the Prevention of Money-laundering Act, 2002. The notification specifies that certain activities, when carried out on behalf of or for another person in the course of business, will be regarded as activities for the purposes of said sub-clause.
The activities that fall under this sub-clause include acting as a formation agent of companies and limited liability partnerships, acting as a director or secretary of a company, partner of a firm or similar position in relation to other companies and limited liability partnerships, providing a registered office, business address or accommodation, correspondence or administrative address for a company or a limited liability partnership or a trust, acting as a trustee of an express trust or performing the equivalent function for another type of trust, and acting as a nominee shareholder for another person.
However, the notification also provides clarification that certain activities will not be regarded as activities for the purposes of sub-clause (vi) of clause (sa) of sub-section (1) of section 2 of the Act. These activities include any activity that is carried out as part of any agreement of lease, sub-lease, tenancy, or any other agreement or arrangement for the use of land or building or any space and the consideration is subjected to deduction of income-tax as defined under section 194-I of Income-tax Act, 1961, any activity that is carried out by an employee on behalf of his employer in the course of or in relation to his employment, any activity that is carried out by an advocate, a chartered accountant, cost accountant, or company secretary in practice, who is engaged in the formation of a company to the extent of filing a declaration as required under clause (b) of sub-section (1) of section 7 of Companies Act, 2013, and any activity of a person which falls within the meaning of an intermediary as defined in clause (n) of sub-section (1) of section 2 of the Prevention of Money-laundering Act, 2002.
In conclusion, the notification issued by the Central Government aims to prevent money-laundering by identifying certain activities as money-laundering under sub-clause (vi) of clause (sa) of sub-section (1) of section 2 of the Prevention of Money-laundering Act, 2002, and providing clarification on activities that will not be regarded as such.
MINISTRY OF FINANCE
(Department of Revenue)
New Delhi
Notification No. S.O. 2135(E) Dated 9th May, 2023
S.O. 2135(E).—In exercise of the powers conferred by sub-clause (vi) of clause (sa) of sub-section (1) of section 2 of the Prevention of Money-laundering Act, 2002 (15 of 2003) (hereinafter referred to the as the Act), the Central Government hereby notifies that the following activities when carried out in the course of business on behalf of or for another person, as the case may be, as an activity for the purposes of said sub-clause, namely:-
(i) acting as a formation agent of companies and limited liability partnerships;
(ii) acting as (or arranging for another person to act as) a director or secretary of a company, a partner of a firm or a similar position in relation to other companies and limited liability partnerships;
(iii) providing a registered office, business address or accommodation, correspondence or administrative address for a company or a limited liability partnership or a trust;
(iv) acting as (or arranging for another person to act as) a trustee of an express trust or performing the equivalent function for another type of trust; and
(v) acting as (or arranging for another person to act as) a nominee shareholder for another person.
Explanation.–For removal of doubts, it is clarified that the following activities shall not be regarded as activity for the purposes of sub-clause (vi) of clause (sa) of sub-section (1) of section 2 of the Act, namely:-
(a) any activity that is carried out as part of any agreement of lease, sub-lease, tenancy or any other agreement or arrangement for the use of land or building or any space and the consideration is subjected to deduction of income-tax as defined under section 194-I of Income-tax Act, 1961 (43 of 1961); or
(b) any activity that is carried out by an employee on behalf of his employer in the course of or in relation to his employment; or
(c) any activity that is carried out by an advocate, a chartered accountant, cost accountant or company secretary in practice, who is engaged in the formation of a company to the extent of filing a declaration as required under clause (b) of sub-section (1) of section 7 of Companies Act, 2013 (18 of 2013); or
(d) any activity of a person which falls within the meaning of an intermediary as defined in clause (n) of sub-section (1) of section 2 of the Prevention of Money-laundering Act, 2002 (15 of 2003).
[F. No. P-12011/10/2023-ES Cell-DOR]
SHASHANK MISRA, Director (Headquarter)
