On 4th April 2023, the Union Ministry of Finance notified changes in the Prevention of Money Laundering Act (PMLA), 2002, widening its ambit to include the financial transactions facilitated by the Chartered Accountants(CA), Company Secretaries(CS), and Cost and Works Accountants (CWA).
- Following the changes, the financial transitions by these professionals including operating and managing their client firms and trusts, and buying and selling business entities will be now covered under the anti-money laundering law.
Details of the changes in PMLA 2002:
i.The changes have been made in the sub-clause (vi) of clause (sa) of sub-section (1) of Section 2 of the PMLA, which defines ‘relevant persons’ and firms covered under the anti-money laundering law.
ii.Prior to these changes, the PMLA 2002 did not include these professionals.
Following this change, CA, CS and cost and works accountants have all become ‘reporting entities’.
Chartered Accountants- Individuals who obtained a certificate of practice under section 6 of the Chartered Accountants Act, 1949.
Company Secretaries- Individuals who obtained a certificate of practice under section 6 of the Company Secretaries Act, 1980.
i.Now, these professionals will be responsible for the activities such as buying and selling of any immovable property, managing assets, creation, operation or management of companies, limited liability partnerships or trusts, and buying and selling of business entities by their clients.
ii.They would need to examine the ownership and financial position, including clients’ sources of funds, and record the purpose of the specified transaction.
These professionals will be now liable under the PMLA if they facilitate a transaction that violates the law.
Failure to meet the requirements will result in penalties imposed by the Director of Financial Intelligence Unit – India (FIU-IND) under Section 13 of the Act.
Note: Vivek Aggarwal is the Director (additional charge) of FIU-IND. He is serving as the Additional Secretary in the Department of Revenue under the Ministry of Finance.
About Ministry of Finance:
Union Minister– Nirmala Sitharaman (Rajya Sabha- Karnataka)
Minister of State– Pankaj Chaudhary (Constituency- Maharajganj, Uttar Pradesh) & Dr. Bhagwat Kishanrao Karad (Rajya Sabha- Maharashtra)