Anti-money laundering law ambit widened: A look at the changes

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Anuradha Shukla

, ET BureauLast Updated: May 19, 2023, 12:23 PM IST

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Synopsis

The Indian government has widened the ambit of its anti-money laundering law by bringing in new reporting entities, and changed the way financial transactions are recorded, giving more powers to authorities. The changes seek to make the framework more effective and compliant. The changes come as India prepares for a review by Financial Action Task Force (FATF) in November.

Changes in anti-money laundering law can adversely impact foreign investment facilitation, say CAs

India has widened the ambit of anti-money laundering law by bringing in new reporting entities, and changed the way financial transactions are recorded, giving more powers to authorities as it prepares for a review by Financial Action Task Force (FATF) in November. The changes seek to make the framework more effective & compliant. ET looks at the changes:

MORE TEETH TO AUTHORITIES

Enforcement Directorate given more powers
Agency empowered to carry out search, seizure without notice
Imprisonment up to seven years
Power to impose fine without upper limit
Can seize and attach properties, including virtual currencies …

...TO ADMINISTER EXPANDED PMLA REGIME
A: MORE REPORTING ENTITIES
More entities brought under the PMLA reporting framework:.
These are:

Chartered accountants, company secretaries, cost work accountants
Directors, secretaries of cos, partners of firms
Intermediaries in casinos and crypto or virtual digital assets
Trustees of express trusts, nominee shareholders
People arranging addresses, trustees for businesses
Individuals helping in formation of a company

B. MORE TRANSACTIONS & INCREASED DISCLOSURES

Lowered threshold of beneficial ownership to 10% from 25%
More disclosure of beneficial owners apart from KYC
More disclosure for non-profit organisation
Widened definition of ‘politically exposed persons

C. NUMBER OF ACTIVITIES COVERED BROADENED

Buying and selling any immovable property on behalf of someone
Managing client money, securities, or other assets
Management of bank, savings, or securities accounts
Organisation of contributions for creation, operation, or management of companies

INDIA GEARS UP FOR FATF EVALUATION

FATF to review India’s anti money laundering framework
Review of compliance as per 40 FATF recommendations
Last FATF peer review was carried out in 2010
Review to be discussed at FATF June ’24 meet

INDUSTRY APPREHENSIVE ABOUT CHANGES

Says new norms will substantially enhance compliance burden
Fears prosecution under PMLA for even small lapses
These are seen as putting a strain on resources of smaller firms
TOO MUCH POWER to enforcement agencies

Friday, 19 May, 2023

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