The Centre has taken another big step towards tightening the enforcement rigour of the anti-money laundering law by categorising practising chartered accountants, company secretaries and cost accountants as a “reporting entity” under the Prevention of Money Laundering Act (PMLA) for certain activities undertaken by them on behalf of their clients.
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 entering into the specified activities and to maintain record thereof for a certain period.
Basically, the role of these professionals in adherence to PMLA requirements has been enhanced by bringing them within the ambit of the meaning of ‘relevant persons’ or ‘person carrying on designated business or profession’, experts said.
The financial transactions — undertaken by these professionals on behalf of their clients — that would be treated as an “activity” for the purpose of monitoring, record keeping and reporting under PMLA are buying and selling of any immovable property; managing of client money, securities or other assets; management of bank, savings or securities accounts; organisation 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.
Awareness program
Reacting to this revenue department move, the CA Institute President Aniket Sunil Talati said ICAI will conduct awareness program for its members in relation to such financial transactions which are already prohibited on behalf of one’s client, in the course of his or her profession.
ICAI will also continue to work with the authorities and other regulators so that these changes are implemented in the right perspective and role of Professionals is understood, he added.
Manish Gupta, President of Company Secretaries Institute, said that the Institute of Company Secretaries of India (ICSI) would be undertaking various initiatives for the appropriate sensitization and handholding of the members in this regard.
Strengthening governance framework
The latest revenue department move would go a long way in strengthening the overall governance framework in the nation, Gupta added.
Amarjit Chopra, former ICAI President, wondered as to why lawyers or the legal community is not being brought under the definition of “relevant person”. “This latest move is harsh on the CA profession. Does it mean that if a lawyer undertakes any of these activities (specified for CAs, CS and CWA) and be of dubious nature that he will not be punished for it. There is no reason why lawyers have been left out of this”, he said.
Nikhil Pillai, Advocate, Delhi High Court, said that it is now clear that the government intends to widen the scope of reporting obligations under the PMLA by bringing more non-government players within its ambit.
Similar categorisation and obligations have been cast in recent years on those involved in gaming activity, Registration Authority, Real Estate agents, dealers in precious metals and stones and most recently those dealing in digital virtual assets, he noted.
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