New Delhi: The Finance Ministry has recently reinforced anti-money laundering measures and redefined beneficial ownership. Anyone with over a 10 per cent stake in equity in a company will now be considered a beneficial owner. The earlier threshold was 15 per cent.
This adjustment comes as a part of the amended Prevention of Money Laundering (Maintenance of Records) Rules 2005. The rules also establish a “Principal Officer”, a management-level functionary, responsible for supplying information to the financial intelligence unit.
The amendment also includes the case of a trust, where the reporting entity will have to ensure that trustees disclose their status during the commencement of an account based relationship or during the process of carrying out specified transactions.
Before the assessment to be conducted by the global watchdog on money laundering and terror financing, the Financial Action Task Force (FATF) later this year, the government took this decision to tighten multiple money-landing provisions.
The finance ministry notified of the changes in PMLA provisions in May. This made chartered and cost accountants, along with company secretaries, accountable under the anti-money laundering law for specific financial transactions on behalf of their clients. Such transactions encompass property dealings and the management of bank accounts.
Further amendments were made in March to the PMLA rules, which obligated banks and other financial institutions to document all financial dealings of politically exposed people (PEP). Financial institutions and reporting agencies were also mandated to collect information about financial transactions of non-profit organisations (NGOs).
The government also mandated crypto exchanges and intermediaries that are involved with virtual digital assets to conduct KYC (Know Your Customer) for clients and users of the platform.
If India’s compliance with FATF regulations is found to have gaps in its preparedness to combat money laundering, it could lead to adverse comments or impact its rating. This could make business in the country costlier for global firms.
To make sure that India is able to maintain its top tier rating, Semi (India’s market regulator) has also amended various rules.