CA, CS & CWA to be considered reporting entity under PMLA for specified activities

Professionals like Chartered Accountants, Company Secretary and Cost and Works Accountants made reporting entity under PMLA for certain activities carried out on behalf of client

Ministry of Finance has issued a Notification specifying type of financial transactions carried out by a CA, CS or CWA on behalf of his client which shall be considered as designated activity under section 2(1)(sa) of the Prevention of Money-laundering Act, 2002.

It has been provided that the following financial transactions carried out by a professional i.e. Chartered Accountant, Company Secretary and Cost and Works Accountant on behalf of his client, in the course of his or her profession shall be considered as designated activity:

(i) buying and selling of any immovable property;

(ii) managing of client money, securities or other assets;

(iii) management of bank, savings or securities accounts;

(iv) organisation of contributions for the creation, operation or management of companies;

(v) creation, operation or management of companies, limited liability partnerships or trusts, and buying and selling of business entities,

Under the PMLA Act if someone directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime is considered as guilty of offence of money-laundering.

The punishment for offence of money-laundering is rigorous imprisonment up to seven years and crimes covered under NDPS Act 1985, up to ten years.

Note: Under PMLA Act a reporting entity” means a banking company, financial institution, intermediary or a person carrying on a designated business or profession. The reporting entity is required to maintain prescribed records/documentations in respect of activities carried out by it on behalf of the client.

The Prevention of Money-Laundering (Maintenance of Records Rules), 2005 rules have been made for maintenance of records of the nature and value of transactions, carrying due diligence, the procedure and manner of maintaining and time for furnishing of information and verification of records of the identity of the clients of the reporting entities.

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