The Prevention of Money-laundering (Maintenance of Records) Amendment Rules, 2023.
Ministry of Finance has amended the the Prevention of Money-laundering (Maintenance of Records) Rules, 2005.
The meaning of Non-profit organization has been amended to means any entity or organisation, constituted for religious or charitable purposes referred to in clause (15) of section 2of the Income-tax Act, 1961(43 of 1961), that is registered as a trust or a society under the Societies Registration Act, 1860 (21 of 1860)or any similar State legislation or a Company registered under the section 8 of the Companies Act, 2013 (18 of 2013).
Further, Politically Exposed Persons” (PEPs) have been defined to mean individuals who have been entrusted with prominent public functions by a foreign country, including the heads of States or Governments, senior politicians, senior government or judicial or military officers, senior executives of state-owned corporations and important political party officials.
The following amendments have been made to “due diligence” aspects
Rule 9 of the Prevention of Money-laundering (Maintenance of Records) Rules, 2005 provides for client due diligence. It requires that every reporting entity shall, at the time of commencement of an account based relationship, identify and verify its client including the beneficial owner.
The following significant amendments have been made to Rule 9:
|Rule 9(3) – determination of beneficial ownership.||“Controlling ownership interest” means ownership of or entitlement to more than 25 per cent. of shares or capital or profits of the company||Controlling interest reduced to 10 percent|
|where the client is a trust, the identification of beneficial owner(s) shall include’ identification of the author of the trust, the trustee, the beneficiaries with 15% or more interest in the trust and any other natural person exercising ultimate effective control over the trust through a chain of control or ownership||Controlling interest reduced to 10 percent|
|Rule 9(6) – KYC Documents to be submitted by the company||
(i) Certificate of incorporation;
(ii)Memorandum and Articles of Association;
(iii) a resolution from the Board of Directors and power of attorney granted to its managers, officers or employees to transact on its behalf; and
(iv) an officially valid document in respect of managers, officers or employees holding an attorney to transact on its behalf.
The following more information to be submitted:
the names of the relevant persons holding senior management position; and
the registered office and the principal place of its business, if it is different
|Rule 9(7) – KYC Documents to be submitted by the Partnership Firm||
(i) registration certificate;
(ii) Partnership deed; and
(iii) an officially valid document in respect of the person holding an attorney to transact on its behalf.
The following more information is to be submitted:
The names of all the partners and address of the registered office, and the principal place of its business, if it is different
|Rule 9(8) – KYC Documents to be submitted by the Trust||
(i) registration certificate;
(ii) trust deed; and
(iii) an officially valid document in respect of the person holding an attorney to transact on its behalf
The names of the beneficiaries, trustees, settlor and authors of the trust and the address of the registered office of the trust; and
List of trustees and documents as are required for individuals under sub-rule (4) for those discharging role as trustee and authorised to transact on behalf of the trust.
Further a new Rule 9A has been inserted to provide that every Banking Company or Financial Institution or intermediary shall register the details of a client, in case of client being a non-profit organisation, on the DARPAN Portal of NITI Aayog, if not already registered, and maintain such registration records for a period of five years after the business relationship between a client and a reporting entity has ended or the account has been closed, whichever is later.
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