Financial Crime World

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FINMIN Amends PMLA Rules to Enhance Anti-Money Laundering Compliance

The Ministry of Finance (FinMin) has introduced a slew of amendments to the Prevention of Money-Laundering Act (PMLA) rules, aimed at strengthening India’s anti-money laundering (AML) framework and ensuring greater transparency in financial transactions.

Key Changes

Record Keeping and Information Sharing

  • Banks and financial institutions are now required to maintain records of all financial transactions for five years after closing accounts or ending business relationships with clients.
  • They must share information on such transactions with the Enforcement Directorate (ED) as and when requested.

Expanded Definition of Politically Exposed Persons (PEPs) and Non-Governmental Organizations (NGOs)

  • Reporting Entities are now required to identify, verify, and obtain information on PEPs and NGOs, including their identity, purpose, and nature of business relationship.
  • Clients must submit details of their registered address and principal place of business.

Regulatory Powers

  • The Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), and Insurance Regulatory and Development Authority of India (IRDAI) have been empowered to regulate financial institutions and intermediaries, respectively.
  • The Financial Intelligence Unit (FIU) will continue to play a crucial role in analyzing information reported by financial institutions and businesses subject to AML requirements.

Penalties for Non-Compliance

  • Severe penalties are imposed for non-compliance, including:
    • Imprisonment of up to seven years
    • Monetary fines
    • Attachment of property involved in money laundering
    • Seizure or freezing of properties
    • Freezing of funds
  • The ED will be responsible for enforcing these provisions.

Industry Expert Reaction

“These changes demonstrate the government’s commitment to enhancing financial transparency and combating illicit activities,” said a leading expert in the field.

Effective Date

The revised PMLA rules come into effect immediately, with all Reporting Entities required to comply with the new regulations by March 31st.