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Record Keeping and Information Disclosure Mandated by New Law
In a bid to enhance transparency and combat financial crimes, the government has introduced new regulations requiring reporting entities to maintain records for a specified period.
Enhanced Transparency and Accountability
According to the latest amendments, records related to transactions with clients must be kept for five years from the date of transaction. This move aims to ensure that reporting entities are held accountable for their actions and can provide critical information to regulators in case of any suspicious activities or irregularities.
Verification of Client Identities
The regulations require reporting entities to verify the identity of clients undertaking specified transactions by authentication under the Aadhaar Act, 2016. This step aims to prevent illegal activities such as tax evasion and other financial crimes.
Additional Powers for Director
The Director may also direct reporting entities to obtain an audit of their records if deemed necessary during the course of any inquiry or investigation. The expenses related to such audits will be borne by the Central Government.
Consequences of Non-Compliance
Failure to comply with these regulations can result in severe penalties, including warnings, specific instructions, reports on measures taken, and monetary penalties up to one lakh rupees for each failure.
Key Highlights
- Records related to transactions with clients must be kept for five years from the date of transaction.
- Reporting entities must verify client identities through Aadhaar authentication or alternative methods.
- Director may seek additional information from reporting entities as needed.
- Failure to comply with regulations can result in penalties up to one lakh rupees per failure.
What This Means
The new regulations aim to strengthen financial transparency and reduce the risk of financial crimes. Reporting entities must ensure that they maintain accurate records and adhere to strict identity verification processes. The Director will have greater powers to seek information and impose penalties for non-compliance.