Center amends anti-money laundering rules, brings ‘politically exposed persons’ under PMLA

The government has changed the provisions of the Anti-Money Act, requiring banks and financial institutions to record financial transactions by politically exposed persons (PEP).

Also, according to the provisions of the Anti-Money Laundering Act (PMLA), financial institutions or reporting agencies are required to collect information about the financial transactions of non-profit organizations or NGOs.

Under the amended PML rules, the Treasury Department defined PEPs as “persons entrusted by a foreign country with prominent public functions, including heads of state or government, senior politicians, senior government or judicial or military officials, senior state officials-corporations and important political party functionaries”.

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Financial institutions are also required to register details of their NGO clients on Niti Aayog’s Darpan portal and keep the records for five years after the business relationship between a client and a reporting entity has ended or the account has been closed, whichever is the case later said the change.

Following this change, banks and financial institutions are now required not only to keep records of financial transactions by politically exposed persons and NGOs, but also to share them with the Enforcement Directorate if necessary.

The changes to the PMLA rules also include a tightening of the definition of beneficial owners under the Money Laundering Act and requiring reporters such as banks and crypto platforms to collect information from their customers.

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Under the changes, any individual or group that owns 10% of the shares in the customer of a “reporting entity” is now considered a beneficial owner if the previously applicable 25% ownership threshold is exceeded.

According to the Anti-Money Laundering Act, “reporting offices” are banks and financial institutions, as well as companies engaged in the real estate and jewelery sectors. This also includes intermediaries in casinos and crypto or virtual digital assets.

Previously, these companies were required to maintain KYC details or records of documents proving the identity of their customers, as well as account records and business correspondence related to customers. You are required to keep records of all transactions including record of all cash transactions greater than Rs 10 lakh.

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They now also have to collect the details of the registered office and head office of their customers.

With PTI inputs