PROFESSIONALS BROUGHT UNDER PMLA NET IF THEY MANAGE CLIENT ASSETS

FINANCE MINISTRY BRINGS PROFESSIONALS CARRYING FINANCIAL TRANSACTIONS OF CLIENTS UNDER PMLA MONEY LAUNDERING LAW

NEW DELHI-04/05/2023: The Central Government, through a recent Gazette notification has notified that the financial transactions carried out Chartered Accountants, Company Secretaries and Cost and Works Accountants and on behalf of his/her client, in the course of his or her profession, in relation to certain activities will be covered under Prevention of Money Laundering Act, 2002.

As per Central Government, practicing professionals in the field of Chartered Accountancy, Company Secretaries and Cost and Works Accountants are now brought under the ambit of the Prevention of Money Laundering Act (PMLA) if any financial transactions are executed on behalf of clients.

The Finance Ministry in a notification today said the relevant sections of the Prevention of Money Laundering Act, 2002, or PMLA, will apply to all client transactions done by any CA, CS and CWA

Notifying changes to the Prevention of Money-laundering Act on Thursday, the Finance Ministry brought in practicing chartered accountants, company secretaries, and cost and works accountants carrying financial transactions on behalf of their clients into the ambit of the money laundering law.

In a notification dated May 3, the Finance Ministry said that an activity will be recognised under the PMLA Act Accordingly, to the notification that in exercising of the powers conferred by sub-clause (vi) of clause (sa) of sub-section (1) of section 2 of the Prevention of Money-laundering Act, 2002 (15 of 2003), the Central Government has notified that the financial transactions carried out by a relevant person on behalf of his client, in the course of his or her profession, in relation to the following activities-

(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,

shall be an activity for the purposes of said sub-section.

Explanation 1.- For the purposes of this notification ‘relevant person’ includes —

(i) an individual who obtained a certificate of practice under section 6 of the Chartered Accountants Act, 1949 (38 of 1949) and practicing individually or through a firm, in whatever manner it has been constituted;

(ii) an individual who obtained a certificate of practice under section 6 of the Company Secretaries Act, 1980 (56 of 1980) and practicing individually or through a firm, in whatever manner it has been constituted;

(iii) an individual who has obtained a certificate of practice under section 6 of the Cost and Works Accountants Act, 1959 (23 of 1959) and practicing individually or through a firm, in whatever manner it has been constituted.

Explanation 2.- For the purposes of this notification ‘firm’ shall have the same meaning assigned to it in sub-clause (i) of clause (23) of section 2 of the Income-tax Act, 1961 (43 of 1961).

Ministry of Finance (Department of Revenue) in a NOTIFICATION at New Delhi, the 3rd May, 2023 Practicing CA, CS and CWAs brought under PMLA if financial transactions executed on behalf of any client. Financial transactions made by chartered accountants, company secretaries and cost and works accounts on behalf of their clients will now come under India’s law to prevent money laundering. The Finance Ministry in a notification today said the relevant sections of the Prevention of Money Laundering Act, 2002, or PMLA, will apply to all client transactions done by any CA, CS and CWA.

Including CA, CS and CWA under the PMLA also works as a deterrence against misuse of their professional license. The PMLA has been used in seizing assets of big economic offenders and fugitives. The move is likely to strengthen the fight against money laundering as finance professionals will have to do better due diligence while dealing with their clients. While the ambit has been widened, lawyers seem to have been kept out of this.