Government Tightens PMLA Rules Bring For 10 Percent Stake Under Benefits Owner

PMLA Rules: The government has made the PMLA rules more stringent. According to the official order, the Department of Revenue has tightened the rules under the Anti-Money Laundering Act to make the obligations more stringent for entities like banks, stock brokers and insurers.

The Money Laundering Second Amendment Rules brought by the Department of Revenue is to ensure more effective compliance. According to this rule amendment made by the Revenue Department, now the person holding 10 percent stake in the company will also come under the category of beneficial owners. This means that even those with 10 per cent stake will get the benefit of the company. Earlier this limit was fixed at 15 percent.

The government has made changes in the Prevention of Money Laundering Rules-2005. Under this rule, the principal officer of the reporting entity defines the list of records on behalf of the beneficial owners of partnership firms and reporting entities. The Chief Officer is responsible for reporting information to the Financial Intelligence Unit.

The amendments are also aimed at improving transparency to the customers of reporting entities such as banks and financial institutions. A reporting entity must disclose whether a client is acting on behalf of a beneficial owner and verify the beneficial owner’s identity at the time of initiating an account-based relationship.

It is also being said that under this change, those who have less than 10 percent stake or profits will also be included. Only those who have 10 percent stake will not be given its benefit.

Records to be kept of transactions

As per the stricter regulation and monitoring, now the reporting unit will also have to maintain a record of customer transaction analysis. Earlier, the Finance Ministry had notified changes in PMLA provisions in May 2023. Under this, chartered and cast accountants and company secretaries were made liable under the Anti-Money Laundering Act for certain financial transactions with their clients. Under this transaction, purchase and sale of any property and management of bank accounts are included.

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