View: ICAI must play a positive role by rolling out a standard PMLA solution
reporting entities (REs) under Prevention of Money Laundering Act (PMLA) 2002 to include practising chartered accountants, cost accountants and company secretaries. This is a welcome step, as many were found involved in money laundering activities, sometimes unknowingly. Auditors and legal professionals had been left out of the scope of this notification.
The scope of activities for such reporting leaves out traditional practices like:
- Buying and selling of immovable property.
- Managing of client monies, securities and other assets.
- Managing of banks, savings or security accounts.
- Organisation of contributions for creation, operation or management of companies.
- Creation, operation or management of companies, LLPs or trusts, and buying and selling of business entities.
The key responsibilities that have been allocated to these professionals include:
- Developing a KYC/anti-money laundering (AML) programme, and appointing a reporting authority like a principal officer and designated director.
- Conduct KYC of clients covered under the above-mentioned activities when entering a business relationship and undertaking any big transaction.
- Review transactions based on risk perception, and collect documents required for due diligence.
- Report suspicious and other specific transactions to Financial Intelligence Unit-India (FIU-IND) through respective regulatory bodies.
- Maintain records regarding customers and transactions for 5 years from the end of the relationship with the client.
On first read, it will seem that many small practitioners, especially in tier-2 and -3 cities, providing audit, assurance and taxation-related services will be unaffected by the new PMLA guidelines. However, scrutiny based on the
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