These activities include functioning as formation agents of companies or LLPs, and acting as or arranging for another person to act as a director or secretary of a company or partner of a firm.
PMLA provisions would also apply to individuals who provide a registered office, business address or accommodation, correspondence or administrative address for a company or an LLP or a trust.
Individuals acting as a trustee of an express trust or nominee shareholders on behalf of other persons would also be covered under anti-money laundering law.
The notification, however, exempts from its purview advocates, chartered, cost accountants and company secretaries, who are engaged in the formation of a company to the extent of only filing a declaration from.
The government has in recent months tightened various anti-money laundering provisions ahead of assessment by the global watchdog on terror financing and money laundering Financial Action Task Force (FATF).
The agency is scheduled to conduct an assessment of the implementation of anti-money laundering and counter-terror financing standards in India later this year. AMRG & Associates Senior Partner Rajat Mohan said by widening the scope of PMLA, the government has indicated zero tolerance for the persons supporting money laundering activities in India.
“These steps would instil a sense of fear in the mind of wrongdoers,” Mohan said.
Last week, the finance ministry notified changes in PMLA provisions which made chartered and cost accountants and company secretaries liable under the anti-money laundering law for carrying out certain specified financial transactions on behalf of their clients.
These transactions include buying and selling of any properties and management of bank accounts.
It also included transactions involving managing client money, securities or other assets; organisation of contributions for the creation, operation or management of companies; and creation, operation or management of companies, limited liability partnerships or trusts, and buying and selling of business entities.
In March, the ministry amended rules under the PMLA, making it mandatory for banks and financial institutions to record financial transactions of politically exposed persons (PEP).
Also, financial institutions or reporting agencies were mandated to collect information about the financial transactions of the non-profit organisations or NGOs under the PMLA.
The government also made it mandatory for crypto exchanges and intermediaries dealing with virtual digital assets to do KYC on their clients and users of the platform.
It notified that entities dealing in virtual digital assets would be ‘reporting entities’ under the PMLA.