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May 12, 2023
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More teeth for PMLA
The government’s apparent determination to strengthen the laws and systems against money laundering is unexceptionable, given that curbing black money and formalisation of the economy are its declared policy priorities. Over the last few years, it has acted on these objectives quite convincingly, though it is debatable whether and how much these efforts have borne fruit. The expansion of the clan of “reporting entities” under the Prevention of Money Laundering (PMLA) Act, 2005, by including the whole brethren of chartered accountants, company directors/secretaries, partners of firms and trustee among others, will doubtless help constrict the flow of criminal money into the country’s financial system and the larger economy. It will make it much more difficult for the launderers to camouflage the illegal source of cash, and help foil the co-mingling of such funds with legitimate money.
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May 11, 2023
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PMLA net widens; directors covered
The ambit of the Prevention of Money Laundering Act (PMLA), 2002 is being cast wider, as the government has resorted to the stringent law to clamp down on shell companies and prepare itself for the compliance review by the Financial Action Task Force (FATF), in November. After chartered & cost accountants and company secretaries, the government has now included directors of companies, partners of firms, trustees of express trusts as well as nominee shareholders as “reporting entities” under the Act. Even persons arranging these officials for another person will be reporting entities, according to the notification issued by the finance ministry late Tuesday.
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