CAs, CS, cost accountants can now be hauled up under PMLA

Chartered and cost accountants and company secretaries can now be hauled up under the anti-money laundering law for carrying out certain specified financial transactions on behalf of their clients.

According to a notification to this effect issued by the Finance Ministry on May 3, these transactions include buying and selling of any properties and management of bank accounts.

The other categories of transactions listed in the notification are 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.

It was further observed that chartered accountants will be equally responsible in terms of penalty and prosecution under the Prevention of Money Laundering Act, 2002 (PMLA).

"The responsibility of the client and CA will be equal if the PMLA provisions are invoked. CAs can now report certain transaction to regulators if they feel that there is a violation of PMLA provision," they added.

The Institute of Chartered Accountants of India (ICAI) in a statement said that the accountants have now become reporting entity for the purposes of these specified transactions.

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"As a reporting entity they have to do KYC of all clients entering into above transactions and maintain record thereof," ICAI said.

It further said that ICAI will conduct an awareness programme for its members in relation to such financial transactions which are already prohibited on behalf of one's client, in the course of his or her profession.

"ICAI will also continue to work with the authorities and other regulators so that these changes are implemented in the right perspective and role of professionals is understood," ICAI added.

The government has been tightening PMLA provisions in recent months to check black money.

In March, the ministry had 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 of their clients and users of the platform.

It notified that entities dealing in virtual digital assets would be 'reporting entity' under the PMLA.