In a significant move, the government has amended the Prevention of Money Laundering Act (PMLA) to broaden its scope, now encompassing individuals serving as formation agents for companies and Limited Liability Partnerships (LLPs). The finance ministry, in a recent notification, has identified five key activities falling under the purview of the amended PMLA.
Covered Activities:
- Formation Agents: Individuals engaged in the formation of companies or LLPs now fall within the anti-money laundering framework.
- Directorship Arrangements: Acting as a director or secretary of a company or arranging for someone else to take on such roles is now subject to PMLA provisions.
- Registered Office Services: Providing services like a registered office, business address, or accommodation for entities triggers anti-money laundering scrutiny.
- Trustee Role: Individuals acting as trustees for express trusts or as nominee shareholders come under the ambit of the amended law.
Exemptions and Focus Areas:
While the amendment casts a wide net, it wisely excludes certain professionals from its purview. Advocates, chartered accountants, cost accountants, and company secretaries are exempted, provided their involvement in company formation is limited to filing a declaration.
Global Compliance Focus:
This move aligns with recent efforts by the government to strengthen anti-money laundering measures, especially in anticipation of an assessment by the Financial Action Task Force (FATF) on India’s adherence to global standards on counter-terror financing and money laundering. The FATF is slated to evaluate India’s implementation of these standards later this year, prompting proactive measures to bolster the country’s regulatory framework.