Money launderers face spring-cleaning
Full-fledged money changers, casinos and offshore banks would have to comply with the PMLA rules.
By Deepshikha Sikarwar, TNN |
NEW DELHI: The government is planning to amend the Prevention of Money Laundering Act (PMLA) to extend its coverage to money changers, offshore banks and casinos.
The amendment — which could come in the current session of Parliament after the recess — would place strict reporting and record-keeping obligations on the entities.
Both, restricted and full-fledged money changers, casinos and offshore banks would have to comply with the PMLA rules, a government source told ET.
Full-fledged money changers get licence from RBI to sell or purchase forex for private or business visits abroad. Restricted ones cannot carry out all the activities.
It may be noted that casinos have been allowed offshore at a few places in the state of Goa.
The government’s objective behind bringing the entities under the PMLA is to keep a check on their being used as vehicles to launder money. Besides, India also has to bring a large number of such entities under the PMLA ambit to comply with the Financial Action Task Force (FATF).
FATF is a global inter-governmental body developing and promoting policies to combat money laundering and terrorist financing.
The proposed amendment would be the first amendment to the law that came into effect in 2002.
At present, the PMLA rules apply to banks, financial institutions and intermediaries. The rules, however, did not cover offshore banks.
Offshore banks are deemed foreign branches of domestic banks on which domestic regulations do not apply. The banks can mop up deposits of people outside the country as well as lend to people outside the country.
Under the PMLA rules, every banking company, financial institution and intermediary has to maintain a record of all transactions for 10 years.
In fact, know-your-customer (KYC) guidelines were put in place for opening bank accounts etc to meet the obligations under the PMLA.
Banks have to report all cash withdrawals and deposits above Rs 10 lakh to the Financial Intelligence Unit (FIU) that manages the data and deciphers it into intelligence to be used by various agencies.
Besides, the entities will also have to verify and maintain the records of the identity of all its clients in the prescribed manner. The entities also have to report all suspicious transactions to the FIU.
deepshikha.sikarwar@timesgroup.com
The amendment — which could come in the current session of Parliament after the recess — would place strict reporting and record-keeping obligations on the entities.
Both, restricted and full-fledged money changers, casinos and offshore banks would have to comply with the PMLA rules, a government source told ET.
Full-fledged money changers get licence from RBI to sell or purchase forex for private or business visits abroad. Restricted ones cannot carry out all the activities.
It may be noted that casinos have been allowed offshore at a few places in the state of Goa.
The government’s objective behind bringing the entities under the PMLA is to keep a check on their being used as vehicles to launder money. Besides, India also has to bring a large number of such entities under the PMLA ambit to comply with the Financial Action Task Force (FATF).
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FATF is a global inter-governmental body developing and promoting policies to combat money laundering and terrorist financing.
The proposed amendment would be the first amendment to the law that came into effect in 2002.
At present, the PMLA rules apply to banks, financial institutions and intermediaries. The rules, however, did not cover offshore banks.
Offshore banks are deemed foreign branches of domestic banks on which domestic regulations do not apply. The banks can mop up deposits of people outside the country as well as lend to people outside the country.
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Under the PMLA rules, every banking company, financial institution and intermediary has to maintain a record of all transactions for 10 years.
In fact, know-your-customer (KYC) guidelines were put in place for opening bank accounts etc to meet the obligations under the PMLA.
ADVERTISEMENT
The Association of Mutual Funds of India (Amfi) had also proposed a unique identity number for investors of mutual funds who have to maintain 10-year records of all transactions.Banks have to report all cash withdrawals and deposits above Rs 10 lakh to the Financial Intelligence Unit (FIU) that manages the data and deciphers it into intelligence to be used by various agencies.
Besides, the entities will also have to verify and maintain the records of the identity of all its clients in the prescribed manner. The entities also have to report all suspicious transactions to the FIU.
deepshikha.sikarwar@timesgroup.com
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