Money laundering rules: Definition of beneficial owners tightened

The Centre on Tuesday notified the amendment in the Prevention of Money-laundering (Maintenance of Records) Rules, 2005, further tightening the definition of beneficial owner for a partnership firm.

It has reduced the threshold for beneficial owners to 10% of entitlement of capital or profits of a partnership firm from 15% earlier. All partners crossing that threshold will now be considered beneficial owners.

Even partners who have ownership of less than 10% of the capital or profits of the partnership but exercise control through other means like right to control the management or policy decisions of the partnership firm, will now be considered beneficial owners.


"This amendment ensures that the beneficial owner will include not only partners who have ownership of more than 10% of the capital or profits but also those who have ownership of 10% or less of the capital or profits of the partnership but exercise control through other means," said S Vasudevan, executive partner at Lakshmikumaran and Sridharan Attorneys.