Reporting Under PMLA by Professionals – Deciphering ‘On Behalf Of’

INTRODUCTION

Notifications dated 3rd May, 2023 and 9th May, 2023 issued by the Ministry of Finance have the effect of making relevant persons ‘reporting entities’ as more particularly defined by Section 2(1)(sa)(vi) read with Section 2(1)(wa) of the Prevention of Money Laundering Act, 2002 (PMLA).

The 3rd May, 2023 Notification purports to cover within the definition of ‘reporting entities’ those ‘relevant persons’ who carry out ‘financial transactions’ on behalf of his / her client, in the course of one’s profession in relation to certain activities. If the certain activities listed in the Notification are carried out by the ‘relevant person’, then the professional would find himself/herself as a reporting entity under the PMLA. Explanation 1 in the Notification states that a ‘relevant person’ would include:

•    an individual who obtained a certificate of practice under section 6 of the Chartered Accountants Act, 1949 (38 of 1949) and practicing individually or through a firm, in whatever manner it has been constituted;

•    an individual who obtained a certificate of practice under section 6 of the Company Secretaries Act, 1980 (56 of 1980) and practicing individually or through a firm, in whatever manner it has been constituted;Read More