Ministry of Finance amends the Prevention of Money-laundering (Maintenance of Records) Rules, 2005 with immediate effect
The Ministry of Finance has issued the Prevention of Money-laundering (Maintenance of Records) Amendment Rules, 2023 (“New Rules”) to further amend the Prevention of Money-laundering (Maintenance of Records) Rules, 2005 (“Principal Rules”) with immediate effect.
The following are the Key Highlights under the New Rules :
1. The New Rules have amended the definition of Non-profit organisation. Non-profit organization means any entity or organisation, constituted for religious or charitable purposes referred to in clause (15) of section 2 of the Income-tax Act, 1961 that is registered as a trust or a society under the Societies Registration Act, 1860 or any similar State legislation or a Company registered under the section 8 of the Companies Act, 2013.
2. Further, Politically Exposed Persons (“PEPs”) have been defined as individuals who have been entrusted with prominent public functions by a foreign country, including the heads of States or Governments, senior politicians, senior government or judicial or military officers, senior executives of state-owned corporations and important political party officials.
3. The New Rules have amended the Controlling Ownership Interest where the client is a company under Rule 9(3). Now, the Controlling Ownership Interest in a company has been reduced to 10% as against 25%. In case, where the client is a Trust, the Controlling Ownership Interest has been reduced to 10 % as against 15%.
4. Under the New Rules, following information must be submitted to the reporting entity where the client is a company along with the existing documents :
• the names of the relevant persons holding senior management position.
• the registered office and the principal place of its business if it is different.
5. Under the New Rules, following information must be submitted to the reporting entity where the client is a partnership firm along with the existing documents :
• the names of all the partners and address of the registered office, and the principal place of its business, if it is different.
6. Under the New Rules, following information must be submitted to the reporting entity where the client is Trust along with the existing documents :
• the names of the beneficiaries, trustees, settlor and authors of the trust and the address of the registered office of the trust
• list of trustees and documents as are required for individuals under sub-rule (4) for those discharging role as trustee and authorised to transact on behalf of the trust
7. Further a new Rule 9A has been inserted to provide that every Banking Company or Financial Institution or intermediary should register the details of a client, in case of client being a non-profit organisation, on the DARPAN Portal of NITI Aayog, if not already registered, and maintain such registration records for a period of five years after the business relationship between a client and a reporting entity has ended or the account has been closed, whichever is later.
8. Under the New Rules, where the client company has submitted any documents to the reporting entity, it should submit any update of such documents to the reporting entity, for the purpose of updating the records within 30 days of such updation.
Source : Ministry of Finance
