Central Govt notifies list of activities to be included under the purview of “person carrying on designated business or profession” under the PMLA, 2002

The Ministry of Finance (“Ministry”) has notified the following activities, when carried out in the course of business on behalf of or for another person, as an activity under Section 2 (1) (sa) (vi) of the Prevention of Money-laundering Act, 2002 (“Act”):

• acting as a formation agent of companies and limited liability partnerships;
• acting as (or arranging for another person to act as) a director or secretary of a company, a partner of a firm or a similar position in relation to other companies and limited liability partnerships;
• providing a registered office, business address or accommodation, correspondence or administrative address for a company or a limited liability partnership or a trust;
• acting as (or arranging for another person to act as) a trustee of an express trust or performing the equivalent function for another type of trust; and
• acting as (or arranging for another person to act as) a nominee shareholder for another person.

Additionally, it has been clarified that the following activities will not be regarded as activity for the purposes of the abovementioned provision:

• any activity that is carried out as part of any agreement of lease, sub-lease, tenancy or any other agreement or arrangement for the use of land or building or any space and the consideration is subjected to deduction of income-tax as defined under section 194-I of Income-tax Act, 1961
• any activity that is carried out by an employee on behalf of his employer in the course of or in relation to his employment
• any activity that is carried out by an advocate, a chartered accountant, cost accountant or company secretary in practice, who is engaged in the formation of a company to the extent of filing a declaration as required under the provisions of the Companies Act, 2013
• any activity of a person which falls within the meaning of an intermediary as defined under Prevention of Money-laundering Act, 2002.

Background:

Section 2 (1) (sa) of the Prevention of Money-laundering Act, 2002 defines what “person carrying on designated business or profession” means. Clause (vi) further states that the Central Government has power to notify/designate any such activity under this definition of “person carrying on designated business or profession“. In light of this, the present Gazette Notification has been issued adding specific activities to the list.

Source: Ministry of Finance