The Ministry of Finance, India, has recently issued a notification under the Prevention of Money Laundering Act (PMLA), 2002 to expand the definition of “persons carrying on designated business or profession” and bring in more activities under the purview of AML/CFT compliance.
The notification provides to include the following activities performed on behalf of or for another person in the course of business:
- acting as a formation agent of companies and Limited Liability Partnerships (LLP)
- acting as a director/secretary of a company, a partner of a firm or a similar position or arranging any person to act so
- providing a registered office, business address or accommodation, correspondence or administrative address for a company, LLP, or a trust
- acting as a trustee of an express trust or performing a similar function for any other type of trust or arranging any other person to act so
- acting as a nominee shareholder for another person or arranging for any other person to act so
Now, any person conducting the above-mentioned activities would be subject to PMLA and be obligated to comply with AML/CFT requirements, such as performing Client Due Diligence, appointing an AML Principal Officer, identifying and reporting Suspicious Transactions to FIU-IND, etc.
However, the notification has clarified and specifically excluded the below-mentioned activities from the definition of “persons carrying on designated business or profession” and, thus, not subject to PMLA:
- activity carried out as part of lease/sub-lease/tenancy agreement or arrangement for the use of land or building and the consideration is subjected to TDS under Section 194-I of Income Tax Act, 1961
- activity conducted by an employee on behalf of his employer in the course of employment arrangement
- filing of the declaration, as required under the Companies Act, 2013, by a practising Advocate, Chartered Accountant, Cost Accountant or Company Secretary engaged in the company incorporation.
