The Prevention of Money Laundering Act, 2002 (PMLA) mandates that regulated entities implement adequate measures to fight money laundering and combat terrorism financing. In this context, the Prevention of Money Laundering (Maintenance of Records) Rules, 2005, have been issued, laying down the implementation guide for the regulated entities in India to comply with PMLA.
The Prevention of Money Laundering (Maintenance of Records) Rules provide for adopting the risk-based approach and developing internal AML policies, procedures, systems and controls to prevent these financial crimes. The rules also talk about the Customer Due Diligence process that the regulated entities must follow before onboarding any customer or executing a transaction. The reporting obligations have also been imposed upon entities to report suspicious transactions and other specified activities. The responsibility to ensure compliance with PMLA and its rules within the regulated entity has been entrusted to the Designated Director and the AML Principal Officer.
Compliance with the PMLA implementation provisions given in the Prevention of Money Laundering (Maintenance of Records) Rules is mandatory for all the regulated entities operating in India.
