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Corporate Laws Central Ministry of Finance Prevention of Money-laundering Act, 2002

Prevention of Money-laundering (Maintenance of Records) Second Amendment Rules, 2023

04-Sep-2023 | G.S.R. 652(E)

Ministry of Finance has issued a Notification amending the Prevention of Money-laundering (Maintenance of Records) Rules, 2005, with the Prevention of Money-laundering (Maintenance of Records) Second Amendment Rules, 2023, effective from September 4, 2023. The key highlights of the amendment: 1. Client Due Diligence (CDD): In Rule 9, Client Due Diligence, the definition of beneficial owner for partnership firms has been updated. The beneficial owner is now defined as the natural person(s) who, either alone or together, or through one or more juridical persons, has ownership of or entitlement to more than ten percent of the capital or profits of the partnership. Control, in this context, includes the right to control the management or policy decisions. Prior to the amendment, the threshold for beneficial ownership in partnership firms was set at fifteen percent. 2. Verification of Authorized Persons: A new provision has been added after sub-rule (10) regarding the verification of authorized persons when the client is a juridical person (a legal entity like a corporation or trust). The reporting entity (such as a financial institution) is now required to verify that any person claiming to act on behalf of such a client is duly authorized. Additionally, the identity of that authorized person must be verified. For trusts, it is specified that the trustees must disclose their status at the commencement of an account-based relationship or when carrying out transactions as specified in the rules.

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