CAs helping their Clients in Money Laundering Likely to get Punished under PMLA

Reportedly, the Government is planning to insert penal provisions in Prevention of Money Laundering Act so as to impose penalty on Chartered Accountants who helps their clients in money laundering.

An article published in Hindustan Times says that “the government has moved to punish chartered accountants if they help clients hide ill-gotten wealth through opaque bank transactions, or money laundering, two top officials said on Tuesday”.

The proposal to tweak the Prevention of Money Laundering Act (PMLA) came from the revenue department on the instruction of the Prime Minister’s Office (PMO), one of the officials from the finance ministry said. The second source is from the PMO. Both officials refused to be identified because of the sensitivity of the matter.

Under the present law, persons involved in money laundering would get imprisonment up to seven years and the confiscation of property. However, the provision doesn’t include chartered accountants. Sources do not confirm the nature of punishment to be prescribed for CAs.

The PMLA stipulates up to seven years in jail and the confiscation of property of those involved in money laundering but that doesn’t include chartered accountants. The proposed amendment doesn’t make it clear what the punishment would be for CAs.

Income tax and corporate laws allow the prosecution of CAs for willful wrongdoing. Recently, the institute of Chartered Accountants of India (ICAI) had took strict disciplinary actions against four Chartered Accounts involved in money laundering post-demonetization.