The Central Government is all set to monitor international transactions over Rupees 50,000/- as per the new Prevention of Money-laundering (Maintenance of Records) Rules, 2005 (PMLA Rules).
Under the new guidelines, every international transaction exceeding Rs 50,000 would be scrutinized more closely. A reporting entity will have to identify the clients, authenticate their identities, and determine the objective of the business if it is not clearly stated. It will verify their identity and also ascertain purpose of the business if not well defined.
“Every reporting entity shall…identify its clients, verify their identity using reliable and independent sources of identification, obtain information on the purpose and intended nature of the business relationship, where applicable and take reasonable steps to understand the nature of the customer’s business, and its ownership and control,” the notification said.
The notification also stated that the reporting entity also has to “determine whether a client is acting on behalf of a beneficial owner, and identify the beneficial owner and take all steps to verify the identity of the beneficial owner, using reliable and independent sources of identification,” the notification said.
The notification said, “In the principal rules, for rule 3A, the following rule shall be substituted, namely:- 3A. Implementation of policies by groups.– (1) Every reporting entity, which is part of a group, shall implement group-wide programmes against money laundering and terror financing, including group-wide policies for sharing information required for the purposes of client due diligence and money laundering and terror finance risk management and such programmes shall include adequate safeguards on the confidentiality and use of information exchanged, including safeguards to prevent tipping-off.”
The implementation of these rules will further tighten the record keeping in case of international transactions above Rs 50,000 to prevent terror financing.
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