Nagpur :- The Prevention of Money Laundering Act (PMLA) will apply to practicing professionals in the fields of Chartered Accountancy, Company Secretaries, and Cost and Works Accountants it they carry out any financial transactions on their client’s behalf, according to a notification released by the Central Govemment on May 3, 2023. This notice has been given according to the Prevention of Money Laundering Act, 2002 (15 of 2003)’s subclause (vi) of clause (sa) of sub-section (1) of section 2.
If CA, CS, and CMA handle client assets, they are included in the PMLA network. For the purposes of the PMLA, the following financial transactions made by a pertinent person on behalf of his or her client in the course of their profession will be regarded as an activity: Purchase and sale of all real estate, managing the funds, securities, or other assets of clients, control over bank, savings, or investment accounts, organisation of financial support for business formation, management, or operation. Creation, management, or operation of corporations, limited liability partnerships, or trusts, as well as the acquisition and disposal of corporate entities.
The term “relevant person is defined in Explanation 1 of the notification to include people who obtained a certificate of practise under Section 6 of the Chartered Accountants Act of 1949, the Company Secretaries Act of 1980, or the Cost and Works Accountants Act of 1959 and are practising either independently or through a firm, regardless of how it has been organised. The definition of “firm” in Explanation 2 states that it has the same meaning as that given to it in sub-paragraph (1) of clause (23) of Section 2 of the Income-tax Act of 1961.
By requiring that working professionals in various sectors abide by the PMLA when carrying out financial transactions on behalf of clients, the notification seeks to prevent money laundering and terrorist funding. According to the PMLA, reporting firms must keep track of all transactions, confirm clients’ identities, and alert the authorities to any questionable activity. Chartered Accountants in practise as well as Company Secretaries and Cost and Works Accountants must be aware of this notification and make sure they abide by the PMLA while carrying out financial transactions on behalf of clients. Non-compliance with the PMLA may result in fines and legal action. Considering the onerous compliance requirements and low conviction rate under the law, the inclusion of practising CAS, CSS, and CWAs under the purview of the Prevention of Money Laundering Act is a significant step. However, the inclusion of CAS, CSS, and CWAS was utterly unnecessary on the part of the government. Services including company formation by CA, CS, and CWA have been included under PMLA as a result of a few undesirable events. Professional organisations established in accordance with a number of Acts of Parliament already regulate these experts.
