Ministry of Finance notified changes to the PMLA 2002

• New rule has brought in practicing Chartered Accountants, Company Secretaries, and Cost and Works Accountants carrying out financial transactions on behalf of their clients into the ambit of PMLA.
• Financial transactions that would be considered for monitoring include buying and selling of any immovable property; managing of client money, securities or other assets; management of bank, savings or securities accounts etc.
• Amendments are expected to aid investigative agencies further in their probe against dubious transactions involving shell companies and money laundering.

Money laundering

• Money laundering is the illegal process of making large amounts of money generated by criminal activity, such as drug trafficking or terrorist funding, appear to have come from a legitimate source. The money from the criminal activity is considered dirty, and the process “launders” it to make it look clean.
• Anti-money laundering (AML) seeks to deprive criminals of the profits from their illegal enterprises, thus eliminating the main motivation for them to engage in such nefarious activities. Illegal and dangerous activities, such as drug trafficking, people smuggling, terrorism funding, smuggling, extortion, and fraud, endanger millions of people globally and impose tremendous social and economic costs upon society.

About FATF

• The Financial Action Task Force (FATF) is an intergovernmental organization that designs and promotes policies and standards to combat financial crime. Recommendations created by the Financial Action Task Force (FATF) target money laundering, terrorist financing, and other threats to the global financial system. The FATF was created in 1989 at the behest of the G7 and is headquartered in Paris.
• The Financial Action Task Force (FATF) makes recommendations for combating financial crime, reviews members’ policies and procedures, and seeks to increase acceptance of anti-money laundering regulations across the globe.
• As of 2021, there were 39 members of the Financial Action Task Force, including the United Nations and the World Bank and India as well.
• Change also assumes significance ahead of the proposed assessment of India under Financial Action Task Force(FATF) expected to be undertaken later this year.
• FATF recommendations to member countries include reporting of suspicious transactions taken by professionals such as lawyers, notaries, other independent legal professionals and accountants on behalf of or for a client.
• FATF is global money laundering and terrorist financing watchdog
• PMLA Act was enacted in 2002 in response to India’s global commitment (including Vienna Convention) to combat money laundering.
• It enables authorities to confiscate property earned from illegally gained proceeds.
• Enforcement Directorate (ED), a financial investigation agency under Department of Revenue, enforces PMLA.

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