CA, CS and CMA Covered Under PMLA for Certain Transactions on Behalf of Client

The government has bought a significant change in the Prevention of Money Laundering Act, 2002 (herein referred to as PMLA) placing responsibility and holding accountable professionals for certain transactions carried on behalf of the clients. In a bid to curb the money laundering transactions, the government has amended the provisions of PMLA by bringing Chartered Accountants (CA), Company Secretaries (CS) and Cost and Management Accountants (CMA) (herein referred to as relevant persons) under the PMLA net. 

When CA CS and CMA are Liable Under the PMLA?

If a relevant person undertakes the following transactions on behalf of the client, then it shall be treated as an activity for the purpose of money laundering:

•  Buying and selling of any immovable property
•  Managing of client money, securities or other assets
•  Management of bank, savings or securities accounts
•  Organisation of contributions for the creation, operation or management of the companies
•  Creation, operation or management of companies, limited liability partnerships or trusts and buying and selling of business entities. 

For the above purpose, the following shall be considered as relevant persons:

•  Individuals who have obtained certificate of practice under Section 6 of the Chartered Accountants Act, 1949 and practicing individually or through a firm
•  Individuals who have obtained a certificate of practice under Section 6 of the Company Secretaries Act, 1980 and practicing individually or through a firm
•  Individuals who have obtained a certificate of practice under Section 6 of the Cost and Works Accountants Act, 1959 and practicing individually or   through a firm

ASC Opinion

The above amendment is a significant one for the government’s attempt to curb money laundering. The government opined that practicing professionals were largely not covered in cases of money laundering. However, for tax experts, this move is uncalled for considering that the conviction rate is low and not all cases involve professionals. Due to certain incidents, the professionals now got covered under the PMLA. One of the significant aspects here is that the lawyers are still not covered under the same.

The government is aggressively tackling the money laundering issues. In the previous attempt, the government widened the scope of the reporting entities under the provisions of money laundering. The amendment concerning professionals is applicable beginning this financial year and the results are expected to unfold in the near future. 

For any further doubt on Prevention of Money Laundering Act, 2002, feel free to contact ASC Group.

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