Here are some notes on the obligations under the Prevention of Money Laundering Act, 2002 (PMLA) in detail:
- Customer due diligence: Financial institutions and other businesses that are required to comply with the PMLA are required to conduct customer due diligence on their customers. This involves verifying the identity of customers and understanding their financial activities.
- Suspicious activity reporting: Financial institutions and other businesses are required to report suspicious activity to the authorities. This includes activity that may be indicative of money laundering or terrorist financing.
- Record-keeping: Financial institutions and other businesses are required to keep records of their customers’ financial transactions. This includes records of customer identification, account opening, and transactions.
- Internal controls: Financial institutions and other businesses are required to have adequate internal controls in place to prevent money laundering and terrorist financing.
- Training: Employees of financial institutions and other businesses that are required to comply with the PMLA are required to receive training on AML compliance.
The obligations under the PMLA are designed to prevent money laundering and terrorist financing. By complying with the PMLA, financial institutions and other businesses can help to keep the financial system safe from criminals.
Here are some of the penalties for non-compliance with the PMLA:
- Fines: Financial institutions and other businesses that fail to comply with the PMLA can be fined. The amount of the fine can be up to INR 500,000.
- Imprisonment: Individuals who fail to comply with the PMLA can be imprisoned for up to 7 years.
- Asset forfeiture: The authorities can seize assets that have been used in money laundering or terrorist financing.
The penalties for non-compliance with the PMLA are severe. This is to deter financial institutions and other businesses from failing to comply with the law.
Here are some of the resources that are available to help businesses comply with the PMLA:
- The PMLA website: The PMLA website provides information on the law and on how to comply with it.
- The Financial Intelligence Unit – India (FIU-IND): The FIU-IND is a government agency that is responsible for receiving and analyzing suspicious activity reports. The FIU-IND also provides guidance on AML compliance.
- The Reserve Bank of India (RBI): The RBI is the central bank of India and has a significant role in AML compliance. The RBI has issued a number of circulars and guidelines on AML compliance, which are binding on all financial institutions regulated by the RBI.
By complying with the PMLA, financial institutions and other businesses can help to keep the financial system safe from criminals and can protect their reputation.