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The Indian Finance Ministry has revised the definition of "beneficial owner" under its anti-money laundering law, requiring reporting entities like banks and crypto platforms to collect more detailed information about their clients. According to the amendments to the Prevention of Money Laundering Rules, any individual or group holding at least 10% ownership in a client of a reporting entity will be considered a beneficial owner, down from the previous threshold of 25%.
Reporting entities, which include banks and financial institutions, real estate and jewellery firms, intermediaries in casinos, and virtual digital asset providers, are now required to collect additional details such as the registered office address and principal place of business of their clients. Previously, they were only required to maintain basic know-your-customer (KYC) details and records of clients' identity documents.
Additionally, reporting entities must identify beneficial owners where the client is acting on behalf of its beneficial owner. Non-profit organisations are now required to be registered on the DARPAN portal of Niti Aayog, and reporting entities must maintain registration records for five years after the closure of the business relationship or account.
The Prevention of Money Laundering Act (PMLA) is a law enacted in India in 2002 to prevent money laundering and other illegal financial activities. The PMLA was amended in 2009 to bring it in line with international standards on anti-money laundering measures. The PMLA requires financial institutions and intermediaries, including banks, financial companies, stockbrokers, and mutual funds, to follow certain rules to prevent money laundering.
The amendments to the PMLA Rules aim to strengthen India's efforts to combat money laundering activities and ensure the transparency and integrity of the financial system. By lowering the threshold for beneficial ownership and requiring more detailed information about clients, reporting entities will have greater visibility into potential money laundering activities and indirect participants.
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