PMLA Charges on advocate, CA, CMA or CS: MOF issues clarificatory notification

The Ministry of Finance has widened scope under the Prevention of Money Laundering Act (PMLA) to include formation agent, arrangements of director or secretary, providing address, agents, nominee shareholder via issuing Notification.

This notification came one week after the notification which stated that CA, CS and CWAs who Enter into financial transactions on behalf of client brought under PMLA are now under purview of PMLA.

After the issue of notification, there was a wide debate among professionals that they can be brought under PMLA, even if they have certified the documents related to the formation of the company.

The Ministry of Finance has clarified that the following activities shall not be regarded as an activity for the purposes of sub-clause (vi) of clause (sa) of sub-section (1) of section 2 of the PMLA Act, namely:-

(a) any activity that is carried out as part of any agreement of lease, sub-lease, tenancy or any other agreement or arrangement for the use of land or building or any space and the consideration is subjected to deduction of income-tax as defined under section 194-I of Income-tax Act, 1961 (43 of 1961); or

(b) any activity that is carried out by an employee on behalf of his employer in the course of or in relation to his employment; or

(c) any activity that is carried out by an advocate, a chartered accountant, cost accountant or company secretary in practice, who is engaged in the formation of a company to the extent of filing a declaration as required under clause (b) of sub-section (1) of section 7 of Companies Act, 2013 (18 of 2013); or

(d) any activity of a person which falls within the meaning of an intermediary as defined in clause (n) of sub-section (1) of section 2 of the Prevention of Money-laundering Act, 2002 (15 of 2003).

Notification Link