Prevention of Money Laundering: Govt to tighten norms for international transactions above Rs 50,000

Money Laundering Prevention: The union government notified an amendment to the Prevention of Money Laundering Rules (Maintenance of Records), 2005. As per the notification, the record keeping will see a further tightening of the rules in case of international transactions above Rs 50,000 to prevent terror financing.

International Transaction Scrutiny

The reporting entity of the international transaction above Rs 50,000 will have to identify clients, verify their identity and also ascertain purpose of the business if not well defined. The rules also enforce adequate safeguards on the confidentiality and use of information exchanged by the reporting entities. It also mandates safeguards to prevent tipping-off.

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"Every reporting entity shall...identify its clients, verify their identity using reliable and independent sources of identification, obtain information on the purpose and intended nature of the business relationship, where applicable and take reasonable steps to understand the nature of the customer's business, and its ownership and control," the notification says.

Reporting entity means a banking company, financial institution, intermediary or a person carrying on a designated business or profession.

Along with identification and verification of the clients, the reporting entities also has to determine whether a client is acting on behalf of a beneficial owner, and identify the beneficial owner and take all steps to verify the identity of the beneficial owner, using reliable and independent sources of identification