The Prevention of Money Laundering Act (PMLA), 2002 places strict obligations on banks, financial institutions, and other reporting entities to maintain transaction records and client information. These requirements are critical for ensuring transparency, detecting suspicious activities, and enabling investigators to trace the origins of funds when necessary. Under PMLA, records must be kept in such…
The Prevention of Money Laundering Act (PMLA), 2002 is India’s primary legislation to combat money laundering and safeguard the integrity of the financial system. To operationalize its provisions, several rules have been framed—most notably the Prevention of Money-laundering (Maintenance of Records) Rules, 2005, which place specific obligations on banks, financial institutions, and other reporting entities.…
A person shall be guilty of offence of money-laundering if such person is found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is involved in one or more of the following processes or activities connected with proceeds of crime, namely:— (a) concealment; or (b) possession; or…
Enhanced Due Diligence (EDD) is a critical compliance requirement under the Prevention of Money Laundering Act (PMLA), 2002, designed to safeguard the financial system against money laundering and terrorism financing. It applies when customers, transactions, or jurisdictions pose higher risks, demanding stricter scrutiny beyond routine checks. What Is Enhanced Due Diligence? While Customer Due Diligence…
Money laundering is among the gravest financial crimes worldwide, carrying strict penalties that extend beyond imprisonment to fines, asset confiscation, and even political disqualification. In India, the Prevention of Money Laundering Act (PMLA), 2002, forms the cornerstone of anti-money laundering enforcement, while globally, regulators impose equally stringent measures to deter such crimes. Legal Penalties in…
Money laundering is one of the most serious financial crimes, threatening the integrity of financial systems worldwide. In India, the Prevention of Money Laundering Act (PMLA), 2002 defines and criminalizes this offence under **Section 3**, prescribing strict punishments, including imprisonment and fines. What is Money Laundering? At its core, money laundering is the process of…
The Prevention of Money Laundering Act (PMLA), 2002 is a cornerstone of India’s legal framework to fight financial crimes. It aims to **curb money laundering, tackle black money, and strengthen financial transparency**. By making money laundering a criminal offense, the Act provides for confiscation of illegally acquired assets (proceeds of crime) and imposes stringent punishments,…
Co-lending between banks and Non-Banking Financial Companies (NBFCs) is a strategic partnership model designed to expand credit access in underserved segments while ensuring efficient risk-sharing. Under this framework, both banks and NBFCs jointly finance loans to Priority Sector Assets (PSAs), with each contributing a pre-agreed share and managing the process collaboratively. For banks, this model…
Section 2[(wa) of PMLA Act 2002, states that a “reporting entity” means a banking company, financial institution, intermediary, or a person carrying on a designated business or profession. The Ministry of Finance vide notification dated May 03, 2023 (‘Notification’) has widened the ambit of the term “Reporting Entity” as defined in Section 2(1)(wa), read with…
Banks in India play a crucial role in providing finance to Non-Banking Financial Companies (NBFCs). The approach, however, differs depending on whether the NBFC is registered with RBI or belongs to a category that **does not require RBI registration**. Bank Finance to RBI-Registered NBFCs Banks can extend need-based working capital and term loans to NBFCs…
