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 detail that individual transactions can be reconstructed if required. Importantly, these obligations now extend beyond traditional financial transactions to cover virtual digital assets (VDAs) and high-value immovable property transactions.
Key Information to Maintain
Reporting entities are required to preserve comprehensive details related to their customers and their activities, including:
* Client and Beneficial Owner Identity: Copies of identification proofs, account opening documents, KYC files, and business correspondence.
* Transaction Details: Records that capture the nature, value, and date of transactions, enabling authorities to reconstruct them when necessary.
Types of Transactions Requiring Record Maintenance
1. Large Cash Transactions – Above ₹10 lakhs (or equivalent in foreign currency).
2. Connected Cash Transactions – Smaller transactions under ₹10 lakhs that, when aggregated in a month, exceed ₹10 lakhs.
3. Non-Profit Organization (NPO) Transactions – Receipts exceeding ₹10 lakhs (or equivalent in foreign currency).
4. Counterfeit Currency Transactions – Use of forged or counterfeit notes or securities.
5. Suspicious Transactions – Any transaction deemed suspicious, regardless of value.
6. Cross-Border Wire Transfers – Transfers exceeding ₹5 lakhs, where India is origin or destination.
7. Immovable Property Transactions – Sale/purchase valued at ₹50 lakhs or more.
8. Virtual Digital Assets (VDAs) – Includes exchange (with fiat or other VDAs) and transfers.
Retention Period for Records
* Transaction Records: Must be retained for five years from the date of the transaction.
* Client Identity Records: Must be retained for five years after the business relationship ends or account closure, whichever is later.
🔎 Summary Table: Record-Keeping under PMLA
| Transaction Type | Threshold | Retention Period |
| Large Cash Transactions | Above ₹10 lakhs | 5 years from transaction date |
| Connected Cash Transactions | Aggregate above ₹10 lakhs in one month | 5 years from transaction date |
| NPO Transactions | Above ₹10 lakhs | 5 years from transaction date |
| Counterfeit Currency | Any value | 5 years from transaction date |
| Suspicious Transactions | Any value | 5 years from transaction date |
| Cross-Border Wire Transfers | Above ₹5 lakhs | 5 years from transaction date |
| Immovable Property | ₹50 lakhs or more | 5 years from transaction date |
| Virtual Digital Assets (VDAs) | Any value (exchange/transfer) | 5 years from transaction date |
| Client Identity Records | All clients & beneficial owners | 5 years after relationship ends/account closure |
✅ **In essence, these record-keeping obligations ensure that financial institutions remain vigilant, investigators can trace illicit money flows, and the financial system is safeguarded from misuse.**
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