The Prevention of Money Laundering Act (PMLA), 2002 imposes strict obligations on reporting entities such as banks, financial institutions, and intermediaries. These entities must maintain detailed records of transactions and client information to ensure transparency and to assist investigative agencies in detecting and preventing money laundering activities.

At the core of these requirements is the principle that records should enable authorities to reconstruct any transaction—including its nature, amount, date, and the parties involved. Importantly, all suspicious transactions must be recorded, regardless of their value or mode (cash or otherwise).

What Information Must Be Maintained

• Transaction Records – Nature, amount, currency, date, and parties involved in transactions.
• Client and Beneficial Owner Identification – Verified records of clients and their beneficial owners, as defined by the relevant regulator.
• Business Correspondence – All account files and business correspondence related to the client.
• Suspicious Transactions – Records of all suspicious transactions, irrespective of the value or medium of payment.
• Specific High-Value Transactions:
•    • Cash Transactions: Exceeding ₹10 lakhs (or equivalent foreign currency).
•    • Connected Transactions: Series of smaller cash transactions below ₹10 lakhs that collectively cross ₹10 lakhs in a month.
•    • NPO Transactions: Funds received by non-profit organizations exceeding ₹10 lakhs.
•    • Counterfeit Currency: Transactions involving forged notes or securities.
•    • Cross-Border Wire Transfers: Transfers above ₹5 lakhs where India is origin or destination.
•    • Immovable Property: Sale or purchase of property worth ₹50 lakhs or more.

Retention Period

– All records must be maintained for a minimum of five years from the date of the transaction.
– Client identity and beneficial ownership records must be kept for five years after the business relationship ends or the account is closed, whichever is later.

Procedure for Maintenance

• Internal Mechanism – Each reporting entity must establish a system to ensure accurate record-keeping.
• Principal Officer – A designated Principal Officer acts as the compliance point of contact with the Financial Intelligence Unit (FIU-IND) and retains copies of the information furnished.
• Furnishing Information – The Principal Officer is responsible for providing information to FIU-IND as required.
• Reconstruction of Transactions – Records must be detailed enough to allow full reconstruction of transactions by authorities.
• Confidentiality – All information maintained and furnished must be treated as confidential.

Summary Table: Record-Keeping Under PMLA

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