Under the Prevention of Money Laundering Act (PMLA), reporting entities are required to furnish transaction and client-related information to the Director, Financial Intelligence Unit – India (FIU-IND), through procedures defined in consultation with their regulators. Typically, this process is handled via the institution’s Principal Officer, who acts as the nodal point for compliance.
Strict timelines apply: Suspicious Transactions must be reported within seven working days of being identified, while other specified reports (such as monthly transaction reports) are due by the 15th of the following month.
1. Understand Your Obligations
• Definition of Reporting Entity: Includes banking companies, financial institutions, intermediaries, and certain designated professionals.
• Appoint Key Personnel: Reporting entities must appoint a Principal Officer and a Designated Director, and communicate their details to FIU-IND.
• Maintain Prescribed Records: Institutions must preserve transaction and client records as required under the PMLA Rules and guidelines issued by the Director.
2. Identify and Report Suspicious Transactions
• Timely Reporting: If a transaction is flagged as suspicious, it must be reported to FIU-IND within seven working days of determining its suspicious nature.
• Other Reporting Obligations: Entities must also report other specified transactions, such as:
– Large cash deposits/withdrawals
– Transactions involving counterfeit currency
– Certain cross-border transactions
3. Understand the Director’s Role and Procedures
• FIU-IND Authority: FIU-IND, under the Ministry of Finance, is the designated authority for receiving and analyzing financial intelligence.
• Consultation with Regulators: The Director specifies reporting procedures in consultation with sectoral regulators (e.g., RBI, SEBI, IRDAI).
• Applicable Rules: The manner, format, and timelines of furnishing information are governed by the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005, and subsequent updates.
4. Action and Compliance
• Internal Mechanism: Establish strong internal systems for monitoring, record-keeping, and timely reporting.
• Consequences of Non-Compliance: Failure to adhere to prescribed procedures can result in regulatory penalties, reputational risks, and operational challenges.
✅ Key Takeaway
A proactive compliance framework—with clear roles, reliable systems, and prompt reporting—is essential for meeting obligations under PMLA and for protecting the integrity of the financial system.
📋 PMLA Reporting Compliance Checklist (Quick Summary)
| Area | Key Requirement | Action Point ✅ |
| Reporting Entity | Includes banks, FIs, intermediaries, and designated professionals | ⬜ Confirm applicability |
| Appointment of Officers | Appoint Principal Officer & Designated Director; notify FIU-IND | ⬜ File details |
| Record Maintenance | Maintain transaction & client records as per PMLA Rules | ⬜ Implement storage system |
| Suspicious Transactions | Report to FIU-IND within 7 working days of identifying suspicious activity | ⬜ File STR promptly |
| Other Transactions | Report large cash, counterfeit currency, and cross-border transactions as specified | ⬜ Submit reports monthly |
| Procedures & Rules | Follow FIU-IND procedures & PML (Maintenance of Records) Rules, 2005 | ⬜ Stay updated |
| Internal Compliance | Establish monitoring and reporting mechanisms | ⬜ Conduct regular reviews |
| Penalties | Non-compliance can attract regulatory action and penalties | ⬜ Ensure 100% compliance |
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