Prevention of Money Laundering Act, 2002(PMLA) is an Act enacted by the Government of India to prevent money-laundering and to provide for confiscation of property derived from money-laundering. PMLA and the Rules notified there under came into force with effect from July 1, 2005. The Rules 3, 4 and 5 of PMLA 2005 amended by Notification No.15/2005 dated 13th Dec 2005, Notification No.12/2013 dated 17th Aug 2013, and PML (Maintenance of Records) Amendment Rules dated 07.07.2015, specify the procedure and manner for maintenance and retention of records.
Section 12 of Prevention of Money Laundering Act, 2002 provides that every reporting entity shall maintain a record of all transactions, including the information furnished to FIU-IND, in such a manner as to enable it to reconstruct individual transactions. In terms of Rule 3 of the act the following records to be maintained by the reporting entity.
a) All cash transactions of the value of more than Rs.1000000 (Rupees ten lakh) or its equivalent in foreign currency;
b) All series of cash transactions, even though individually each of the cash transaction is below the value of Rs.10 lakh or equivalent value in foreign currency, if they are integrally connected to each other and monthly aggregate value is above Rs.10 lakh.
c) all cash transactions where forged or counterfeit currency notes or bank notes have been used as genuine or where any forgery of a valuable security or a document has taken place facilitating the transactions;
d) all suspicious transactions irrespective of they are made in cash or not;
e) All cross border wire transfers of the value exceeding Rs.5 lakh or its equivalent in foreign currency where either the origin or destination of fund is in India;
f) All purchase and sale of immovable property valued at Rs.50 lakh or more that is registered by the reporting entity.
As per Rule 3 of the Prevention of Money-laundering (Maintenance of Records) Rules, 2005, the reporting entity shall maintain the records for a period of five years from the date of cessation of the transactions with their clients. The records defined under PMLA include the records maintained in the form of books or stored in a computer or such other form as may be prescribed. The reporting entities shall maintain transactions with their clients both in hard and soft copies in accordance with the procedure and manner as may be specified by the Reserve Bank of India or the Securities and Exchange Board of India or the Insurance Regulatory and Development Authority, as the case may be.
