India expands scope of money laundering law

The law now also includes individuals who provide the company with an office or correspondence address or act as a trustee

The government has further expanded the scope of money laundering regulations bringing under its purview the individuals who provide the company with an office or correspondence address or act as a proxy nominee director or secretary.

As per a notification issued by the Department of Revenue, Ministry of Finance, any individual acting as a proxy for another person for certain activities will be covered under the Prevention of Money Laundering Act (PMLA).

This includes the individuals “providing a registered office, business address or accommodation, correspondence or administrative address for a company or a limited liability partnership or a trust.”

The government, however, clarified that any agreement of lease, sub-lease, tenancy or any other agreement for the use of land, building or space where the rent is subject to tax deduction at source, will not be covered under this.

The broadened law will also cover the persons acting on behalf of another person for formation of companies or limited liability partnerships, acting as (or arranging for another person to act as) a trustee of an express trust or performing the equivalent function for another type of trust, and a nominee shareholder for another person.

In an attempt to crack down on black money, the government has significantly widened the scope of money laundering law.

Last week, a notification was issued to bring chartered accountants, company secretaries and cost and work accountants under its purview. Under the new guidelines, they would now be required to maintain records of all financial transactions they undertake for clients.