Strictness on NGO in money laundering case, Center tightens screws


The government has reduced the threshold for disclosure or reporting of ‘beneficiaries’ to 10 per cent from the current 25 per cent under the Prevention of Money Laundering Act, increasing the crackdown on non-profit organizations and people with ties to politics or power.

This means that the information of the person holding 10 percent stake in the institution or 10 percent of the capital or profit will have to be given.

Beneficiary means a person who has control or ownership of a person (entity) carrying out financial transactions with a reporting entity covered under the Prevention of Money Laundering Act (PMLA). Along with this, the scope of investigation has also been increased for these two units so that their activities of converting black money into white can be stopped.

Under this, submission of complete details of the names of senior managers of the concerned unit, names of partners, names of beneficiaries, names of trustees, trust makers (settlers) or whoever is legally involved in the formation of the organization Will happen.

So far, the investigation was limited to providing basic KYC of these entities such as registration certificate, copies of Permanent Account Number (PAN card) and documents of legal authorities conducting transactions on behalf of the customers.

The Finance Ministry issued a notification on March 7 saying that the Prevention of Money Laundering (Maintenance of Records) Amendment Rules, 2023 has been amended. It requires customers to make necessary disclosures for due diligence requirements.

Non-profit organizations are formed for the purpose of religion and charity whereas politically active people are individuals who are entrusted with public functions by heads of states or governments of another country. These include senior politicians, senior government or judicial or military officers, senior officers of public sector companies, etc.

These entities will now have to furnish the address of the registered office and principal place of business of the reporting entity. According to the notification of the Ministry, the reporting units will now have to register as non-profit entities on NITI Aayog’s portal ‘Darpan’ as a subscriber and 5 years after discontinuing the work or business or closing the account Registration records will have to be maintained till

The new rules require reporting entities to disclose the identity of beneficial owners.

Sandeep Jhunjhunwala, mergers and acquisitions tax partner at Nangia Andersen LLP, said that beneficial owner means a person or entity that holds more than 25 per cent stake in the profits or capital or shares of the company concerned. Now this limit has been reduced from 25 per cent to 10 per cent. By doing so, the government has attempted to bring indirect partners also under the reporting ambit.


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