India's onsite assessment by the Financial Action Task Force (FATF) is slated for November while the assessment is likely to come up in discussion in June 2024.

Financial Action Task Force has recently stated that a violent extremist organisation in India collected funds through well-structured networks including offline and online fundraising mechanisms such as circulating QR codes and account details.

Without naming any specific organisation, FATF has underlined that funds for mosques or public religious places are being ultimately used to procure arms and ammunition for training the cadres.

Ahead of India's mutual evaluations by the FATF, the Centre has taken several measures to implement the recommendations of this multilateral institution.

Back in 2010, a review was proposed to include the notification of practicing Chartered Accountants, Company Secretaries, and Cost and Management Accounts as reporting entities.

The FATF carries out the review to determine whether it's recommended measures to curb money laundering and terror financing that may have been taken up by any member country.

In May 2023, the Finance Ministry had issued a notification designating the three categories of finance professionals as 'persons carrying on a designated business or profession' under the Prevention of Money Laundering Act (PMLA).

The law provides that a 'reporting entity' means a banking company, financial institution, intermediary or a person carrying on a designated business or profession.

Under the same notification by the Government of India, five more activities were brought under the same preview. They included acting as a formation agent of companies and limited liability partnerships and acting as a director or secretary of a company, a partner of a firm or a similar position in relation to other companies and LLPs.

Those providing a registered office, business address, and correspondence for a company of acting as a trustee of an express trust or performing the equivalent function for another type of trust or acting as a nominee shareholder for another person were also included. Guidelines were issued by government departments to these respective people.

A reporting entity has to maintain a record of all transactions and documents evidencing the identity of its clients and beneficial owners, account files, and business correspondence with them and furnish information when sought by the respective authority.

Prior to the commencement of each specified transaction, it has to verify the identity of his clients, examine the ownership and financial position including sources of funds of the client, and record the purpose behind the specified transaction and the intended nature of the relationship between the transacting parties.

This move will lead to further monitoring of greater scrutiny transactions. The information gathered during these measures shall be maintained for 5 years.

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Reference:

• thehindu.com
• indianexpress.com