Government amends KYC to add non-profit organisations, ‘politically exposed persons’

The Finance Ministry has amended the Prevention of Money Laundering (Maintenance of Records) Rules for widening the scope of Know your Customer (KYC) norms to consist of Politically Exposed Persons (PEPs), non-income enterprises (NPOs) and people dealing in digital virtual assets (VDA) as reporting entities.   

The selection has been taken beforehand of the predicted Financial Action Task Force (FATF) evaluation of India later this year.

Through a notification, the Ministry has made the exchanges and intermediaries dealing in VDA, together with cryptocurrency, reporting entities beneathneath the Prevention of Money Laundering Act (PMLA), hence making it obligatory for them to stick to the patron/consumer KYC requirements. 

Under the Act, reporting entities are required to hold all of the applicable statistics in their useful proprietors and transactions for as a minimum 5 years. 

The Ministry has issued some other notification, which defines PEPs as people who've been entrusted with outstanding public capabilities with the aid of using a overseas country, which include the heads of States or governments, senior politicians, senior authorities or judicial or army officers, senior executives of state-owned companies and crucial political celebration officials.

“In such cases, transactions of ₹10 lakh and above will need to be suggested to the Financial Intelligence Unit,” stated a central authority official. 

Non-income enterprises shaped for non secular or charitable purposes, and registered as believe or society, too had been introduced to the list. 

According to the notification, each banking company, economic organization or middleman will need to sign in the info of a non-income employer patron at the Darpan portal of NITI Aayog. They may even need to keep such registration statistics for a length of 5 years after the commercial enterprise dating among a patron and a reporting entity has ended or the account closed, whichever is later.

Another key selection relates to the decreasing of possession threshold from the preceding 25% to 10%, thereby treating any man or woman or organization conserving 10% possession in a reporting entity as a “useful owner” for the reason of PMLA rules.