As a major step towards prevention of money laundering, the Government on Thursday said that the financial transactions made by chartered accountants, company secretaries and cost accountants on behalf of their clients will now come under the Prevention of Money Laundering Act (PMLA).
It is to be noted that only such professionals would get hit by these provisions of PMLA who are holding the certificate of practice.
According to the Finance Ministry notification, such transactions include buying and selling of any immovable property; managing a client's money, securities or other assets; managing bank, savings or securities accounts; organising contributions to create, operate or manage companies; creating, operating and managing companies, limited liability partnerships or trusts, and buying and selling entities.
"PMLA aims to prevent money laundering and financing of terrorism activity in India. This law intends to control the menace by developing a robust identification and reporting system for suspected financial transactions," Delhi-based CA Rajat Mohan said.
"Government of India isolating select professions over the menace would not be a proper long-term policy framework for the economy. Policymakers must work on an inclusive solution whereby trouble makers, irrespective of their educational background, are reprimanded," Mohan further added.
Meanwhile, Pune-based Pritam Mahure said that the likely reasons behind this step is Government's commitment to Financial Action Task Force (FATF) as well as a few professional's involvement/role in certain suspicious and fake-invoicing-related transactions.
"Professionals who maintain high professional and moral standards may not worry much although they need to do detailed KYC before working with clients. Interestingly, while CA, CS and CWA are covered, Advocates are left out," Mahure added.
With this move, professionals would fear undertaking benami transactions on behalf of their clients or helping them to undertake such transactions. In case, any professional fails to comply with these provisions, then it may lead to penalties, fines, or prosecution.