The government updated the Prevention of Money Laundering (Maintenance of Records) Rules, 2005 in an effort to prevent terrorist financing. The measure aims to strengthen record-keeping for offshore transactions over Rs 50,000.
The new requirements require reporting organisations to identify clients for any overseas transaction exceeding Rs 50,000 and to determine the business's aim if it is not clearly defined.
The amendment also requires group reporting organisations to undertake anti-money laundering and anti-terror funding procedures. They should also disclose information required for client due diligence and implement "adequate safeguards" to ensure the confidentiality and use of information exchanged in order to avoid tipping-off, which might jeopardise ongoing investigations.
"Every reporting entity shall…identify its clients, verify their identity using reliable and independent sources of identification, obtain information on the purpose and intended nature of the business relationship, where applicable and take reasonable steps to understand the nature of the customer's business, and its ownership and control," according to the amended rule.
It specified that the reporting body must determine whether a client is acting on behalf of a beneficial owner, identify the beneficial owner, and use all reasonable efforts to verify the beneficial owner's identity using credible and independent sources of identification.
