Impact Analysis of the Inclusion of CA/CS/CWA as Designated Professionals under PMLA

[2023] 150 taxmann.com 218 (Article)

Introduction

The role of professionals in today’s commercial business environment has grown much larger than it traditionally was. Professionals, armed with the knowledge that their qualification gives them and the association built up with their clients over years of competent compliance and advisory services rendered, have taken on larger roles in their client’s commercial affairs. It is always said that every family must have a competent doctor and a lawyer associated with them-we can now extend this to other professionals, especially chartered accountants.

The sheer breadth of services that chartered accountants, company secretaries, and cost work accountants render to the clients over and above the traditional roles as originally envisaged make them not only privy to confidential information but also find them deeply involved in complex financial transactions on behalf of the clients.

About Notification

The latest notification of 3rd May 2023, seems to have been causing a scare amongst chartered accountants, company secretaries, and cost work accountants. A dispassionate reading of the notification along with the relevant statutory framework will show that there is no cause for concern.

In fact, the compliance added by this Notification may be to the advantage of the professionals that are affected by it. The headlines that discuss this notification have been made out to sound very alarming. There may be no reason to worry with regard to this notification for a majority of professionals. On the contrary, it may prove to be a protection for the professionals if proceedings under the PMLA (The Prevention of Money Laundering Act, 2002) are invoked against them due to their client’s actions.

The notification of 3rd May 2023 of the Ministry of Finance now includes certain financial transactions carried out by a professional (relevant person) on behalf of a client, in the course of his or her profession to be an activity for the purposes of Section 2(1) (sa). These transactions are:

• • Buying and selling of any immovable property;
  • Managing of client money, securities or other assets; management of bank, savings or securities accounts;
  • Organization of contributions for the creation, operation, or management of companies;
  • Creation, operation, or management of companies, limited liability partnerships or trusts, and

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