Company Directors, trustees, and nominee shareholders are now under Money Laundering Act

The Finance Ministry expanded the ambit of the Prevention of Money Laundering Act (PMLA) to include directors of a company, trustees of an express trust, and nominee shareholders of a company as reporting entities. This means that these individuals will be held responsible for any misconduct or violation of the law that occurs in the course of their business activities. The Finance Ministry’s notification specifies that five categories of activities carried out on behalf of another person fall under the purview of the PMLA. These include acting as a director or secretary of a company, providing a registered office, business address, or accommodation, acting as a trustee of an express trust, and acting as a nominee shareholder. Chartered accountants, company secretaries, and cost accountants are now obligated to maintain KYC records of all clients entering into these activities and keep them for a certain period. By including these individuals within the definition of ‘relevant persons’ or ‘persons carrying on designated business or profession,’ their role in adhering to PMLA requirements has been elevated.