The Ministry of Finance (‘MoF’), by way of a Notification dated May 3, 2023, expanded the ambit of the term ‘person carrying on designated business or profession’ under Section 2(1)(sa) of Prevention of Money-Laundering Act, 2002 (‘PMLA’) to include in the definition of a relevant person, a chartered accountant, a company secretary, and a cost and works accountant (in each case, who has obtained a certificate of practice and practicing individually or through a firm, in whatever form it has been constituted) carrying out financial transactions on behalf of his or her client in the course of his or her profession in relation to the following activities:

i.    buying and selling of immovable property;

ii.   managing of client money, securities or other assets;

iii.  management of bank, savings or securities accounts;

iv.   organisation of contributions for creation, operation, or management of companies; and / or

v.    creation, operation, or management of companies, limited liability partnerships, or trusts, and buying and selling of business entities.

As a result of this, the relevant persons in relation to the abovementioned activities will now be ‘reporting entities’ for the purposes of PMLA and will be subject to various obligations such as verification of a client’s identity and maintenance of records of transactions.

Separately, the MoF by way of another Notification dated May 9, 2023, has further expanded the abovementioned definition to also include persons carrying out the following activities in the course of business on behalf of or for another person:

i.    acting as a formation agent of companies and limited liability partnerships;

ii.   acting as (or arranging for another person to act as) a director or secretary of a company, a partner of a firm, or a similar position in relation to other companies and limited liability partnerships;

iii.  providing a registered office, business address, or accommodation, correspondence, or administrative address for a company, or a limited liability partnership, or a trust;

iv.   acting as (or arranging for another person to act as) a trustee of an express trust or performing the equivalent function for another type of trust; and

v.    acting as (or arranging for another person to act as) a nominee shareholder for another person.

However, the below are exceptions to the abovementioned activities and will not be included within the ambit of the definition of ‘person carrying on designated business or profession’:

i.    any activity that is carried out as part of any agreement of lease, sub-lease, tenancy, or any other agreement or arrangement for the use of land or building or any space and the consideration is subject to deduction of income-tax as defined under Section 194-I of the Income Tax Act, 1961;

ii.   any activity that is carried out by an employee on behalf of his employer in the course of or in relation to his employment;

iii.  any activity that is carried out by an advocate, chartered accountant, cost accountant, or company secretary in practice, who is engaged in the formation of a company to the extent of filing a declaration as required under Section 7(1)(b) of the Companies Act (which requires a certification that all requirements of the Companies Act and the rules issued thereunder in respect of registration and matters precedent or incidental thereto have been complied with); or

iv.   any activity of a person which falls within the meaning of an intermediary as defined under Section 2(1)(n) of the PMLA.