New Delhi: The Indian government has widened the list of reporting entities under the Prevention of Money Laundering Act (PMLA) to boost data collection and combat money laundering, an official order read.

A wide range of entities, including businesses, banks, cryptocurrency exchanges, foreign portfolio investors, trusts, and NGOs, are subject to anti-money laundering (AML) legislation in India. India recently amended its anti-money laundering statute to broaden the definition of reporting entities to include banking intermediaries, financial institutions, and accounting experts including Chartered Accountants and Company Secretaries.

Nominee directors, nominee shareholders, partners, and providers of office space without a legal contract matching specific requirements are now included on the updated list. These organisations collaborate with others, such banks and real estate brokers, in doing client due diligence, maintaining records, and reporting questionable transactions.

Experts have said that the modifications signal the authorities' zero-tolerance stance on issues of PLMA. In an effort to raise their accountability and liability as well as change the procedures for transaction due diligence and source of funds inspection, the Revenue Department last week placed some transactions by accountants and company secretaries under PMLA.

The law defines, reporting businesses include banks, financial institutions, companies that run casinos and other games of chance for money, real estate brokers, dealers in precious metals, and individuals engaged in a certain line of work. The final group of reporting organisations to get an expansion in the most recent two orders is this one.

The PMLA would now apply to anyone who act on behalf of another person when forming corporations or limited liability partnerships, acting as a nominated shareholder, director, secretary, or partner, or offering an office or lodging.

"By extending the reach of PMLA, the government has made it clear that it has zero tolerance for anybody who aid in money laundering operations in India. These measures would make wrongdoers fearful, said Rajat Mohan, a partner at the accounting firm AMRG Associates.

The term "reporting entity" currently refers to anyone who offers a registered office, business address, lodging, correspondence, or administrative address for a corporation, limited liability partnership, or trust.

The order made it clear that this exclusion does not apply to any lease, sublease, tenancy, or other agreement for the use of property, a building, or space where the rent is subject to tax deduction at source.

The latest order further defines how the PMLA would be applied to certifications made to Registrars of Companies by attorneys, accountants, and company secretaries that a firm has complied with all registration-related regulations. 

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