Banks and financial institutions are now required by amendments to the Prevention of Money-laundering (Maintenance of Records) Rules, 2005, to keep track of the financial transactions of those who are politically exposed (PEPs).
The modifications, which became effective on March 7, also require financial institutions to gather data on the financial dealings of NGOs or non-profit organisations.
PEPs are defined as ‘persons who have been entrusted with prominent public functions by a foreign country, including the heads of States or Governments, senior politicians, senior government or judicial or military officers, senior executives of state-owned corporations and important political party officials’in the amended money laundering rules.
According to a gazette notification, the financial institutions must also register the information about their NGO clients on the Niti Aayog’s Darpan portal and keep a record of it for five years after the client’s business relationship with a reporting entity has ended or the account has been closed, whichever comes first.
Since the regulations have changed, banks must now not only keep track of PEPs’ and NGOs’ financial transactions, but also provide such information with the Enforcement Directorate as needed.
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