Finance Ministry tightens definition of 'beneficial owners' under PMLA

The Finance Ministry has tightened the definition of beneficial owners under the anti-money laundering law, mandating reporting entities like banks and crypto platforms to collect information from their clients.

As per the amendments to the Prevention of Money Laundering Rules, any individual or group holding 10 per cent ownership in the client of a 'reporting entity' will now be considered a beneficial owner as against the ownership threshold of 25 per cent applicable earlier.

The amended rules were notified on March 7 by the Finance Ministry.

Under the anti-money laundering law, 'reporting entities' are banks and financial institutions, firms engaged in real estate and jewellery sectors. They also include intermediaries in casinos and crypto or virtual digital assets.

So far, these entities were required to maintain KYC details or records of documents evidencing the identity of their clients as well as account files and business correspondence relating to clients. They are requir