International Transactions Rules: In order to stop the financing of terrorism, the Centre on Tuesday announced a modification to the Prevention of Money-Laundering Rules, 2005 that tightens the record-keeping requirements even more for foreign transactions over 50,000.
Enhanced Scrutiny for Foreign Transactions
Every foreign transaction over 50,000 will be given more attention, and a reporting organisation will need to identify the clients, confirm their identities, and determine the purpose of the business if it is not clearly stated. The most recent regulation also required reporting entities, who are members of a group, to have sufficient protections for the privacy and use of information shared, including protections against tip-off.
Reporting Entities Mandated to Verify Client Identity and Business Nature
The notification says, “Every reporting entity shall…identify its clients, verify their identity using reliable and independent sources of identification, obtain information on the purpose and intended nature of the business relationship, where applicable and take reasonable steps to understand the nature of the customer’s business, and its ownership and control.”
Uncovering Beneficial Owners
The reporting organisation must also “determine whether a client is acting on behalf of a beneficial owner, and identify the beneficial owner and take all steps to verify the identity of the beneficial owner, using reliable and independent sources of identification,” according to the notification.