Non-profit organisations (NPOs) will now face intense scrutiny under the Prevention of Money Laundering Act (PMLA) as the Finance Ministry has now brought two key changes in rules related to maintenance of records under PMLA.
The Ministry has also given definition for Politically Exposed Person (PEP) besides other changes. These notifications will take effect from March 7.
Though experts are expecting more changes in the definition of PEP, they also feel that changes related with NPOs will make the process onerous even if they indicate an intent in transparency in the use of funds.
New Rules
The notification defines NPO as “any entity or organisation, constituted for religious or charitable purposes” referred in the Income Tax Act, Societies Registration Act or Companies Act. Earlier, any entity or organisation that is registered as a trust or a society under the Societies Registration Act, or any similar State legislation, or a company registered under Companies Act was referred to as an NPO.
A new sub-rule has been added which states that every banking company/financial institution/ intermediary shall register the details of a client, in case of client being an NPO, on the DARPAN Portal of NITI Aayog, if not already registered. They also have to maintain such registration records for a period of five years after the business relationship between a client and a reporting entity has ended or the account has been closed, whichever is later.
For Complete Official Notification Click Here