Prevention of Money-laundering (Maintenance of Records) Fourth Amendment Rules, 2019

The Prevention of Money-laundering (Maintenance of Records) Rules, 2005 (hereafter referred to as ‘Principal Rules’) has been amended vide gazette notification dated 19.09.2019.

Following are the amendments made to the ‘Principal Rules’ :

1. “ Depository Receipt” means a foreign currency denominated instrument, whether listed or not listed on an international exchange, issued by a foreign depository in a permissible jurisdiction on the back of eligible securities issued or transferred to that foreign depository and deposited with a domestic custodian. Such ‘Depository Receipt’ includes ‘Global Depository Receipt’.

2. The following proviso has been added to Rule 9 (1) in relation to document required to be submitted by unincorporated association or body of individual.

” Where a client is subscribing or dealing with depository receipts or equity shares, issued or listed in jurisdictions notified by the Central Government, of a company incorporated in India, and it is acting on behalf of a beneficial owner who is a resident of such jurisdiction, the determination, identification and verification of such beneficial owner, shall be as per the norms of such jurisdiction and nothing in the sub-rules (3) to (9) of these rules shall be applicable for due-diligence of such beneficial owner.”.

Explanation–For the purposes of this proviso, the expression “equity share” means a share in the equity share capital of a company and equity share capital shall have the same meaning as assigned to it in the Explanation to section 43 of the Companies Act, 2013.”;

3. It is not necessary to identify and verify the identity of any shareholder or beneficial owner of any entity, where :

• The client or the owner of the controlling interest is an entity listed on a stock exchange in India, or
• It is an entity resident in jurisdictions notified by the Central Government and listed on stock exchanges in such jurisdictions notified by the Central Government, or
• It is a subsidiary of such listed entities.

To read the full notification Click here.