PMLA Compliance — Practical Overview
The Prevention of Money Laundering Act, 2002 (PMLA) imposes obligations on Reporting Entities — banks, financial institutions, intermediaries, and certain notified non-financial entities — to maintain customer-identification records, monitor transactions, and report suspicious activity to the Financial Intelligence Unit – India (FIU-IND).
Regulatory and Statutory Framework
Compliance components: Principal Officer / Designated Director appointment; KYC / Customer Due Diligence (CDD) framework with risk categorisation; ongoing transaction monitoring; STR (Suspicious Transaction Report), CTR (Cash Transaction Report), CCR (Cross-border Wire Transfer Report), and NTR (Non-profit Transaction Report) filings; record retention for at least 5 years post-relationship-closure; and periodic risk assessment.
Process and Documentation Requirements
The end-to-end process typically involves: (a) initial fact-finding and document collection — incorporation documents, financial statements, board resolutions, and any prior filings on the matter; (b) regulatory analysis — identification of applicable provisions, exemptions, and procedural prerequisites; (c) drafting of the substantive deliverable — whether a report, application, certificate, or representation; (d) obtaining necessary internal approvals from the company's board or shareholders; (e) submission to the regulatory authority with supporting evidence; (f) follow-up on queries and rectifications; (g) post-completion compliance maintenance and record-keeping. PMLA scope expansion in recent years brings within its ambit: chartered accountants, company secretaries, cost accountants (in specified transactions); real estate agents; dealers in precious metals and stones; virtual digital asset service providers.
Common Pitfalls and How We Avoid Them
From our litigation and assessment experience, the most frequent issues that escalate into adverse outcomes are: (a) inadequate documentation supporting the technical position taken; (b) inconsistency between disclosures across different statutory filings (income tax, ROC, GST); (c) failure to obtain timely contemporaneous evidence (board minutes, valuer reports, contracts); (d) reliance on form over substance — the Indian regulatory regime increasingly looks through form to economic substance; (e) missed limitation periods for filings, replies, or appeals. Our engagement methodology builds in checks against each of these failure modes from kick-off.
Why CA V. Viswanathan and Virtual Auditor
The combination of FCA, ACS, CFE, and IBBI Registered Valuer credentials under one practice — IBBI/RV/03/2019/12333 — is rare, and is precisely the breadth needed for engagements that span direct tax, indirect tax, corporate law, FEMA, and valuation simultaneously. Our practice has been operating since 2012 with offices in Chennai, Bangalore, and Mumbai, and serves clients across India through secure document-room workflows, named partner ownership, and weekly status updates. Engagements are scoped on fixed-fee terms wherever the work permits, with full transparency on inclusions and exclusions.
Engagement Process and Next Step
Free 30-minute consultation with CA V. Viswanathan to scope your specific requirement, identify the right approach, and provide a written fixed-fee quote within 24 hours. Engagements typically commence within 3-5 working days of acceptance, with kickoff document checklist shared upon engagement letter signing. References from comparable engagements available on request, subject to confidentiality. Call +91 99622 60333 or email support@virtualauditor.in to schedule.
Frequently Asked Questions
Who must comply with PMLA?
This service can be provided by qualified professionals with relevant credentials. At Virtual Auditor, CA V. Viswanathan holds FCA (ICAI), ACS (ICSI), CFE (ACFE USA), and IBBI Registered Valuer (IBBI/RV/03/2019/12333) certifications — covering the full spectrum of regulatory requirements. Our practice operates from Chennai, Bangalore, and Mumbai.
What are the KYC requirements under PMLA?
The specific requirements, documents, and procedures are detailed in the relevant regulatory provisions. Virtual Auditor provides comprehensive support including documentation, filing, representation, and follow-up. Our multi-credential team ensures nothing is missed across regulatory intersections.
What is a suspicious transaction report?
A report that a reporting entity (bank, NBFC, intermediary, or a professional covered by the 2023 notifications) must file with the Financial Intelligence Unit-India under rule 8 of the PML (Maintenance of Records) Rules, 2005 within 7 working days of concluding that a transaction, whether or not in cash, appears to involve proceeds of crime or has no apparent economic rationale.
Are CA firms covered under PMLA?
Virtual Auditor provides expert advisory on this through our FCA + ACS + CFE + IBBI Registered Valuer practice. Contact us at +91 99622 60333 or visit virtualauditor.in for detailed guidance specific to your situation.
What are the penalties for PMLA non-compliance?
The specific requirements, documents, and procedures are detailed in the relevant regulatory provisions. Virtual Auditor provides comprehensive support including documentation, filing, representation, and follow-up. Our multi-credential team ensures nothing is missed across regulatory intersections.