India PMLA: AML Obligations for Chartered Accountants and Company Secretaries

Since 2023, India's anti-money laundering law has reached professional accountants. A government notification under the Prevention of Money Laundering Act, 2002 (PMLA) brought practising chartered accountants, company secretaries and cost and works accountants within the scope of the Act when they carry out certain financial transactions for clients. If you are a CA, CS or CMA in practice, or you work in a firm that offers company formation, property or client-money services, this guide explains which activities trigger the rules and what a sensible compliance approach looks like. It is a summary of published commentary and professional-body material, not legal advice, so check the notification text and your institute's guidelines before relying on any detail.

What changed in 2023

According to India Briefing, the government revised the PMLA framework on 3 May 2023 to cover accounting professionals, and a further notification on 9 May 2023 extended coverage to people involved in forming companies, including acting as a director, secretary or nominee director. The rules apply to practising chartered accountants, company secretaries and cost and works accountants who carry out the listed activities for or on behalf of clients. Lawyers and legal professionals are excluded from this notification, as India Briefing describes it. The professional institutes (ICAI, ICSI and ICMAI) have since published AML/CFT guidance for members.

Which activities bring a professional within the Act?

Coverage depends on what you do, not just on your qualification. India Briefing lists the following activities:

• buying and selling immovable property;
• managing client money, securities or other assets;
• managing bank, savings or securities accounts;
• organising contributions for creating, operating or managing companies; and
• creating, operating or managing companies, limited liability partnerships or trusts, and buying and selling business entities.

Audit, statutory certification and ordinary tax compliance do not appear on that list. A professional who only performs those services should still confirm their position with their institute, but the focus of the rules is on professionals who handle or arrange client transactions.

What a reporting professional must do

Commentary on the rules describes a set of obligations that will look familiar to anyone who has worked under other regimes:

• Know your client (KYC). Complete KYC before starting work, including identifying the client and verifying their identity.
• Customer due diligence. Establish ownership and control, understand the client's financial position and the source of funds, and document the purpose of the transaction.
• Reporting. Report suspicious transactions to the Financial Intelligence Unit - India (FIU-IND). Some sources describe timelines for filing, but these vary by source and by type of report, so check the current rules and FIU-IND guidance for the exact deadline.
• Record-keeping. Keep client and transaction records for the period the rules specify. Sources we reviewed gave different periods for different types of entity, so confirm the period that applies to you.
• Registration and governance. Check your institute's guidance on whether you need to register on the FIU-IND portal and how to appoint a responsible officer.

Beneficial ownership: the 10% test

India Briefing reports that the beneficial ownership threshold was lowered from 25% to 10% for certain reporting entities, such as banks, other financial institutions and real estate and jewellery businesses. Check your institute's guidance on whether the 10% figure applies to your category of professional. Many firms treat the lower figure as a prudent standard when they look for the people who own or control a corporate client. Where ownership runs through several layers or through trusts, keep a clear note of how you reached your conclusion. Our guide to ultimate beneficial ownership for accountants explains the practical steps for tracing and recording it.

Practical steps for a practising CA, CS or CMA

1. Scope your services. List the services you provide and mark any that match the activities above. These are where the PMLA obligations apply.
2. Write a short policy. Cover client acceptance, KYC, risk rating, escalation and record-keeping. Our firm-wide AML risk assessment guide offers a structure you can adapt.
3. Rate client risk. Consider the client type, geography, products and delivery channel. Complex structures, cash and links to higher-risk countries call for enhanced checks.
4. Screen clients. Check names against sanctions lists and screen for politically exposed persons. See our guide to PEPs for accountants.
5. Know how to report. Decide who in your firm decides whether to file a suspicious transaction report and how that is recorded.
6. Train the team. Everyone who deals with clients should understand red flags and the rule against tipping off.

How India compares with other regimes

The Indian approach follows the Financial Action Task Force (FATF) standards, which say that accountants should be covered when they prepare for or carry out specified transactions for clients. The UK, Ireland, the UAE and Australia all apply a similar activity-based model, though the supervisory arrangements and reporting channels differ. If you work across borders, learning the common core of risk assessment, due diligence, reporting and record-keeping makes it easier to adapt to each jurisdiction.

Frequently asked questions

Does the PMLA apply to a CA who only does audits and tax returns?

The notification, as described by India Briefing, targets professionals who carry out the listed financial transactions for clients. A CA who does only audit and tax compliance work is less likely to be caught, but should confirm with ICAI guidance.

Who regulates this?

Reports go to FIU-IND, which is India's financial intelligence unit. The professional institutes have also issued guidelines and may monitor compliance.

Are company secretaries and cost accountants covered too?

Yes. Practising company secretaries and cost and works accountants are named alongside chartered accountants.

Is there CPD on AML for Indian professionals?

Learnsignal publishes CPD material on financial crime and compliance. Browse our CPD courses to see what is available, and check your institute's own requirements.