Money Laundering Current Affairs - 2019

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Government makes mandatory for Banks to match original IDs with photocopies

The Department of Revenue (DoR), Finance Ministry has made it mandatory for banks and financial institutions to check original identification documents of individuals dealing in cash above prescribed threshold to weed out  use of forged or fake copies.

In this regard, DoR has issued an official gazette notification making an amendment to Prevention of Money-laundering (Maintenance of Records) Rules.

Background

The Prevention of Money Laundering Act (PMLA), 2002 forms core of legal framework to combat money laundering and generation of black money. The PMLA and its rules impose obligation on reporting entities like banks, financial institutions and intermediaries to verify identity of clients, maintain records and furnish information to Financial Intelligence Unit of India (FIU-IND). Intermediaries like chit fund company, stock broker, cooperative bank, housing finance institution and non-banking finance companies (NBFCs) are also classified as reporting entities.

New Rule

The new rule now requires reporting entity to compare copy of officially valid id produced by client with original and recording same on copy. It also has made mandatory for biometric identification number Aadhaar and other official documents requirement to be obtained by reporting entities from anyone opening bank account as well as for any financial transaction of Rs 50,000 and above. The same is also required for all cash dealing of more than Rs 10 lakh or its equivalent in foreign currency.

If valid document furnished does not contain updated address, utility bill like telephone, electricity, post-paid mobile phone, piped gas or water bill not more than two months old can be considered as a proof of address. Besides, property or municipal tax receipt, pension or family pension payment orders issued to retired employees by Government departments or letter of allotment of accommodation from employer can be also considered for same purpose.

Month: Categories: Business, Economy & Banking

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British Tax authorities probing charges against HSBC

image The British tax authorities launched an investigation into allegations of money laundering against HSBC.

  • HSBC Bank has been accused of opening offshore bank accounts in Jersey for serious criminals living in Britain.
  • This move from British Tax authorities came after a whistleblower was secretly provided a detailed list of names, addresses and bank accounts of HSBC’s alleged clients.
  • These were said to include names of several people with criminal convictions, including gun-runners and drug dealers.

Contrast with India

  • Observers are contrasting the prompt action taken by British authorities with the Indian government’s response to similar allegations against HSBC involving Indian clients, where Indian government took no action against HSBC when India Against Corruption (IAC) charged HSBC for alleged involvement in Hawala (Money Laundering).
  • Also, Indian Govt took no action since more than a year after the French government gave India a CD containing names of 700 Indian clients who had accounts in HSBC’s Geneva branch.

Month: Categories: Business, Economy & Banking

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