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[DAILY CURRENT AFFAIRS, 13 MARCH 2023]

FINANCIAL ACTION TASK FORCE (FATF)

 
1.Context
The Finance Ministry’s notification placing all transactions involving virtual digital assets under the purview of the Prevention of Money Laundering Act (PMLA) is a much-needed, even if belated, step.
The government has been struggling in recent years to formulate an appropriate regulatory response to deal with the pandemic-era upsurge in advertisements soliciting investment in virtual assets as well as reports of actual investment
2.Financial Action Task Force (FATF)
  • The FATF is an inter-governmental body that sets international standards seeking to prevent international financial crimes that aid terrorism. The FATF  was established in July 1989 by a G-7 summit in Paris to examine and develop measures to combat money laundering.
  • The FATF currently comprises 37 member jurisdictions and two regional organizations European Commission and Gulf Cooperation Council, representing most major financial centers in all parts of the globe. India has been a member of the FATF since 2010. India is also a member of its regional partners, the Asia Pacific Group (APG) and the Eurasian Group (EAG).
  • Its secretariat is located at the Organisation for Economic Cooperation and Development (OECD) headquarters in Paris.
After the 9/11 attacks, the FATF in October 2001 expanded its mandate to incorporate efforts to combat terrorist financing. In April 2012, it added efforts to counter the financing of the proliferation of weapons of mass destruction. The FATF has developed the FATF recommendations, or FATF standards, which ensure a coordinated global response to prevent organized crime, corruption, and terrorism.

3. FATF Lists

3.1 Grey List
Countries that are considered safe heaven for supporting terror funding and money laundering are put on the FATF Grey list. This inclusion serves as a warning to the country that it may enter the Black list.
Recently Democratic Republic of Congo, Mozambique, and Tanzania are added to the Grey List.
3.2 Black List
Countries known as Non-cooperative countries or Territories are put on the Black list. These countries support Terror funding and Money Laundering activities. The FATF revises the blacklist regularly, adding or deleting entries.
Currently, Iran and the Democratic people's Republic of Korea are under High-risk jurisdiction or Black list. Myanmar was added to the list.
Moved Myanmar is from the "grey list" taken by the military junta since they overthrew the government in a coup last February.
 
4.Way Forward
As it has pointed out, the fact that a few countries have moved to regulate virtual assets, and some others have banned them outright, while a majority have not taken any action has created a global system with loopholes for criminals and terrorists to abuse
 India, which holds the presidency of the G-20, has been repeatedly stressing the need for a globally coordinated regulatory response to deal with crypto assets
While the Centre’s decision to add the PMLA monitoring requirements, following the introduction of a tax regime for virtual digital assets in last year’s Budget, has been interpreted by the crypto assets sector as moves towards regulating rather than proscribing it, the RBI’s consistent advocacy for a ban needs to be seriously weighed before any decision is taken on the fate of the long-delayed draft legislation on virtual assets
 
 
For Prelims: PMLA, FATF, Grey List, 
For Mains: 
1.Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog . Discuss(250 Words)
 
 
 

UK POLICY ON REFUGEES

 

1. Context

The Conservative government of the U.K. is proposing to adopt a new, stricter policy to deal with asylum seekers who arrive on the island via boat. The government has taken this step to fulfill a promise made in January 2023 by Prime Minister  Rishi Sunak, to stop the boats.

2. The political context for the Bill

  • Policies to regulate immigration, specifically of undocumented workers and asylum seekers, have always been a sensitive political issue in the U.K., as in other developed economies.
  • With the rise of anti-immigrant sentiments fuelling some aspects of the Brexit campaign, which became a reality on January 31, 2020, the U.K. conservative party has been a strong advocate for tighter immigration policies.
  • This is purportedly aimed at protecting U.K. jobs or shifting the focus to skilled workers arriving through legal routes.
  • However, through the recent years of the pandemic and the economic distress it has caused across developing countries, as well as the displacement of certain communities in countries such as Afghanistan, Iran, and Iraq, ever greater numbers of asylum seekers have been arriving on the shores of the U.K., prompting closer scrutiny of the policy response in this regard.

3. Proposals of the Bill

  • The Bill, when passed into law by the U.K. Parliament, will require that the Home secretary detain and remove those arriving in the U.K. illegally, either to Rwanda or another "safe" third country.
  • It would deny migrants the right to bail or judicial review for the first 28 days of their immigration detention.
  • To block such migrants from returning to the U.K. or seeking British citizenship going forward.
  • The bill would also seek to cap the number of refugees permitted to settle in the U.K. through "safe and legal routes".
  • This currently only applies to people from Afghanistan and Ukraine or British National status holders in Hong Kong.

4. What was the 'UK-Rwanda Asylum Plan'?

  • The UK and Rwanda Migration and Economic Development partnership or the Rwanda Deal is a Memorandum of Understanding (MoU) signed between the two governments.
  • Under this deal, Rwanda will commit to taking in asylum seekers who arrive in the UK on or after January 1, 2022, using illegally facilitated and unlawful cross-border migration.
  • Rwanda will function as the holding center where asylum applicants will wait while the Rwanda government makes decisions about their asylum and resettlement petitions in Rwanda.
  • Rwanda will, on its part, accommodate anyone who is not a minor and does not have a criminal record.

5. Is the bill consistent with human rights laws? 

  • This is most salient in the concept of non-refoulment, an idea encapsulated in the Refugee Convention as well as the ECHR, to which the U.K. is a signatory, that refugees should not be returned to a country where they face threats to life and liberty.
  • There was more than a 50% chance that the new bill is incompatible with international law.
  • In this context, it is expected that the bill will be challenged in the courts and might fail on the grounds of inconsistency with human rights laws.
  • However, the U.K. High Court recently ruled that the Rwanda deportation plan did not violate any human rights conventions.

6. United Nations Refugee Convention, 1951

  • It is a United Nations Multilateral treaty that defines who is a refugee and sets out the rights of individuals who are granted asylum and the responsibilities of nations that grant asylum.
  • It also set out which people do not qualify as refugees, such as war criminals.
  • It grants certain rights to people fleeing persecution because of race, religion, nationality, affiliation to a particular social group, or political opinion.
  • The Convention also provides for some visa-free travel for holders of travel documents issued under the convention.
  • The 1967 protocol included refugees from all countries as opposed to the 1951 convention which only included refugees from Europe.
  • India is not a member of this convention.

Previous year Question

1. Amnesty International is  (UPSC 2015)
A. an agency of the United Nations to help refugees of civil wars
B. global Human Rights Movement
C. a non-governmental voluntary organization to help very poor people
D. Inter-governmental agency to cater to medical emergencies in war-ravaged regions
Answer: B

For Prelims & Mains

For Prelims: UK-Rwanda Asylum Plan, Refugees, Migration, 1967 protocol, United Nations Refugee Convention, 1951, Memorandum of Understanding (MoU), Rwanda, and Immigration policies.
For Mains: 1. What is United Nations Refugee Convention, 1951, and discuss the proposals of the new U.K. migration bill and why the U.K. is bringing the new migration bill now?
 
 Source: The Hindu

COMPASSIONATE APPOINTMENTS

1. Context 

In a judgment delivered the Supreme Court rejected some applications for "compassionate appointments" that were filed by the dependents of deceased government employees in West Bengal. 
A bench of Justice Krishna Murari and Justice BV Nagarathna underlined that compassionate appointment is not a vested right of such dependents of a deceased employee.

2. About Compassionate appointments

  • The Concept of compassionate appointments can be traced to the Indian Constitution's Article 39, which is under the Directive Principles of State Policy and talks about the right to livelihood.
  • It aims to employ on compassionate grounds the dependent family members of a government servant who dies in harness or retires on medical grounds, leaving the family without any source of sustenance.
  • Multiple factors are looked at while assessing a request for compassionate appointments, such as the family's financial condition, the presence of earning members, family size, children's ages and the family's essential needs.
According to the DoPT's office memorandum dated January 16, 2023, these appointments can only be made for "Group C posts against the direct recruitment quota".

3. Eligibility for applying compassionate appointments

According to instructions on "Compassionate Appointment under Central Government" given by the DoPT, Ministry of Personnel, Public Grievances & Pensions on August 2, 2022, Compassionate appointments can extend to dependent family members of a government servant who:
(a) Dies while in service (including death by suicide)
(b) Retired on Medical grounds under Rule 2 of the CCS (Medical Examination) Rules 1957 or the corresponding provision in the Central Civil Service Regulations before 55 years of age (57 years for erstwhile Group 'D' Government servants)
(c) Retired on medical grounds under Rule 38 of the CCS (Pension) Rules, 1972 or the corresponding provision in the Central Civil Service Regulations before attaining the age of 55 years (57 years for erstwhile Group 'D' Government Servants).

The measure can also extend to the family members of an Armed Forces Employee who:
(a) Dies during Service;
(b) Is Killed in action; or
(c) Is medically boarded out and is unfit for civil employment.
  • However, the government servant must have been appointed " regularly" and not on a daily wage, casual, apprentice, ad-hoc, contract or reemployment basis.
  • Moreover, the deceased's dependents can only be first-degree relations such as their spouse, son or daughter ( including adopted ones), brother or sister in the case of an unmarried Government servant or member of the Armed Forces, who was wholly dependent on the government servant at the time of their death in harness or retirement on medical grounds.
  • To be eligible for this, the deceased's family must be "indigent" or needy and deserving of immediate assistance for relief from financial destitution".
  • The applicant should also be eligible and suitable for the post in all respects under the provisions of the relevant Recruitment Rules.

4. Empowering this appointment

  • Compassionate appointments are made by either the Joint Secretary in charge of administration in the Ministry or Department concerned or the "Head of the Department under Supplementary Rule 2 (10) in the case of attached and subordinate offices".
  • They can also be made by the Secretary of a Ministry or Department in special cases.

5. Court judgments

  • The apex court set aside the judgment delivered by a Division Bench of the Calcutta High Court on September 30, 2019, restoring an earlier order passed by a single judge of the Calcutta High Court on July 5, 2018.
  • While the Division Bench had directed consideration of the applications for the compassionate appointments in light of circulars issued by the state government, the single-judge had rejected the applications due to delay and absence of state policy.
  • In its decision, the apex court cited its rulings from 2008 and 2014 in the cases of "Mumtaz Yunus Mulani vs, the State of Maharashtra and State Bank of India vs. Surya Narain Tripathi" respectively, to say that "the existence of a policy issued by the State Government is a sine qua non for making appointments on the compassionate basis".
  • Observing the absence of a policy governing compassionate appointments the Court refused to grant the posts under local authorities in West Bengal.
  • Moreover, the Court said that even if the policy existed, it would be of no use to consider the applications several years after they were filed.
  • The Court also referred to a slew of its rulings from 1989 and 1994 in "Sushma Gosain vs. Union of India' and "Umesh Kumar Nagpal vs. the State of Haryana" respectively, to say that there shouldn't be any delay in compassionate appointments and the same should be "provided immediately to redeem the family in distress", provided that the government or public authority examines the financial condition of the deceased's family and is satisfied that "but for the provision of employment, the family will not be able to meet the crisis".

For Prelims & Mains

For Prelims: Compassionate appointments,  Article 39, right to livelihood
For Mains:
1. What are Compassionate appointments? Discuss the challenges associated with it. (250 Words)
Source: The Indian Express

LEAST DEVELOPED COUNTRY

 

1. Context

Bhutan, the mountainous, landlocked country that is consistently ranked one of the happiest in the world, will on December 13th of this year, become the seventh nation to graduate from the United Nations (UN) list of Least Developed Countries (LDC). While this promotion is a cause for celebration, it also raises some concerns, notably how Bhutan will compensate for the loss of certain trade privileges associated with being an LDC.

2. What is a Least Developed Country?

The LDCs are developing countries listed by the UN that exhibit the lowest indicators of socioeconomic development. The concept first originated in the late 1960s and was codified under UN resolution 2768 passed in November 1971.

3. UN definition of Least Developed Country

According to the UN, an LDC is defined as “a country that exhibits the lowest indicators of socioeconomic development, with low levels of income, human capital, and economic diversification, high levels of economic vulnerability, and a population that is disproportionately reliant on agriculture, natural resources, and primary commodities.”
  • The UN identifies three criteria for a country to be classified as an LDC:
    First, it must have a gross national income (GNI) per capita below the threshold of USD 1,230 over a three-year average.
  • Second, it must perform poorly on a composite human assets index based on indicators including nutrition, health, and education.
  • Lastly, the country must demonstrate economic vulnerability such as being prone to natural disasters and possessing structural economic constraints.

4. Data of present LDC Countries

These 46 LDCs are distributed among the following regions:

Africa (33): Angola, Benin, Burkina Faso, Burundi, Central African Republic, Chad, Comoros, Democratic Republic of the Congo, Djibouti, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Niger, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Somalia, South Sudan, Sudan, Togo, Uganda, United Republic of Tanzania and Zambia
Asia (9): Afghanistan, Bangladesh, Bhutan, Cambodia, Lao People’s Democratic Republic, Myanmar, Nepal, Timor-Leste, and Yemen
Caribbean (1): Haiti
Pacific (3): Kiribati, Solomon Islands, and Tuvalu.
 
Image Source: UNCTAD

5. How does a country get off the LDC list?

  • At the UN 2021 triennial review of LDC countries, the organization recommended that Bangladesh, Laos, and Nepal be removed from the list.
  • To graduate from the LDC list, a country must meet certain criteria in the three areas stated before namely, income, human assets, and economic vulnerability.
  • A nation must have a GNI per capita of at least USD 1,242 for two consecutive triennial reviews to meet the income requirement.
  • The nation must also show that this level of income can be sustained over the long term.
  • By using measures like education, health, and nutrition, a nation must show that it has improved its human capital to achieve the human assets requirement.
  • This entails expanding literacy rates, lowering malnutrition rates, and enhancing access to healthcare and education. 
  • A nation also must show that it has improved its ability to withstand external economic shocks like natural catastrophes or shifts in commodity prices to pass the economic vulnerability test.
  • To achieve these goals, a country might need to implement a combination of policies, including promoting economic growth through investment in infrastructure, improving governance and reducing corruption, diversifying the economy, addressing environmental challenges, and investing in human development.

6. Previous countries that get off the LDC list

  • Botswana achieved graduation in 1994 primarily due to its strong economic performance driven by its diamond mining industry and investments in education and infrastructure.
  • Similarly, Carbo Verde graduated in 2007 following investments in tourism, fisheries, and services, as well as positioning its strategic location as a hub for sea and air transportation to help attract foreign investment.

7. How did Bhutan get off the LDC list?

  • Bhutan was included in the first group of LDCs in 1971.
  • Over the last few decades, it has made remarkable progress on a variety of socio-economic metrics.
  • Bhutan first fulfilled the requirements for graduation in 2015, and then again in 2018.
  • Bhutan was therefore scheduled to graduate in 2021.
  • The Un viewed Bhutan's request to match the effective graduation date with the conclusion of the nation's 12th national development plan in 2023 as a legitimate request and thus postponed the delisting.
  • Bhutan has taken several measures to reach this point and the results have been significant.

8. Driving factors that led Bhutan to get off the LDC list

  • Bhutan’s economy increased more than eight times in the last 20 years, from just under USD 300 million in 2000 to USD 2.53 billion in 2017, with an average annual growth rate of more than 7 percent.
  • Additionally, the percentage of people living in poverty, as determined by the amount of money they make each day, decreased from 17.8 percent in 2003 to 1.5 percent in 2017.
  • In the same vein, the percentage of people living below the national poverty line decreased from 23.2 percent in 2007 to 8.2 percent in 2017.
  • Bhutan has mostly accomplished this by increasing exports of hydropower to India, which now accounts for 20 percent of its economy.
  • The nation also established Brand Bhutantoo to diversify exports while acknowledging the modest size of its local market.
  • The idea was to target high-end markets with specialized exports of high-value, low-volume Bhutanese goods.
  • Their goods come from sectors of the economy including textiles, tourism, handicrafts, culture, and natural resources.

9. Advantages of being an LDC

  • Being an LDC confers certain economic benefits to the listed country. As such, advancing out of the list is often only the first step in overall development.
  • To begin with, due to their reliance on exports of raw materials, LDCs are suffering badly from the most recent decline in raw materials prices.
  • LDCs continue to be significantly more vulnerable to catastrophic natural and economic disasters, including threats from climate change, and, are significantly less prepared to handle such difficulties.
  • Small island developing states, which make up 10 of the LDCs, are amongst the most affected by this.
  • Importantly, LDCs also enjoy duty-free and quota-free (DFQF) access to the markets of developed countries. This means that LDCs are not restricted by trade restrictions or tariffs when exporting their goods to wealthier nations. For LDCs, this is a significant advantage because it enables them to expand their exports and get access to new markets, which can boost their economic development.
  • A nation can lose access to the DFQF as it transitions from being an LDC to a middle-income developing nation. As a result, a nation that leaves the category of LDC may encounter new trade obstacles that it had not previously encountered, making it more challenging for it to expand its exports and get access to new markets.
  • LDCs are also eligible for loans with special terms for development, which include loans with a lower interest rate and a longer repayment time than those given to other nations.
  • The term “Official Development Assistance” (ODA) or “aid” is frequently used to describe this form of support. This money is intended to aid LDCs in their initiatives to meet their fundamental requirements, promote sustainable economic growth and development, and fight poverty.

Previous year Question

1. Which of the following statements about the 'Nairobi Package' adopted in the Tenth Ministerial Conference of WTO is/are correct? (UPSC CAPF 2015)
1. No safeguard mechanism for developing country members.
2. Preferential rules of origin for least developed countries.
3. Public stockholding for food security purposes.
Select the correct answer using the code given below: 
A. 1 only
B.1 and 2 only
C. 2 and 3 only
D. 1, 2 and 3
Answer: C

For Prelims & Mains

For Prelims: United Nations (UN) list of Least Developed Countries (LDC), United Nations Organisation (UNO), Duty-free and quota-free (DFQF), Gross national income (GNI), UN resolution 2768, Official Development Assistance (ODA), Nutrition, Health, and Education.
For Mains: 1. What is a Least Developed Country? Discuss the significance and advantages of being a least developed Country(LDC).
Source: The Indian Express

PMLA

1. Context 

The Finance Ministry has amended money laundering rules to incorporate more disclosures for non-governmental organisations by reporting entities like financial institutions, banking companies or intermediaries.
In addition, it has defined "politically exposed persons" (PEPs) under the Prevention of Money Laundering Act (PMLA) in line with the recommendations of the Financial Action Task Force (FATF).

2. About PMLA

  • The Anti-money laundering legislation was passed by the National Democratic Alliance government in 2002 and came into force on July 1, 2005.
  • The PMLA was showcased as India's commitment to the Vienna Convention on combating money, drug trafficking and countering the financing of terror (CFT).
  • The law was aimed at curbing the process of converting illegally earned money into legal cash.
  • The Act empowered the Enforcement Directorate (ED) to control money laundering, confiscate property and punish offenders.
  • ED recorded around 5,422 cases, attached proceeds to the tune of ₹ 1,04,702 crores (approx), filed Prosecution Complaints in 992 cases resulting in the confiscation of ₹ 869. 31 crores and convicted 23 accused persons under PMLA by the end of March 31, 2022.

3. Effect on crypto

  • The gazette notification by the Ministry brings cryptocurrency transactions within the ambit of PMLA.
  • This means that Indian crypto exchanges will have to report any suspicious activity related to buying or selling of cryptocurrency to the Financial Intelligence Unit-India (FIU-IND).
  • This central agency is responsible for receiving, processing, analysing and disseminating information related to suspicious financial transactions to law enforcement agencies and overseas FIUs.
  • In its analysis, if the FIU-IND finds wrongdoing, it will alert the ED.
  • Under Sections 5 and 8 (4) of the Act, the ED has discretionary powers to search and seize suspected property without any judicial permission.

4. Reasons for tightening the digital trade

  • For a little more than a decade, cryptocurrencies, non-fungible tokens (NFT) and other digital assets enjoyed a regulation-free environment.
  • But, in the past couple of years, as the use of digital assets has gone mainstream, regulators have turned hawkish.
  • The value of all existing cryptocurrencies is about $804 billion as of January 3, 2023.
  • It is about twice the GDP of Singapore in 2021.
  • In India, over 10 crore Indians have invested in cryptocurrencies.
  • The illegal use of cryptocurrencies hit a record $ 20.1 billion last year. 
  • Transactions associated with sanctioned entities jumped over 1, 00, 000-fold, making up 44 per cent of last year's illegal activity.

5. Tools used to track money laundering via crypto transactions

  • Tracking money trail in cryptocurrency transactions may require new tools and approaches as such transfers differ fundamentally from traditional banking channels.
  • FIUs may be familiar with Know Your Customer (KYC) or Customer Due Diligence (CDD) norms.
  • But the technological nature of VDAs presents a new challenge in gathering information.
  • This requires the intelligence unit to broaden its intelligence framework.
The Cooperation between FIUs to prevent money laundering and recommends the analysis of crypto wallets, their associated addresses and blockchain records and hardware identifiers like IMEI (International Mobile Equipment Identity), IMSI (International Mobile Subscriber Identity) or SEID (Secure Element Identifier) numbers, as well as MAC addresses.

6. Regulations in other Countries

  • The Global Crypto Regulations Report 2023 a large proportion of countries are at various stages of drafting regulations around crypto.
  • Most countries have already brought digital assets under anti-money laundering laws.
  • Singapore, Japan, Switzerland and Malaysia have legislation on the regulatory framework.
  • The U.S., U.K., Australia and Canada have initiated plans for regulation.
  • So far, China, Qatar and Saudi Arabia have issued a blanket ban on cryptocurrency.
  • The EU is also preparing a cross-jurisdictional regulatory and supervisory framework for crypto-assets.
  • The framework seeks to provide legal clarity, consumer and investor protection and market integrity while promoting innovation in digital assets.

7. The Changes imply

  • The new clause in the rules for PMLA compliance defines "Politically Exposed Persons" as individuals who have been entrusted with prominent public functions by a foreign country, including the heads of State or Governments, Senior politicians, Senior government or judicial or military officers, senior executives of state-owned corporations and important political party officials.
  • The amendment is about foreign PEPs and not domestic ones.
  • The move to define politically exposed persons under PMLA is to bring uniformity with a 2008 circular of the RBI for KYC norms/Anti-money laundering standards for banks and financial institutions, which had defined PEPs in line with FATF norms.
  • PEP has already been in the RBI's master circular, in line with FATF.
  • The definition has now been given in the PMLA rules so that the same definition is applicable everywhere.

8. Significance of the FATF-related changes

  • The amendments assume significance ahead of India's proposed FATF assessment, which is expected to be undertaken later this year.
  • India's assessment is likely to come up for discussion in the plenary discussion in June, while the possible onsite assessment is slated for November.
  • Due to the pandemic and the pause in the FATF's assessment process, the fourth round of mutual evaluation of India had been postponed to 2023.
  • Before this, the FATF had undertaken an evaluation for India in June 2010.
  • The FATF, which is the global money laundering and terrorist financing watchdog, has 40 recommendations.
  • In its recommendations, the FATF states that financial institutions should be required to have appropriate risk-management systems to determine whether a customer or beneficial owner is a domestic PEP or a person who is or has been entrusted with a prominent function by an international organisation.
  • The broader objective is to bring in legal uniformity and remove ambiguities before the FATF assessment.
  • The 40 recommendations cover seven areas and provide a framework of measures.
  • This is to help countries tackle illicit financial flows through laws, regulations and operational measures to ensure authorities can take action to detect and disrupt financial flows that fuel crime and terrorism.
The seven areas are anti-money laundering/ counter-terrorist financing;
  1. Policies and coordination;
  2. Money laundering and confiscation;
  3. Terrorist financing and financing of proliferation;
  4. Preventive measures;
  5. Transparency and beneficial ownership of legal persons and arrangements
  6. Powers and responsibilities of competent authorities and other institutional measures and
  7. International cooperation.

9. Other Changes in the PMLA rules

  • The Amended rules have also lowered the threshold for identifying beneficial owners by reporting entities, where the client is acting on behalf of its beneficial owner, in line with the Companies Act and Income-tax Act.
  • The term "beneficial owner" was defined to mean ownership of or entitlement to more than 25 per cent of shares or capital or profit of the company, which has now been reduced to 10 per cent, thereby bringing more indirect participants within the reporting net.
  • Also, reporting entities are now required to register details of the client if it's a non-profit organisation on the DARPAN portal of NITI Aayog.
  • Every Banking Company or Financial Institution or intermediary, as the case may be, shall register the details of the client, in case of the client is a non-profit organisation, on the DARPAN portal of NITI Aayog, if not already registered and maintain such registration records for five years after the business relationship between a client and a reporting entity has ended or the account has been closed, whichever is later.
  • The definition of a non-profit organisation has also been amended and linked to the definition of charitable purpose provided under Section 2 (15) of the Income-tax Act 1961 to include any entity or organisation, constituted for religious or charitable purposes under I-T Act, that is registered as a trust or society under the Societies Registration Act or any similar state legislation or a company registered under the Companies Act.
  • The due diligence documentation requirements, which were until now limited to obtaining the basic KYCs of clients such as registration certificates PAN copies and documents of officers holding an attorney to transact on behalf of the client have now been extended.
  • It now includes the submission of details such as names of persons holding senior management positions, names of partners, names of beneficiaries, trustees, settlors and authors, as the case may be, depending upon the legal form of the organisation.
  • Also, the details of the registered office address and principal place of business are now required to be submitted by clients to financial institutions, banking companies or intermediaries.

For Prelims & Mains

For Prelims: Money Laundering Act, Financial Action Task Force, Enforcement Directorate, financing of terror, FIU-IND, NFT, Customer Due Diligence, IMEI, IMSI,  SEID, Global Crypto Regulations Report 2023, cryptocurrencies, DARPAN portal of NITI Aayog, Income-tax Act 1961, Societies Registration Act, Companies Act, 
For Mains: 
1. What is the new Amendment to the Prevention of Money-laundering Act and how it will impact politically exposed persons and NGOs? (250 Words)
 
Source: The Hindu and The Indian Express
 
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