The regulator under PMLA issues guidelines and prescribes measures to establish client identity in different transactions.
It may prescribe enhanced or simplified measures to verify the client's identity taking into consideration the type of client, business relationship, nature and value of transactions based on the overall money laundering and terrorist financing risks involved, the rules state.
Under PMLA, every reporting entity is required to maintain record of all transactions of value exceeding Rs 10 lakh, all cross border wire transfers of more than Rs 5 lakh and all purchase and sale of immovable property of Rs 50 lakh or more.
Rules provide for "client due diligence" by the reporting entity to prevent money laundering or terrorist financing. After the amendment, the DGGSTI would now keep a track of transactions in the gems and jewellery sector to see if they are conformity with law.
Under the PMLA, 'Regulator' is defined as an authority or a Government which is vested with the power to license, authorise, register, regulate or supervise the activity of reporting entities or the Director as may be notified by the Government for a specific reporting entity or a class of reporting entities or for a specific purpose.
Experts said this is likely to give power to DGGSTI in the line with that of a Sales Tax officers to go to shops and check whether money laundering has happened.
Nangia & Co Executive Director (Taxation) Neha Malhotra said through this amendment the DG GST
Intelligence has been made PMLA regulator for the gems and jewellery sector.
"This sector has to ensure that they are compliant with the law, since now they are directly under the lens of DGGSTI who shall keep an eye on any money laundering activities in this sector," Malhotra said.
The DG GSTI is the new name given to the Directorate General of Central Excise Intelligence (DGCEI), which was mandated to check service tax and central excise duty evasion.
Ahead of the rollout of Goods and Services Tax (GST) from July 1, the government had strengthened DGSTI for detecting excise and service tax evasion using its intelligence network across the country. It also alerts field formations about the latest trends in the duty or tax evasion.
During the last financial year, DGCEI detected tax evasion worth Rs 15,047 crore during financial year 2016-17.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.