Delhi HC seeks Centre’s stand in plea against including CA, CS among Reporting Entities under PMLA
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The Delhi High Court Monday sought the Centre’s stand in a plea against a notification where chartered accountants, company secretaries and cost accountants have been included among “reporting entities” under the Prevention of Money Laundering Act (PMLA)
A division bench of Chief Justice Satish Chandra Sharma and Justice Sanjeev Narula granted time to Additional Solicitor General Chetan Sharma, who appeared for the Centre, to “seek instructions” and listed the matter on October 4.
The bench also noted the petitioner’s submission that he was confining himself to “prayer a” of the petition where a direction for quashing the May 3 gazette notification by the Union Ministry of Finance has been sought.
As per the plea, the notification has “read into” the provisions of the PMLA and “expanded the definition” of the word “person” used in Section 2(1)(sa)(vi) and the definition of the word “activity”.
“Specifically, a class of professionals i.e., Chartered Accountants/Company Secretaries/Cost Accountants have been included within the definition of ‘Reporting Entities’ and onerous obligations under the PMLA have been put on them,” the plea said.
The plea stated that the notification lays down that if the relevant persons conduct the activities i.e., transactions specified in the notification on behalf of their clients, “then they would have to perform the function of a Reporting Entity and report such transactions under PMLA to the Director (ED) as and when information is sought”.
Appearing for the petitioner Rajat Mohan, who is a practising chartered accountant, senior advocate Trideep Pais said the inclusion of these professionals was on a “vague and subjective” basis, which is also in violation of the fiduciary relationship that they share with their clients.
ASG Sharma said the National Financial Fraud Reporting Authority is an authority created by law to look into “financial fraud”.
“Any interference will upset the harmonious arc” for reporting such transactions, the ASG said. He further said there will be a full mechanism put in place and each and every case will be looked at on its own terms.
The plea stated that the provisions of the PMLA make it mandatory for all chartered accountants/company secretaries/cost accountants to “practically maintain a vigil in the nature of policing on the records and transactions of all the parties approaching them”.
A division bench of Chief Justice Satish Chandra Sharma and Justice Sanjeev Narula granted time to Additional Solicitor General Chetan Sharma, who appeared for the Centre, to “seek instructions” and listed the matter on October 4.
The bench also noted the petitioner’s submission that he was confining himself to “prayer a” of the petition where a direction for quashing the May 3 gazette notification by the Union Ministry of Finance has been sought.
As per the plea, the notification has “read into” the provisions of the PMLA and “expanded the definition” of the word “person” used in Section 2(1)(sa)(vi) and the definition of the word “activity”.
“Specifically, a class of professionals i.e., Chartered Accountants/Company Secretaries/Cost Accountants have been included within the definition of ‘Reporting Entities’ and onerous obligations under the PMLA have been put on them,” the plea said.
The plea stated that the notification lays down that if the relevant persons conduct the activities i.e., transactions specified in the notification on behalf of their clients, “then they would have to perform the function of a Reporting Entity and report such transactions under PMLA to the Director (ED) as and when information is sought”.
Appearing for the petitioner Rajat Mohan, who is a practising chartered accountant, senior advocate Trideep Pais said the inclusion of these professionals was on a “vague and subjective” basis, which is also in violation of the fiduciary relationship that they share with their clients.
ASG Sharma said the National Financial Fraud Reporting Authority is an authority created by law to look into “financial fraud”.
“Any interference will upset the harmonious arc” for reporting such transactions, the ASG said. He further said there will be a full mechanism put in place and each and every case will be looked at on its own terms.
The plea stated that the provisions of the PMLA make it mandatory for all chartered accountants/company secretaries/cost accountants to “practically maintain a vigil in the nature of policing on the records and transactions of all the parties approaching them”.
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