In plain words: banks are not the only ones with PMLA duties. The net of 'reporting entities' has widened to many businesses and professionals — and non-compliance carries real penalties.
Who is a reporting entity
A reporting entity under the PMLA includes banks and financial institutions, intermediaries (in securities and similar sectors), and various designated businesses and professions notified from time to time — the category has expanded over the years.
What they must do
- Verify identity of clients and beneficial owners (KYC).
- Maintain records of transactions and identity for the prescribed period.
- Report suspicious and high-value transactions to FIU-IND.
- Have internal policies, a principal officer, and training.
Expanding scope
Through notifications, activities such as certain dealings in high-value goods, specified professional services, and virtual digital asset services have been brought within reporting obligations. If your business touches these areas, check whether you are now a reporting entity.
The penalties for failure
A reporting entity (and its directors/officers) that fails to comply — weak KYC, missing records, unfiled reports — can face monetary penalties imposed by the Director, along with directions to fix the failures. Repeated or serious lapses invite stiffer action and reputational harm.
What to do if you may be covered
- Assess whether your activities make you a reporting entity.
- Register and set up reporting with FIU-IND where required.
- Build a compliance programme before a problem arises.
Frequently asked questions
Is my profession a reporting entity? It depends on notifications for your activity — several professional and designated businesses are now covered.
Who imposes the penalty? The Director under the PMLA, after due process.
Can officers be penalised personally? Yes — responsible officers can face consequences.
How Vakil Help Desk helps
Vakil Help Desk advises and defends clients at every stage of a PMLA matter — summons, attachment, arrest, bail and trial. If the ED has contacted you or you fear action, we can help you protect your position.
This article is for general legal awareness, not individual legal advice. PMLA proceedings move fast and the law is evolving through court rulings and notifications, so the right step depends on your facts and the current position. If you have received an ED notice or fear action, consult a lawyer immediately.