Rule 2 - Definitions. - Prevention of Money-Laundering (Maintenance of Records) Rules, 2005

Definitions. 2. (1) In these rules, unless the context otherwise requires,- (a) Act means the Prevention of Money-Laundering Act, 2002 (15 of 2003); 24 [ 30 [ 33 [ (aa) ] Aadhaar number shall have the meaning assigned to it in clause (a) of section 2 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 (18 of 2016); ] 33 [ (ab) ] authentication means the process as defined under sub-section (c) of section 2 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016; (aac) 31 [*******] (aad) 31 [*******] 39 [ (aag) Depository Receipt means a foreign currency denominated instrument, whether listed on an international exchange or not, issued by a foreign depository in a permissible jurisdiction on the back of eligible securities issued or transferred to that foreign depository and deposited with a domestic custodian and includes global depository receipt as defined in the Companies Act, 2013 (18 of 2013); ] 1 [ 33 [ (ac) ] Central KYC Records Registry means a reporting entity, substantially owned and controlled by the Central Government, and authorised by that Government through a notification in the Official Gazette to receive, store, safeguard and retrieve the KYC records in digital form of a client as referred to in clause (ha) in such manner and to perform such other functions as may be required under these rules;] 2 [(b) client due diligence means due diligence carried out on a client referred to in clause (ha) of sub-section (1) of section 2 of the Act 51 [ using reliable and independent sources of identification ] ;] 3 [(ba) Designated Director means a person designated by the reporting entity to ensure overall compliance with the obligations imposed under Chapter IV of the Act and the Rules and includes- (i) the Managing Director or a whole-time Director duly authorized by the Board of Directors if the reporting entity is a company, (ii) the managing partner if the reporting entity is a partnership firm, (iii) the proprietor if the reporting entity is a proprietorship concern, (iv) the managing trustee if the reporting entity is a trust, (v) a person or individual, as the case may be, who controls and manages the affairs of the reporting entity if the reporting entity is an unincorporated association or a 42 [ body of individuals; ] 43 [ (va) a person who is heading the reporting entity in India, if the reporting entity is located in an International Financial Services Centre; and ] (vi) such other person or class of persons as may be notified by the Government if the reporting entity does not fall in any of the categories above. Explanation .-For the purpose of this clause, the terms Managing Director and Whole-time Director shall have the meaning assigned to them in the 4 [Companies Act, 2013 (18 of 2013)];] 5 [(bb) Designated Officer means any officer or a class of officers authorized by a banking company, either by name or by designation, for the purpose of opening small accounts;] 34 [ (bba) digitial KYC means the capturing live photo of the client and officially valid document or the proof of possession of Aadhaar, where offline verification cannot be carried out, along with the latitude and longitude of the location where such live photo is being taken by an authorised officer of the reporting entity as per the provisions contained in the Act; (bc) Digital Signature shall have the same meaning as assigned to it in clause (p) of sub-section (1) of section (2) of the Information Technology Act, 2000 (21 of 2000); ] (c) Director means the Director appointed under sub-section (1) of section 49 of the Act for the purposes of 6 [sections 12, 12A and 13] of the Act; 33 [ (ca) ] e KYC authentication facility means an authentication facility as defined in Aadhaar (Authentication) Regulations, 2016; 35 [ (cb) equivalent e-document means an electronic equivalent of a document, issued by the issuing authority of such document with its valid digital signature including documents issued to the digital locker account of the client as per rule 9 of the Information Technology (Preservation and Retention of Information by Intermediaries Providing Digital Locker Facilities) Rules, 2016; ] 47 [ (cba) group shall have the same meaning assigned to it in clause (e) of sub-section (9) of section 286 of the Income-tax Act,1961 (43 of 1961) ] 46 [ 48 [(cbb) International Financial Services Centre means an International Financial Services Centre set up under section 18 of the Special Economic Zones Act, 2005 (28 of 2005); ] ] 3 [ 33 [ (cc) ] Know Your Client (KYC) Identifier means the unique number or code assigned to a client by the Central KYC Records Registry; 33 [ (cd) ] Know Your Client (KYC) records means the records, including the electronic records, relied upon by a reporting entity in carrying out client due diligence as referred to in rule 9 of these rules; 33 [ (ce) ] last KYC verification or updation means the last transaction made by a reporting entity in the Central KYC Records Registry by which the KYC records of a client were recorded, changed or updated by a reporting entity; ] 49 [ (cf) ] Non-profit organization means any entity or organisation, constituted for religious or charitable purposes referred to in clause (15) of section 2 of the Income-tax Act, 1961 (43 of 1961), that is registered as a trust or a society under the Societies Registration Act, 1860 (21 of 1860) or any similar State legislation or a Company registered under the section 8 of the Companies Act, 2013 (18 of 2013); ] (d) officially valid document means 25 [ the passport, the driving licence, 32 [ proof of possession of Aadhaar number ] the Voter s Identity Card issued by Election Commission of India, job card issued by NREGA duly signed by an officer of the State Government, the letter issued by the National Population Register containing details of name, address or any other document as notified by the Central Government in consultation with the Regulator ] ] 12 [Provided that where simplified measures are applied for verifying the identity of the clients the following documents shall 36 [ also ] be deemed to be officially valid documents: (a) identity card with applicant s Photograph issued by Central/State Government Departments, Statutory/Regulatory Authorities, Public Sector Undertakings, Scheduled Commercial Banks, and Public Financial Institutions; (b) letter issued by a gazetted officer, with a duly attested photograph of the person: ] 13 [Provided further that where simplified meausres are applied for verifying the limited purpose of proof of address of the clients, where a prospective customer is unable to produce any proof of address, the following documents shall 36 [ also ] be deemed to be officially valid document : (a) utility bill which is not more than two months old of any service provider (electricity, telephone, post-paid mobile phone, piped gas, Water bill); (b) property or Municipal tax receipt; (c) bank account or Post Office savings bank account statement 44 [ or if the reporting entity is located in an International Financial Services Centre, statement of foreign bank ] ; (d) pension or family pension payment orders (PPOs) issued to retired employees by Government Departments or Public Sector Undertakings, if they contain the address; (e) letter of allotment of accommodation from employer issued by State or Central Government departments, statutory or regulatory bodies, public sector undertakings, scheduled commercial banks, financial institutions and listed companies. Similarly, leave and licence agreements with such employers allotting official accommodation; and 28 [****] ] 29 [Provided also that in case the officially valid document presented by a foreign national does not contain the details of address, in such case the documents issued by the Government departments of foreign jurisdictions and letter issued by the Foreign Embassy or Mission in India shall be accepted as proof of address.] 45 [ Provided also that in an International Financial Services Centre, the national identity card and voter identification card, by whatever name called, issued by the Government of foreign jurisdictions or agencies authorised by them capturing the photograph, name, date of birth and address of a foreign national shall also be considered as officially valid document: ] 32a [ Provided also that where the client submits his proof of possession of Aadhaar number as an officially valid document, he may submit it in such form as are issued by the Unique Identification Authority of India; ] 14 [ Explanation .-For the purpose of this clause, a document shall be deemed to an officially valid document even if there is a change in the name subsequent to its issuance provided it is supported by a marriage certificate issued by the State Government or Gazette notification, indicating such a change of name.] 37 [ (da) offline verification shall have the same meaning as assigned to it in clause (pa) of section 2 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 (18 of 2016); ] 47 [ (db) Politically Exposed Persons (PEPs) are individuals who have been entrusted with prominent public functions by a foreign country, including the heads of States or Governments, senior politicians, senior government or judicial or military officers, senior executives of state-owned corporations and important political party officials; ] (e) prescribed value means the value of transaction prescribed under these rules; (f) Principal Officer means an officer designated by a 15 [reporting entity]; 50 [ Provided that such officer shall be an officer at the management level; ] 23 [(fa) Regulator means -- (i) a person or 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; (ii) the Reserve Bank of India with respect to Central KYC Records Registry as defined in clause (aa) 38 [ (ac) ] of sub-rule (1) of rule 2] 40 [ (iii) the Central Board of Indirect Taxes and Customs, constituted under Central Boards of Revenue Act, 1963, with respect to the dealers in precious metals and precious stones. ] 41 [ (iv) the Central Board of Indirect Taxes and Customs, constituted under Central Boards of Revenue Act, 1963, with respect to the real estate agents. ] 18 [ 33 [ (fb) ] Rules means the Prevention of Money-laundering (Maintenance of Records) Rules, 2005;] 19 [ 33 [ (fc) ] small account means a savings account in a banking company where- (i) the aggregate of all credits in a financial year does not exceed rupees one lakh, (ii) the aggregate of all withdrawals and transfers in a month does not exceed rupees ten thousand, and (iii) the balance at any point of time does not exceed rupees fifty thousand;] 26 [Provided that this limit on balance shall not be considered while making deposits through government grants, welfare benefits and payment against procurements.] 20 [(g) Suspicious transaction means a transaction referred to in clause (h), including an attempted transaction, whether or not made in cash, which to a person acting in good faith-- (a) gives rise to a reasonable ground of suspicion that it may involve proceeds of an offence specified in the Schedule to the Act, regardless of the value involved; or (b) appears to be made in circumstances of unusual or unjustified complexity; or (c) appears to have no economic rationale or bona fide purpose; or (d) gives rise to a reasonable ground of suspicion that it may involve financing of the activities relating to terrorism.] 21 [ Explanation .-Transaction involving financing of the activities relating to terrorism includes transaction involving funds suspected to be linked or related to, or to be used for terrorism, terrorist acts or by a terrorist, terrorist organisation or those who finance or are attempting to finance terrorism;] 22 [(h) transaction means a purchase, sale, loan, pledge, gift, transfer, delivery or the arrangement thereof and includes- (i) opening of an account; (ii) deposits, withdrawal, exchange or transfer of funds in whatever currency, whether in cash or by cheque, payment order or other instruments or by electronic or other non-physical means; (iii) the use of a safety deposit box or any other form of safe deposit; (iv) entering into any fiduciary relationship; (v) any payment made or received in whole or in part of any contractual or other legal obligation; (vi) any payment made in respect of playing games of chance for cash or kind including such activities associated with casino; and (vii) establishing or creating a legal person or legal arrangement.] 33 [ (i) ] Yes/No authentication facility means an authentication facility as defined in Aadhar (Authentication) Regulations, 2016;] (2) All other words and expressions used and not defined in these rules but defined in the Act shall have the meaning respectively assigned to them in the Act. ------------------- Notes: 1. Inserted Vide Prevention of Money-laundering (Maintenance of Records) Amendment Rules, 2015, w.e.f. 7-7-2015. 2. Substituted Vide Prevention of Money-laundering (Maintenance of Records) Amendment Rules, 2013, w.e.f. 27-8-2013. Before it was read as: (b) client means a person that engages in a financial transaction or activity with a banking company, or financial institution or intermediary and includes a person on whose behalf the person that engages in the transaction or activity, is acting 3. Inserted Vide Prevention of Money-laundering (Maintenance of Records) Amendment Rules, 2013, w.e.f. 27-8-2013. 4. Substituted Vide Prevention of Money-laundering (Maintenance of Records) Amendment Rules, 2015, w.e.f. 7-7-2015. Before it was read as: Companies Act, 1956 (1 of 1956) 5. Inserted Vide Prevention of Money-laundering (Maintenance of Records of the Nature and Value of Transactions, the Procedure and Manner of Maintaining and Time for Furnishing Information and Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Third Amendment Rules, 2010, w.e.f. 16-12-2010. 6. Substituted Vide Prevention of Money-laundering (Maintenance of Records) Amendment Rules, 2013, w.e.f. 27-8-2013. Before it was read as: sections 12 and 13 7. Renumbered Vide Prevention of Money-laundering (Maintenance of Records) Amendment Rules, 2015, w.e.f. 7-7-2015. Before it was read as: Clause (ca) as (cd) 8. Substituted Vide Prevention of Money-laundering (Maintenance of Records) Amendment Rules, 2015, w.e.f. 7-7-2015. Before it was read as: section 25 of the Companies Act, 1956 (1 of 1956) 9. Substituted Vide Prevention of Money-laundering (Maintenance of Records of the Nature and Value of Transactions, the Procedure and Manner of Maintaining and Time for Furnishing Information and Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Third Amendment Rules, 2010, w.e.f. 16-12-2010. Before it was read as: the Election Commission of India or any other document as may be required by the banking company, or financial institution or intermediary; 10. Inserted Vide Prevention of Money-laundering (Maintenance of Records) Amendment Rules, 2015, w.e.f. 7-7-2015. 11. Substituted Vide Prevention of Money-laundering (Maintenance of Records) Amendment Rules, 2013, w.e.f. 27-8-2013. Before it was read as: Reserve Bank of India or any other document as may be required by the banking companies, or financial institution or intermediary 12. Inserted Vide Prevention of Money-laundering (Maintenance of Records) Amendment Rules, 2013, w.e.f. 27-8-2013. 13. Inserted Vide Prevention of Money-laundering (Maintenance of Records) Amendment Rules, 2015, w.e.f. 15-4-2015. 14. Inserted Vide Prevention of Money-laundering (Maintenance of Records) Third Amendment Rules, 2015, w.e.f. 22-9-2015. 15. Substituted Vide Prevention of Money-laundering (Maintenance of Records) Amendment Rules, 2013, w.e.f. 27-8-2013. Before it was read as: banking company, financial institution or intermediary, as the case may be 16. Inserted Vide Prevention of Money-Laundering (Maintenance of Records of the Nature and Value of Transactions, the Procedure and Manner of Maintaining and Time for Furnishing Information and Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Amendment Rules, 2009, w.e.f. 12-11-2009. 17. Substituted Vide Prevention of Money-Laundering (Maintenance of Records) Amendment Rules, 2013, w.e.f. 27-8-2013. Before it was read as: banking companies, financial institutions or intermediaries, as the case may be 18. Inserted by the Prevention of Money-Laundering (Maintenance of Records) Amendment Rules, 2013, w.e.f. 27-8-2013. 19. Inserted Vide Prevention of Money-laundering (Maintenance of Records of the Nature and Value of Transactions, the Procedure and Manner of Maintaining and Time for Furnishing Information and Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Third Amendment Rules, 2010, w.e.f. 16-12-2010 20. Substituted Vide Prevention of Money-laundering (Maintenance of Records of the Nature and Value of Transactions, the Procedure and Manner of Maintaining and Time for Furnishing Information and Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Amendment Rules, 2009, w.e.f. 12-11-2009. Before Substitution, clause (g) as amended by the Prevention of Money-Laundering (Maintenance of Records of the Nature and Value of Transactions, the Procedure and Manner of Maintaining and Time for Furnishing Information and Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Amendment Rules, 2007, w.e.f. 24-5-2007, Before it was read as: (g) suspicious transaction means a transaction whether or not made in cash which, to a person acting in good faith- (a) gives rise to a reasonable ground of suspicion that it may involve the proceeds of crime; or (b) appears to be made in circumstances of unusual or unjustified complexity; or (c) appears to have no economic rationale or bona fide purpose; or (d) gives rise to a reasonable ground of suspicion that it may involve financing of the activities relating to terrorism; 21. Inserted Vide Prevention of Money-Laundering (Maintenance of Records of the Nature and Value of Transactions, the Procedure and Manner of Maintaining and Time for Furnishing Information and Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Second Amendment Rules, 2010, w.e.f. 16-6-2010. 22. Substituted Vide Prevention of Money-laundering (Maintenance of Records) Amendment Rules, 2013, w.e.f. 27-8-2013. Before it was read as: (h) transaction includes deposit, withdrawal, exchange or transfer of funds in whatever currency, whether in cash or by cheque, payment order or other instruments or by electronic or other non-physical means. 23. Substituted vide Not. 1/2017 - Dated 12-4-2017 , before it was read as, 16 [(fa) Regulator means a person or an authority or a Government which is vested with the power to license, authorise, register, regulate or supervise the activity of 17 [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];] 24. Inserted vide Not. 2/2017 - Dated 1-6-2017 25. Substituted vide Not. 2/2017 - Dated 1-6-2017 before it was read as, the passport, the driving licence, the Permanent Account Number (PAN) Card, the Voter s Identity Card issued by 9 [Election Commission of India, job card issued by NREGA duly signed by an officer of the State Government, the letter issued by the Unique Identification Authority of India 10 [or the National Population Register] containing details of name, address and Aadhaar number or any other document as notified by the Central Government in consultation with the 11 [Regulator]: 26. Inserted vide Notification no. 3/2017 dated 21-8-2017 27. Inserted vide Notification no. 5/2017 dated 23-8-2017 28 Omitted vide notification no. 7/2017 dated 23-10-2017 before it was read as, (f) documents issued by Government departments of foreign jurisdiction and letter issued by Foreign Embassy or Mission in India 29 Inserted vide notification no. 7/2017 dated 23-10-2017 30. Substituted vide NOTIFICATION No. G.S.R. 108(E) dated 13-02-2019 before it was read as (aaa) Aadhaar number means an identification number as defined under sub-section (a) of section 2 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016; 31. Omitted vide NOTIFICATION No. G.S.R. 108(E) dated 13-02-2019 before it was read as (aac) Resident means an individual as defined under sub-section (v) of section 2 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016; (aad) identity information means the information as defined in sub-section (n) of section 2 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016; 32. Inserted vide NOTIFICATION No. G.S.R. 108(E) dated 13-02-2019 32a. Inserted vide NOTIFICATION No. G.S.R. 108(E) dated 13-02-2019 33. Substituted vide NOTIFICATION No. [F. No. P.12011/24/2017-ES Cell-DoR] dated 19-08-2019 before it was read as (aa) as (ac), (aaa) as (aa), (aab) as (ab), (aae) as (ca), (aaf) as (i), (ca) as (cc) , (cb) as (cd), (cc) as (ce), 7 [ (cd) ] as (cf), (faa) as (fb), (fb) as (fc), 34. Inserted vide NOTIFICATION No. [F. No. P.12011/24/2017-ES Cell-DoR] dated 19-08-2019 35. Inserted vide NOTIFICATION No. [F. No. P.12011/24/2017-ES Cell-DoR] dated 19-08-2019 36. Inserted vide NOTIFICATION No. [F. No. P.12011/24/2017-ES Cell-DoR] dated 19-08-2019 37. Inserted vide NOTIFICATION No. [F. No. P.12011/24/2017-ES Cell-DoR] dated 19-08-2019 38. Inserted vide NOTIFICATION No. [F. No. P.12011/24/2017-ES Cell-DoR] dated 19-08-2019 39. Inserted vide NOTIFICATION No. G.S.R. 669(E) dated 18-09-2019 40. Substituted vide Notification No. G.S.R. 800(E) dated 28-12-2020 before it was read as 27 [(iii) the Directorate General of Goods and Service Tax Intelligence with respect to Gems and Jewellery Sector.] 41. Inserted vide Notification No. G.S.R. 800(E) dated 28-12-2020 42. Substituted vide Notification No. G.S.R. 575(E) dated 13-07-2022 before it was read as, body of individuals, and 43. Inserted vide Notification No. G.S.R. 575(E) dated 13-07-2022 44. Inserted vide Notification No. G.S.R. 575(E) dated 13-07-2022 45. Inserted vide Notification No. G.S.R. 575(E) dated 13-07-2022 46. Inserted vide Notification No. G.S.R. 575(E) dated 13-07-2022 47. Inserted vide Notification No. S.O. 1074(E)., dated 07-03-2023. 48. Renumbered vide Notification No. S.O. 1074(E)., dated 07-03-2023. , before it was read as (cba) 49. Substituted vide Notification No. S.O. 1074(E)., dated 07-03-2023. , before it was read as, 33 [ (cf) ] non-profit organisation means any entity or organisation that is registered as a trust or a society under the Societies Registration Act, 1860 (21 of 1860) or any similar State legislation or a company registered under 8 [section 8 of the Companies Act, 2013 (18 of 2013)] 50. Inserted vide Notification No. G.S.R. 652(E) dated 04-09-2023 51. Inserted vide Notification No. G.S.R. 745(E) dated 17-10-2023