Delhi High Court to Hear Arguments Against Including CAs in Money Laundering Law on Monday
A petition challenging the inclusion of cost accountants, company secretaries, and chartered accountants within the purview of “reporting entities” under the anti-money laundering law and the imposition of criminal liability on them in the event of legal non-compliance will be heard by the Delhi High Court on Monday.
A panel of Chief Justice Satish Chandra Sharma and Justice Sanjeev Narula will hear the case of practicing chartered accountant Rajat Mohan.
The argument made in the lawsuit claimed that by including CAs and other professionals in the Prevention of Money Laundering Act’s (PMLA) definition of “reporting entities,” “onerous obligations” have been placed on them with the threat of criminal prosecution if they don’t comply, effectively forcing them to “police” the clients they interact with in a fiduciary capacity.
“The Petitioner is contesting the legality of Gazette Notification No. S.O.2036(E) dated 03.05.2023 passed by the Respondents wherein they have expanded the definition of the word “person” used in Section 2(1)(sa)(vi) of the Prevention of Money Laundering Act, 2002 as well as the definition of the word “activity” used in PMLA. According to the petition, which was submitted via attorneys Shweta Kapoor and R K Kapoor, “a class of professionals, namely Chartered Accountants, Company Secretaries, and Cost Accountants, have been included under the term of ‘Reporting Entities’.
The petition claimed that the notice infringes many civil and statutory rights, including the right to privacy and the protection of professional, privileged, and secret communications, as well as Articles 14, 19, 20 (3), 21, and 300A of the Indian Constitution.
It said that the notice provides the authorities under the anti-money laundering statute “unbridled and unlimited, arbitrary, and whimsical power” and establishes the groundwork for a fishing and roaming investigation into every financial transaction of every person and citizen of the nation.
The scope and implementation of PMLA are so tight that even a genuine oversight might endanger the lives, liberty, and professional prospects of the Reporting Entities. The petitioner would constantly have a sword of Damocles hanging over his or her head.
“It is left to each Chartered Accountant/Company Secretary/Cost Accountant’s expertise, understanding, and mental process to assess the customers who come to them to comprehend their transactions from the standpoint of money laundering and then enhance their vigilance on such accounts. According to the law, the state is responsible for performing this duty; ordinary persons, who are only experts in a certain subject and are not certified prosecutors, are not.
