The Prevention of Money Laundering Act compliance framework has undergone significant expansion, with enhanced obligations for reporting entities and increased enforcement activity. Organizations within the scope of PMLA requirements must establish robust compliance architectures that address both regulatory obligations and the substantial penalties for non-compliance.
The identification of reporting entity status requires careful analysis of business activities against the categories specified under PMLA and associated rules. The expansion of covered entities to include various categories of designated non-financial businesses and professions has broadened the compliance universe significantly. Organizations must assess their activities against current and proposed requirements to determine applicable obligations.
Customer due diligence requirements under PMLA establish the foundational compliance obligation for reporting entities. The graduated CDD framework, encompassing simplified, standard, and enhanced procedures based on risk assessment, requires systematic processes for customer identification, verification, and ongoing monitoring. The implementation of risk-based approaches demands sophisticated assessment methodologies and supporting technology infrastructure.
Transaction monitoring and suspicious transaction reporting obligations require systems capable of identifying unusual patterns indicative of potential money laundering. The calibration of monitoring parameters, the establishment of alert investigation processes, and the development of STR filing capabilities all demand careful attention. The consequences of both over-reporting and under-reporting create challenging calibration requirements.
Record-keeping obligations under PMLA extend beyond routine business documentation to encompass specific categories of information maintained for prescribed periods. Organizations must establish systematic record management processes ensuring both retention compliance and retrieval capability. The increasing digitization of records creates opportunities for efficient compliance while also raising data protection considerations.
Governance frameworks for PMLA compliance should establish clear accountability structures, including designated principal officer responsibilities, board-level oversight, and independent compliance functions. The integration of PMLA compliance within broader enterprise risk management frameworks ensures appropriate visibility and resource allocation while avoiding siloed compliance approaches.