An amendment put forward by the Finance Ministry brings cryptocurrency dealings and other Virtual Digital Asset (VDA) transactions within the reach of the Prevention of Money-Laundering Act (PMLA), 2002, broadening the legislation's coverage to address that category of digital financial activity.
Revised provisions under the PMLA, 2002 now bring persons carrying on a designated business or profession within the scope of Section 2(1)(sa) when their operations cover the swapping of virtual digital assets for fiat currencies, the conversion of one form of virtual digital asset into another, or the outright transfer of such assets. Custody of VDAs in ways that grant the holder operational control, along with taking part in or supplying financial services tied to those assets, fall within the scope of the framework as well. Under anti-money laundering rules, any business trading in virtual digital assets now falls within the definition of a reporting entity.
Record-keeping procedures were expanded to capture a greater level of detail. Under India's Income Tax Act, the term "non-profit organisation" maps onto entities formally constituted as NPOs within the framework of Section 2(15). Under trust law, a controlling interest of 10% — rather than the 15% figure sometimes cited — is the threshold at which a person acquires a beneficial interest in the trust.
Where the client in question takes the form of a trust, the reporting entity bears an obligation to furnish documentation covering every individual who holds a trustee position. Where the client happens to be a non-profit organisation, reporting entities are additionally required to log that client's details onto the NITI Aayog DARPAN portal.
Revised provisions bring down the ownership-disclosure threshold, drawing on frameworks already established under both the Income-Tax Act of 1961 and the Companies Act. Under company law, holding as little as 10% of the controlling shares — rather than the 25% threshold sometimes assumed — is sufficient to establish a beneficial interest in that entity. Under applicable rules, organisations that submit client company information are required to include the names of individuals occupying senior management roles within that entity.
Where a partnership firm holds the position of client, documentation covering beneficial owners alongside managers, officers, and employees is required to be submitted on record. Under the amended rules, banks, financial institutions, and companies active in real estate or jewellery are required to collect identifying information on every individual they deal with.
Compliance paperwork now reaches well beyond the foundational KYC materials — registration certificates, PAN copies, and authorisation documents for officers empowered to act on a client's behalf — with additional verification requirements layered on top. What a firm is required to disclose varies according to its legal structure, but typically covers the identities of senior managers, partners, beneficiaries, trustees, settlors, and those who drafted the relevant documents.
Financial institutions, banks, and intermediaries are now required to collect details on where a client's registered office sits and where the business primarily operates. Under anti-money-laundering frameworks, the label "Politically Exposed Person" — or PEP — attaches to any individual who holds, or has held, a prominent public role on behalf of a foreign state, a category that spans heads of government, senior figures across political, judicial, and military branches, top executives at state-owned enterprises, and leading officials within political parties. Under the amended Act, those individuals become subject to the obligations set out in the compliance framework.
