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Term Definition Source
Authorised Person Authorised person means an authorised person as defined in clause (c) of section 2 of the Foreign Exchange Management Act, 1999 2(1)(da) of PMLA
Banking Company Banking company means a banking company or a co-operative bank to which the Banking Regulation Act, 1949 applies and includes any bank or banking institution referred to in section 51 of that Act. 2(1)(e) of PMLA
Chit Fund Company Chit fund company means a company managing, conducting or supervising, as foremen, agent or in any other capacity, chits as defined in Section 2 of the Chit Funds Act, 1982. 2(1)(h) of PMLA
Co-operative Bank Co-operative bank shall have the same meaning as assigned to it in clause(dd) of section 2 of the Deposit Insurance and Credit Guarantee Corporation Act 1961. 2(1)(i) of PMLA
Client CClient means a person who is engaged in a financial transaction or activity with a reporting entity and includes a person on whose behalf the person who engaged in transaction or activity, is acting. 2(1)(ha) of PMLA
Financial institution Financial Institution means a Financial Institution as defined in clause (c) of section 45-I of the Reserve Bank of India Act, 1934 (2 of 1934) and includes a chit fund company, a housing finance institution, an authorized person, a payment system operator, a non-banking financial company and the Department of Posts in the Government of India 2(1)(l) of PMLA
Housing Finance Institution Housing Finance Institution shall have the same meaning as assigned to it in clause (d) of section 2 of the National Housing Bank Act, 1987. 2(1)(m) of PMLA
Intermediary Intermediary means, -
  • a stock-broker, sub-broker, share transfer agent, banker to an issue, trustee to a trust deed, registrar to an issue, merchant banker, underwriter, portfolio manager, investment adviser or any other intermediary associated with Securities market and registered under Section 12 of the Securities and Exchange Board of India Act, 1992 ; or
  • an association recognised or registered under the forward contracts (Regulation) Act, 1952 or any member of such association; or
  • intermediary registered by the Pension Fund Regulatory and Development Authority; or
  • a recognised stock exchange refereed to in clause (f) of Section 2 of the Securities Contracts (Regulation) Act 1956.
2(1)(n) of PMLA
Money Laundering Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money laundering. 3 of PMLA
Non-banking Financial Company Non-banking financial company shall have the same meaning as assigned to it in clause (f) of section 45-I of the Reserve Bank of India Act, 1934. 2(1)(q) of PMLA
Non profit organisation 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 section 25 of the Companies Act, 1956 (1 of 1956). 2(1)(ca) of Rules**
Officially Valid Document Officially valid document means the passport, the driving licence, the Permanent Account Number (PAN) Card, the Voter's Identity Card issued by the 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 containing the details of name, address and Aadhar number or any document as notified by the Central Government in consultation with the Regulator. provided that where simplified measures are applied for verifying the identity of the clients the following document shall be deemed to be ‘officially valid document’ :
(a) identity card with applicant's photograph issued by the 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.
2(1)(d) of Rules*
Person Persons includes -
  • an individual,
  • a Hindu undivided family,
  • a company,
  • a firm,
  • an association of persons or a body of individuals, whether incorporated or not,
  • every artificial juridical person, not falling within any of the preceding sub-clauses, and
  • any agency, office or branch owned or controlled by any of the above persons mentioned in the preceding sub-clauses.
2(1)(s) of PMLA
Prescribed Value Prescribed value means the value of transaction prescribed under these rules. 2(1)(e) of Rules*
Principal Officer Principal officer means an officer designated by a banking company, financial institution and intermediary, as the case may be. 2(1)(f) of Rules*
Proceeds Of Crime Proceeds of crime means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property. 2(1)(u) of PMLA
Property Property means any property or assets of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible and includes deeds and instruments evidencing title to, or interest in, such property or assets, wherever located. 2(1)(v) of PMLA
Records Records include the records maintained in the form of books or stored in a computer or such other form as may be prescribed. 2(1)(w) of PMLA
Reporting Entity Reporting entity means a banking company, financial institution, intermediary or a person carrying on a designated business or profession.
Regulator 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 reporting entities or the Directors as may be notified by the Government for a specific reporting entity or a class of reporting entities or for a specific purpose. 2(1)(fa) of Rules**
Scheduled Offence Scheduled offence means -
  • the offences specified under Part A of the Schedule; or
  • the offences specified under Part B of the Schedule if the total value involved in such offences is thirty lakh rupees or more, or
  • the offences specified under Part C of the Schedule.
2(1)(y) of PMLA
Suspicious Transaction Suspicions 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 bonafide purpose; or

(d)  gives  rise  to  a  reasonable  ground  of  suspicion  that  it may involve financing of the activities relating to terrorism;
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 organization or those who finance or are attempting to finance terrorism.

2(1)(g) of Rules***
Transaction Transaction means a purchase, sale, loan, pledge, gift, transfer, delivery or the arrangement thereof and includes –
  • opening of an account;
  • deposits, withdrawals, 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;
  • the use of a safety deposit box or any other form of safe deposit;
  • entering into any fiduciary relationship;
  • any payment made or received in whole or in a part of any contractual or other legal obligation;
  • any payment made in respect of playing games of chance for cash or kind including such activities associated with casino; and
  • establishing or creating a legal person or legal arrangement.
2(1)(h) of Rules*
Transfer Transfer includes sale, purchase, mortgage, pledge, gift, loan or any other form of transfer of right, title, possession or lien. 2(1)(za) of PMLA
Value Value means the fair market value of any property on the date of its acquisition by any person, or if such date cannot be determined, the date on which such property is possessed by such person. 2(1)(zb) of PMLA
*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) Rules, 2005
*Inserted by Notification No. 13/2009 dated 12-11-2009
*** Amended vide Notification No 4/2007 dated 24-05-2007 and Notification No. 13/2009 dated 12-11-2009
Related Acts >> Banking Regulation Act, 1949
Related Acts >> Chit Funds Act, 1982
Related Acts >> DICGC Act, 1961
Related Acts >> NABARD Act, 1981
Related Acts >> National Housing Bank Act, 1987
Related Acts >> RBI Act, 1934
Related Acts >> SEBI Act, 1992
PMLA >> Overview
Notifications >> Notification No. 9/2005 - Rules for Record Keeping and Reporting
Notifications >> Notification No. 13/2009 - Amendment to Rules
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