By S&S Co. Advocates & Solicitors · Published 28 September 2026 · Informational content, not legal advice: see our disclaimer
Overview
A compliance guide for a business in a sector covered by the Prevention of Money Laundering Act, banks, NBFCs, payment aggregators, real estate agents, precious-metals dealers and similar covered persons, explaining reporting-entity obligations, KYC/beneficial-ownership requirements, and suspicious-transaction reporting.
What You Need to Know
- A 'reporting entity' under PMLA includes banking companies, financial institutions and intermediaries in the securities market, as well as persons carrying on specifically notified designated businesses or professions, such as real estate agents and dealers in precious metals and stones: the definition extends well beyond traditional banks to cover NBFCs, payment aggregators, fintech platforms, crypto exchanges and insurance companies
- Sections 11A to 15 of PMLA impose the core reporting-entity obligations: verifying the identity of clients and beneficial owners, maintaining records of transactions, and reporting specified and suspicious transactions to the Financial Intelligence Unit-India (FIU-IND)
- A beneficial-ownership identification threshold under the PMLA Rules has been reduced from 25% to 10%, meaning reporting entities must now identify and verify a materially larger set of individuals holding an ownership or controlling interest in a client entity
- Reporting entities must retain records for five years from the date of the transaction or the closure of the account, whichever is later, to preserve traceability well after a transaction has concluded
- Where a transaction appears suspicious, the reporting entity must report it to the FIU-IND within the prescribed period, generally understood as seven working days of forming the relevant opinion or being satisfied of its suspicious nature
- Reporting entities are required to upload customer KYC records to the Central KYC Records Registry (CKYCR) operated by CERSAI, and recent regulatory updates have tightened video-based customer identification process (V-CIP) requirements and formalised banking-correspondent-led KYC
Frequently Asked Questions
Does PMLA's 'reporting entity' definition cover only banks?
No: it extends to NBFCs, payment aggregators, fintech platforms, crypto exchanges, insurance companies, and persons carrying on notified businesses such as real estate agents and dealers in precious metals and stones.
How long must a reporting entity retain transaction records?
For five years from the date of the transaction or the closure of the account, whichever is later.
What ownership threshold triggers beneficial-owner identification now?
The threshold has been reduced from 25% to 10%, so reporting entities must identify and verify a materially larger set of individuals holding an ownership or controlling interest in a client entity.
References & Further Reading
This guide references the following statutes, rules and sources, cross-checked at the time of writing.
- Reporting entity definition covering banks, NBFCs, payment aggregators, real estate agents and precious-metals dealers: confirmed via Lexology's AML snapshot and Taxmann's PMLA obligations explainer at research time
- Reduction of the beneficial ownership identification threshold from 25% to 10%: confirmed via multiple 2025-26 AML compliance sources at research time: verify the exact effective date and current threshold against the PMLA Rules as amended, at drafting time
- Seven-day suspicious transaction reporting timeline to FIU-IND: general figure cited in research-time sources: verify the current prescribed period under the PMLA Rules, since some sources describe this in slightly different terms, before stating it as a fixed number in the final guide
- Five-year record retention period: well-settled under the PMLA Rules, confirmed at research time
- See also our Banking & Finance Notable Judgments and Legal Updates, Banking & Finance archive.