Question
Under the PMLA, the obligation to maintain records of transactions and verify the identity of clients is imposed on whom?
Solution
Under Section 12 of the Prevention of Money Laundering Act, every reporting entity, including banks, financial institutions and intermediaries, is obliged to maintain records of transactions, verify the identity of its clients (know your customer), maintain records of the identity of clients, and furnish information to the Financial Intelligence Unit. These obligations are central to the detection and prevention of money laundering. They ensure that financial entities act as the first line of defence against the laundering of criminal proceeds.
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