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    Question

    A property dealer receives an offer from a person to

    purchase a luxury apartment for Rs. 3 crores in cash with no documentation of the source. The dealer suspects the source may be illicit. Under PMLA and Know Your Customer norms, which statements are correct? Statement 1: The dealer can accept cash payment if the customer provides identification. Statement 2: The dealer must obtain information about the source of funds and document it. Statement 3: If the dealer suspects illicit source, they can report to ED without informing the customer. Statement 4: The property transaction becomes void if later found to involve proceeds of crime. Which statements are correct?
    A Statements 1 and 4 only Correct Answer Incorrect Answer
    B Statements 2, 3, and 4 only Correct Answer Incorrect Answer
    C Statements 1 and 2 only Correct Answer Incorrect Answer
    D Statements 2 and 3 only Correct Answer Incorrect Answer
    E All statements are correct Correct Answer Incorrect Answer

    Solution

    Due diligence requires obtaining source information—Statement 2 is correct. Section 29(1) and Schedule VII mandate reporting of suspicious transactions—Statement 3 is correct. PMLA permits attachment and confiscation of property that is proceeds of crime—Statement 4 is correct. Statement 1 is incorrect because large cash transactions require source verification. Statements 2, 3, and 4 are correct.

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