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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 informationā€”Statement 2 is correct. Section 29(1) and Schedule VII mandate reporting of suspicious transactionsā€”Statement 3 is correct. PMLA permits attachment and confiscation of property that is proceeds of crimeā€”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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