9,500 NBFCs seen as 'high risk' companies by Finance Ministry

In a major crackdown on black money in India, the Financial Intelligence Unit (FIU), which operates under the Finance Ministry, has laid out a list of nearly 9,500 non-banking financial companies (NBFCs) as 'high risk financial institution'. 

The FIU on its website involves the names of NBFCs which have been identified as 'high risk' and found non-complaint to the Prevention of Money Laundering Act (PMLA) rules as of January 31, 2018. 

One can Click Here to know the names of these 9,500 identified NBFCs. 

It may be noted these NBFCs and co-operative banks were found converting banned Rs 500 and Rs 1000 notes during the demonetisation drive in November 2016, reported Times of India. 

Reportedly, these companies received cash as deposits and issued back-dated fixed deposits and cheques despite the fact the RBI had prevented them from taking such deposits.
 
The PMLA guides that all NBFCs are required to appoint a principal officer in the financial institution, and they are also needed to report all suspicious and cash transactions of Rs 10 lakh and above before the FIU. 
 
Further, section 12 of PMLA guides that every reporting entity must maintain proper records of all transactions and ensure to verify the identity of their clients and their beneficial owners as per the directions given by FIU.
 
Entities are needed to maintain records of transactions and identify of clients of at least five years. 

If the above mentioned criteria is not followed, the section 13 of PMLA , 2002, allows the Director, FIU-IND for imposing penalties on any banking financial institution or intermediary. 
 
The penalties may vary from Rs 10,000 to Rs 1 lakh for each failure, the guidelines adds.