The Indian government said in an official notification that the newly created Directorate General of Goods and Service Tax Intelligence (the reconfigured intelligence arm of the Excise department), will be the regulator dealing with money laundering cases in the gems and jewellery sector.
The government had, in an earlier notification, said that any dealer in precious metals, precious stones or high value goods with a turnover of more than ₹2 crore ($313,000) will come under the ambit of the Prevention of Money Laundering Act (PMLA) rules.
The Finance Ministry’s notification last week amended the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005 to make the Directorate General of Goods and Service Tax Intelligence (DGGSTI) the regulator with respect to the gems and jewellery sector, with authority to issue guidelines and prescribes measures to establish client identity in different transactions.
It may prescribe enhanced or simplified measures to verify the client’s identity taking into consideration the type of client, business relationship, nature and value of transactions based on the overall money laundering and terrorist financing risks involved, the rules state.
Under the PMLA, every reporting entity is required to maintain records of all transactions exceeding ₹10 lakh ($15,654), all cross-border wire transfers of more than ₹5 lakh ($7,827) and all purchase and sale of immovable property of ₹50 lakh ($78,275) or more. The rules also call for client due diligence by the GST reporting firm.
Industry watchers say the new rules are likely to empower the DGGSTI to physically visit premises to check on whether or not any money has been laundered.
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