The Delhi High Court is set to address a significant legal challenge against the expansion of the definition of "Reporting Entities" under the Prevention of Money Laundering Act (PMLA), which now includes Chartered Accountants, Company Secretaries, and Cost Accountants. The bench comprising Chief Justice Satish Chandra Sharma and Justice Sanjeev Narula will hear the petition filed by Rajat Mohan, a practising Chartered Accountant, who is raising concerns about the implications of these changes and their impact on professionals' obligations and potential criminal liability.
The petition, scheduled for hearing on October 4, contests the Gazette Notification No. S.O.2036(E) dated May 3, 2023, which introduced the expanded definition. Mohan's plea, represented by Senior Advocate Trideep Pias and Advocate Shweta Kapoor, asserts that the recent changes unduly burden professionals in these fields with onerous obligations and the risk of criminal prosecution for non-compliance.
Mohan argues that including Chartered Accountants, Company Secretaries, and Cost Accountants within the scope of "Reporting Entities" subjects them to responsibilities that could potentially involve "policing" their clients' financial activities, even before any money laundering proceedings have been initiated. The petitioner contends that these changes diverge from the intended purpose of the PMLA, potentially leading to overreach and unwarranted scrutiny.
The plea further contends that these alterations not only violate the fundamental rights of professionals but also open the door to arbitrary and limitless authority under the anti-money laundering law. Mohan's argument also highlights potential constitutional violations, including Articles 14, 19, 20 (3), 21, and 300A of the Indian Constitution, along with concerns about privacy and the protection of professional, privileged, and confidential communications.
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