Plea in Delhi HC, challenging inclusion of CA, CS' within ambit of reporting entities under PMLA

New Delhi [India], August 21 : A plea was moved in the Delhi High Court challenging the notification which included Chartered Accountants, Company Secretaries and Cost Accountants within the definition of "reporting entities" under the Prevention of money laundering Act (PMLA) and fastening of criminal liability on them in case of non-compliance of the legal provisions.
The petitioner Rajat Mohan, a practising chartered accountant (CA) plea stated that the impugned notification is ultra vires the object of the PMLA as it creates the framework for a fishing and roving enquiry into every financial transaction of each individual/citizen of the country who attends the office of the petitioner to engage his services without exception even before a money laundering proceeding has been initiated against any such citizen/individual or juristic entity.
The petioner says the impugned notification has virtually put the cart before the horse. PMLA surely was not meant to harass persons prior to there even being a predicate offence in existence which is exactly what the notification aims to do, state the plea.
The bench of Justice Satish Chandra Sharma and Justice Sanjeev Narula after hearing the submissions of the petitioner at length, granted time to Counsel representing Centre Government to obtain instructions on the matter and listed the matter for October 4, 2023.
The petition prayed for quashing of Sections 1(sa)(vi), 11A, 12, 12A, 12AA, and 13 of the PMLA as they have been made applicable to the petitioner.
The effect of the operation of the sections in so far as they have been made applicable to the profession of Chartered Accountants is that they virtually make the petitioner and others notified under the impugned notification engage virtually in policing their own clients who interact with them in a fiduciary capacity even when a case under the PMLA has not even commenced, the plea said.
The above-said sections give unbridled and unlimited, arbitrary, and whimsical power to the authority under the PMLA to pass any directions against "Reporting Entities."
The petition says the operation of the impugned notification read with the aforementioned provisions of PMLA threaten the Petitioner's Fundamental Rights guaranteed under Article 14, 19(1)(g), 20 (3) and 21 of the Constitution of India along with the Constitutional right under Article 300A of the Constitution of India, and other Civil and statutory rights, including the right to privacy, and the the protection accorded to professional, privileged, and confidential communications.
The import of the impugned notification is that to avoid scrutiny and consequences flowing out of PMLA the petitioner should avoid any clients who would like him to carry out the selected list of activities for them as stated in the impugned notification.
This would lead to a virtual closure of the business of the petitioner and like professionals, the petition added.
There are regulatory bodies to regulate the professional misconduct of the professionals covered under the impugned notification.
The petitioner is covered under the Chartered Accountants Act is regulated by the provisions of the said Act , added the plea.
It is submitted that the impugned notification does not reconcile the provisions of misconduct in that Act with the rigours suffered under PMLA by the petitioner and like a professional, plea read.