Saturday, November 21, 2009

INDIA—GREATER SCRUTINY OF NPO FINANCIAL ACTIVITIES ANNOUNCED

Non-profit organizations (NPOs), whether registered as charitable trusts, temples, churches or mosques, NGOs, educational institutions or societies, etc. will not only have to disclose the sources of their funds, but also will be scrutinized for large monetary transactions.  This change in the law has been introduced by an amendment to the Prevention of Money Laundering Act (PMLA) 2002, notified in the Official Gazette on November 12, 2009 to bring NPOs within the purview of the law.  Earlier, the entities that fell under the ambit of the law included only fund companies, banking companies, financial institutions, and housing finance companies.  The amendment now says any company registered under section 25 of the Indian Companies Act, 1956, and/or as a trust or society under the Societies Act, 1860, or any similar state legislation, will be brought within the purview of PMLA.  “Money laundering in India was rampant through NGOs and charitable trusts.  The majority of industrialists and even some top politicians were using NGOs to launder their black money back into the country.  The amendment would prove an effective tool in the hands of authorities and would take the veil off the racket,” said Mumbai-based lawyer Bhushan Bahal.

 

kws

http://lawprofessors.typepad.com/nonprofit/2009/11/indiagreater-scrutiny-of-npo-financial-activities-announced.html

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