The Financial Intelligence Unit of India (FIU) has termed 9491 non-banking financial companies (NBFCs) as 'high-risk financial institutions' for non-compliance with Prevention of Money Laundering Act (PMLA).
The FIU India, an arm of the Union Finance Ministry, released a list of high-risk NBFCs on its website.
Tata Industries (CIC), Tata Capital (CIC), Wipro Suppliers (P) Ltd, Reliance Commercial Co. Ltd, Reliance Commercial Finance Pvt. Ltd., Adani Capital Private Ltd., Indigo Fincap Pvt Ltd, F6 Capital & Finance Private Limited ( formerly known as Bajaj Chit Fund Co. Pvt. Ltd.), Shriram Capital, Capital India Finance Ltd., are among the NBFCs listed by FIU India.
The agency found that these companies did not comply with the PMLA, as on 31 January 2018.
Under the PMLA, all the NBFCs had been advised to appoint a principal officer in their institutions and report to the FIU about all the suspicious cash transactions of over Rs 10 lakh or equivalent foreign currency transactions.
The Section 12 of the Prevention of Money Laundering Act, 2002 states, ''every reporting entity shall maintain a record of all transactions, including the information furnished to FIU-IND, in such a manner as to enable it to reconstruct individual transactions''. The record has to be maintained of the prescribed transactions and information for a minimum period of five years.
After the demonetization of Rs 500 and Rs 1000 notes in November 2016, NBFC's, cooperative banks, and many other financial institutions had come under the strict supervision of both Enforcement Directorate and Income Tax Department of India, for allegedly converting demonetized currency notes illegally.
NBFCs are financial institutions which offer banking services like loans, credit facilities, money market services etc, but they do not have a banking license.