Prevention of Money Laundering Acts in India

Prevention of Money Laundering Act, 2002:

This Act was enacted to prevent money-laundering and to provide for confiscation of property derived from, or involved in, money-laundering. The Act extends to the whole of India including J&K.

Salient features of the Act:

  • Offence of Money laundering and Punishment.
    • Offence of money laundering means the projection of tainted money as untainted.
    • Punishment prescribe for the offence in normal crime is rigorous imprisonment for a term which shall not be less than 3 years and for that of criminal cases is rigorous imprisonment of 7 years.
  • Attachment of property involved in money laundering
    • If the Director has reason to believe that a person is in possession of property involved in money laundering or he is dealing in such property, the ED is empowered to attach the property.
  • The Act prescribes for formation of a three member Adjudicating Authority for dealing with matters relating to attachment and confiscation of property under the Act.
  • Every banking company, financial institution and intermediary is under an obligation to maintain a record for a period of 10 years and furnish information to the Director whenever it asked for.
  • The Authorities under the Act have power to enter any place for survey when the said authority has a reason to believe on the basis of material in his possession that any offence of money laundering has been committed.

The Prevention of Money Laundering (Amendment) Act, 2012:

The PMLA was enacted in 2002, but was amended thrice, first in 2005, then in 2009 and then 2012. The law became operation from Feb 15, 2013. PMLA (Amendment), 2012 has enlarged the definition of money laundering by including activities such as concealment, acquisition, possession and use of proceeds of crime as criminal activities. Some features are as follows:

  • The amendment has introduced the concept of Corresponding law to link the provisions of Indian law with the laws of foreign countries and to provide for transfer of the proceeds of foreign predicate offence committed in any manner in India.
  • It also adds the concept of ‘reporting entity’ which would include a banking company, financial institution, intermediary or a person carrying on a designated business or profession.
  • The act has provided for provisional attachment and confiscation of property of any person (for a period not exceeding 180 days). This power may be exercised by the authority if it has reason to believe that the offence of money laundering has taken place.
  • The act has conferred the powers upon the Director to call for records of transactions or any additional information that may be required for the purposes of investigation. The Director may also make inquiries for non-compliance of the obligations of the reporting entities.
  • Part B of the Schedule in the erstwhile Act included only those crimes that are above Rs 30 lakh or more whereas part A did not specify any monetary limit of the offence. The amended act has brought all the offences under Part A of the Schedule to ensure that the monetary thresholds do not apply to the offence of money laundering.
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