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Everything you Need to Know About the Prevention of Money Laundering Act

IndianMoney.com Research Team | Updated On Friday, May 10,2019, 06:17 PM

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Everything you Need to Know About the Prevention of Money Laundering Act

 

 

Prevention of Money Laundering Act 2002:

The Prevention of Money Laundering Act was implemented in order to prevent money laundering and also provide for seizure of property vis-a-vis money laundering acts by companies or high net-worth individuals (HNIs). The act extends to the whole of India and was enacted to combat money laundering and black money in India.

Money laundering includes different methods of money laundering like bulk cash smuggling, cash intensive business, trade-based laundering, shell companies and trusts, fictional loans, false invoicing, round tripping and so on. Under this Act, if a person or an entity intentionally indulge or attempts to assist in money laundering or is partly involved with the activities that lead to money laundering, he/she would be held accountable for this offence.

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Everything You Need to Know About the Prevention of Money Laundering Act:

Listed Below are the Main Objectives of the Money Laundering Act:

  • Control and prevention of money laundering.
  • Seizure of property purchased from the laundered money.
  • To deal with issues related to money laundering in India.

What are the Predicate Offences Which Entails Proceedings under PMLA?

Under PMLA the list of offences are specified under Part A, Part B and Part C of the schedule of PMLA.

  • Part A enlists offences under various acts: Indian Penal Code, 1860, Narcotic Drugs and Psychotropic Substances Act, 1985, Prevention of Corruption Act, 1988 SEBI, Customs Act, 1955, Foreigners Act, Arms Act, Antiquities and Art Treasures Act, Copyright Act, 1957, Trademark Act, 1999 and so on.
  • Part B of the schedule enlists offences under the Customs Act.
  • Part C deals with transnational crimes and reflects the laws to tackle money laundering across international borders.

SEE ALSO: Deposit Friends Black Money In Your Bank Account?

Salient Features of the Money Laundering Act:

Punishment for money laundering: The act states that if any person is found guilty of laundering money, he/she will be punished with imprisonment for a period of 3 years to 7 years. The punishment can be extended up to 10 years for serious offences.

Power of attachment of tainted property: Any authority/body appointed by the government can provisionally attach property believed to be the proceeds of crime for a period of 180 days. Such an order is required to be confirmed by an independent adjusting authority in writing, confirming the attachment of the property. If the guilt of the person in proved in the trial court and the order of such court becomes final, then the government will take possession of the attached property.

Appellate tribunal: An appellate tribunal is a legal body appointed by the government. It is authorized with the responsibility of hearing appeals against the order of the adjudicating authority and any other authority under the Act. A person aggrieved by the order made by the adjudicating authority, can raise an appeal to the Appellate Tribunal. The appeal must be filed within 45 days from the date of receiving a copy of the order passed by the adjudicating authority.

Special court: Special courts are the court sessions that are specially designated for a case or group of cases by the central government, in consultation with the Chief Justice of the high court, for a trial of an offence punishable under Section 4.

The Offence of Money Laundering:

As stated by the Act, any entity or a person who attempts to indulge directly or indirectly or intentionally assists in the crime or is partly or is fully involved in the activities connected with the proceeds of a crime can be booked for money laundering.  

Punishment for Money Laundering:

As stated by the Act, any individual who commits the crime of money laundering i.e. assists knowingly or is partly or fully involved in any process or activity of money laundering, shall be punished with imprisonment for a minimum term of 3 years.

The term may continue for a period of 7 years depending on the severity of the crime along with a penalty of Rs 5 lakhs. The prison term may also extend to 10 years for certain crimes. As per section 45 of the Prevention of Money Laundering Act, money laundering is a non-bailable offence. In such cases, the person arrested as a suspect for money-laundering is not entitled to bail as a matter of right. Under this Act, a person can be booked without court warrant.

SEE ALSO: Black Money Crackdown: Get To Know Benami Property

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IndianMoney.com Research Team

The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.

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