Recently, a matter where the Directorate of Enforcement (ED) recovered unaccounted money to the...
Money laundering involves earning money through illegal sources such as Corruption, Organized Crime, narcotics trade etc. It deprives government of the legitimate revenue, and therefore government has introduced statutes to prevent money laundering. Through the enactment of the Prevention of Money Laundering Act 2002, a critical step was taken towards the prevention of money laundering.
The legislation dealing with money laundering is called as the Prevention of Money Laundering Act 2002. It was enacted to tackle the menace of money laundering in India. Its main objectives are as follows:
The Act came into effect from 1st July 2005. The act was amended by the PML (Amendment) Act 2009. It was again amended by the Prevention of Money Laundering (Amendment) Act, 2012.
It may be noted that there are other specialised authorities who tackle the issue of money laundering apart from PMLA provisions. These authorities include RBI, SEBI, IRDA anti-money laundering regulations. Majority of these authorities provide suspicious transaction reports that are analysed by Financial Intelligence Units formed by the Central Government.
The Enforcement Directorate, Department of Revenue, under the ministry of Finance, investigates the money laundering offences under the Prevention of Money Laundering Act 2002.
Financial Intelligence Unit-India under the ministry of finance is the central national agency responsible for receiving, processing, analyzing and disseminating information pertaining to suspect financial transactions to enforcement agencies and foreign FIUs. Certain offences are also investigated by Police, Customs, SEBI, CBI etc, under their respective Acts.
The investigating officer’s powers include the following:
It may be noted that the provisions of the Act shall apply to each person who directly/indirectly attempts to indulge, knowingly assists or knowingly is a party or is involved in any process/activity connected to the proceeds of crime, including the concealment, possession, acquisition or use and claiming it as untainted property will be guilty of money laundering.
Here person shall include:
Therefore apart from the natural person, legal entities are also covered under the expression person under the Act.
Proceeds of crime refer to any property derived or obtained, directly or indirectly, by a person due to criminal activity pertaining to a scheduled offence or the value of any such property.
The offences provided in the Schedule to the PMLA 2002 are scheduled offences in terms of Section 2(1) (y) of the Act. The scheduled offences are divided into Part A and C.
Offences to the Schedule is listed in 28 paras, and it comprises of offences under the IPC, offences under Narcotic Drugs and Psychotropic Substances, offences under Explosive Substances Act, offences under the Arms Act, offences under Unlawful Activities (Prevention) Act, offences under the Immoral Traffic (Prevention) Act, etc.
Part B has been omitted by the 2012 amendment, and all the offences have been placed in Part A of the schedule.
Part C deals with trans-border crimes, and it is a crucial step in tackling money laundering across international boundaries.
If money laundering involves two or more interconnected transactions and one or more such transactions is/are proved to be connected to Money laundering, then for adjudication or confiscation under Section 8 or for trial of the Money Laundering offence, it shall be presumed that the remaining transactions are a part of such interconnected transactions related to the money laundering.
If a transaction of acquisition of property is part of the inter-connected transactions, the burden to establish that such property is not connected to the activity of money laundering is upon the person in ownership, control or in possession of the property though not accused of Section 3 offence under PMLA, provided one or more interconnected transactions is or are proved to be involved in Money Laundering.
The ultimate objective of any criminal enterprise is to make profits. Money laundering is one of the ways through which criminal proceeds are made by hiding their origin. The Prevention of Money Laundering Amendment Act 2013 was made stringent with a view to tackle money laundering. Some stringent provisions are placed under the Prevention of Money Laundering Act (Amendment) against a person who commits the offence.