The Prevention of Money Laundering Act (PMLA), in India, is a comprehensive legislation that addresses the issues of money laundering and related offenses. The PMLA was first enacted in 2002 and has undergone amendments to strengthen its provisions over the years.
The primary objective of the Act is to prevent and control money laundering activities and to confiscate and seize properties derived from money laundering.
Key features of the Prevention of Money Laundering Act in India include:
Definition of Money Laundering: The PMLA defines money laundering as the act of concealing or disguising the proceeds of crime or possession, acquisition, or use of such proceeds, or projecting it as untainted property.
Criminalization of Money Laundering: The PMLA criminalizes the act of money laundering and prescribes penalties for those found guilty of such offenses. The offenses include acquiring, owning, possessing, or projecting as untainted property, any property knowing that such property is derived from the proceeds of crime.
Creation of Financial Intelligence Unit (FIU): The Act establishes a Financial Intelligence Unit-India (FIU-IND) responsible for receiving, processing, analyzing, and disseminating information related to suspect financial transactions.
Obligations on Reporting Entities: Financial institutions, banks, and other entities dealing with financial transactions are designated as "reporting entities" and are required to adhere to strict customer due diligence (CDD) procedures. They must maintain records and report certain transactions to the authorities.
Attachment and Confiscation of Proceeds of Crime: The PMLA provides for the attachment and confiscation of property involved in money laundering. The enforcement authorities can provisionally attach properties believed to be involved in money laundering, and after due process, the properties can be confiscated.
International Cooperation: The Act facilitates cooperation with foreign countries in investigations and proceedings related to money laundering. It allows for the exchange of information between competent authorities.
Penalties and Offenses: The PMLA prescribes penalties for offenses related to money laundering, and the severity of punishment depends on the nature and gravity of the offense.
Amendments: The PMLA has been amended to strengthen its provisions and enhance its effectiveness in combating money laundering like the amendments about the inclusion of accounting professionals, broadening the scope of reporting obligations, lowering the ownership threshold to 10%, due diligence documentation requirement, and inclusion of shell companies.
The Prevention of Money Laundering Act in India aims to align with international standards and commitments in combating money laundering and the financing of terrorism.
It is part of India's broader efforts to strengthen its legal framework against financial crimes and maintain the integrity of its financial system.
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