2. INTRODUCTION
The Prevention of Money Laundering Act came into
force w.e.f. 1st July,2005.
The Act was amended by the prevention of money
laundering (Amendment) act 2009 w.e.f. 1st
June,2009.
Further it amended by the prevention of money
laundering act (Amendment) act 2012 w.e.f. 15th
Feb,2013
This Act extends to whole of India including the state
of Jammu & Kashmir.
3. OBJECT OF THIS ACT
It is an act to prevent Money Laundering and to
provide for confiscation of property derived from, or
involved in, money laundering and to punish those
who commit the offence of money laundering.
4. WHAT IS MONEY LAUNDERING?
The goal of a large number of criminal activities is to
generate profit for an individual or a group. Money
laundering is the processing of these criminal proceeds
to disguise their illegal origin.
Illegal arms sales, smuggling, other organized crime,
drug trafficking and prostitution rings can generate huge mounts
of money. The money so generated is tainted and is in the
nature of ‘dirty money’. Money Laundering is the process of
conversion of such proceeds of crime, the ‘dirty money’, to
make it appear as ‘legitimate’ money.
5. MONEY
Thef LAUNDERING INCLUDES :
Tax evasion
t
Fraud
Human trafficking
Drug trafficking
Robbery
Prostitution
Terrorism
Arms smuggling
Corrupt practices
6. IMPORTANT DEFINITIONS
1.
“Attachment" means prohibition of transfer, conversion,
disposition or movement of property by an order issued
under Chapter III.
2.
Person Includes - An Individual, HUF, Company , Firm ,
AOPs , BOIs,
3.
"proceeds of crime" means any property derived or
obtained, directly or indirectly, by any person as a result
of criminal activity relating to a scheduled offence or the
value of any such property. [Section 2(1)(u)]
7. 4. "scheduled offence" means –
The offences listed in the Schedule to the Prevention
of Money Laundering Act, 2002 are scheduled offences10
in terms of Section 2(1)(y) of the Act. The scheduled
offences are divided into two parts - Part A & Part C.
In part A, offences to the Schedule have been listed
in 28 paragraphs
Part ‘C’ deals with trans-border crimes, and is a vital
step in tackling Money Laundering across International
Boundaries.
Annexure - A
8. 5. "property" means any property or assets of every
description, whether corporeal or incorporeal, movable
or immovable, tangible or intangible and includes
deeds and instruments evidencing title to, or interest
in, such property or assets, wherever located;
9. WHAT IS THE OFFENCE OF
MONEY LAUNDERING?
Whosoever directly or indirectly attempts to indulge
or knowingly assists or knowingly is a party or is actually
involved in any process or activity connected with the
proceeds of crime including its concealment, possession,
acquisition or use and projecting or claiming it as
untainted property shall be guilty of offence of money
laundering (Section 3)
10. HOW DOES MONEY LAUNDERING
TAKE PLACE ?
The process of Money Laundering generally involve the
following three stages :
11. 1. Placement
This is the first step of the money-laundering process and the
ultimate aim of this phase is to remove the cash from the
location of acquisition so as to avoid detection from the
authorities.
Ex: Dividing large amount of money into less smaller terms that are
deposited directly into different bank account.
12. 2. Layering
Layering involves moving funds around the financial system, often
in a complex serious of transactions to create confusion and
complicate the paper trail.
Ex: Exchanging money in larger or smaller amount, or transferring
funds to numerous accounts in one or more financial institutions.
Acct 1, Bank C
Acct 1,
Bank A
Acct 2,
Bank B
Acct 1,
Bank D
Acct 2, Bank B
Acct X,
Bank Y
13. 3. Integration
The ultimate goal of money laundering process is integration. Once
the funds are in the financial system and insulated through the
layering stage, the integration stage is used to create the
appearance of legality through additional transactions.
Ex: Purchase or resale of real estate, investment in securities etc.
Or funnel such money into various dummy firms and get repaid through
salaries, rent, leas on non- existing assets.
15. ACTIVITIES RESPONSIBLE FOR
MONEY LAUNDERING:
Conversion or transfer of property knowing that the property is the result of a
committed crime in order to conceal the illicit origin of the property;
Assistance to any person involved in committing of such a crime in order to
avoid legal consequences of these activities;
Hiding or concealing the true nature, source, location, availability and movement
of derived ownership rights or property knowing that the property is the result of a
committed crime;
Gaining, possession or use of goods or things or values knowing at the time of
their receipt that they are the result of illicit trafficking of narcotics;
Collusion in order to commit, attempt, assist, instigate, facilitate or advise to
commit crime of trafficking of narcotics including money laundering.
16. WHO CAN INVESTIGATE A CASE OF
MONEY LAUNDERING ?
As per Sections 48 & 49 of the PMLA, the officers of
the Directorate of Enforcement have been given
powers to investigate cases of Money Laundering. The
officers have also been authorised to initiate
proceedings for attachment of property and to launch
prosecution in the designated Special Court for the
offence of money laundering.
17. WHAT ARE THE POSSIBLE ACTIONS WHICH CAN BE TAKEN
AGAINST PERSONS / PROPERTIES INVOLVED IN MONEY
LAUNDERING ?
1.
Attachment of property u/s 5.
2.
Imprisonment for a term not less than 3 years, it may
extend up to 7 years and shall be liable to fine which may
extend to 5 Lakh rupees. (It may extend up to 10 years
and In case offence is punishable under the Narcotics
and Psychotropic substances Act, 1985)
3.
The prosecution or conviction of any legal juridical
person is not contingent on the prosecution or
conviction of any individual.
