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Prevention of Money-Laundering Act, 2002

Money-laundering poses a serious threat not only to the financial systems of countries, but also to their integrity and sovereignty.  To prevent money-laundering and connected activities the legislature has enacted the Prevention of Money-Laundering Act, 2002 (PML Act).
The Prevention of Money-Laundering Act, 2002 was enacted by the Parliament in the year 2003 but it came into force with effect from 1st July, 2005.

Objective of the Act
The PML Act seeks to combat money laundering in India and has three main objectives:
1.      To prevent and control money laundering
2.      To confiscate and seize the property obtained from the laundered money; and
3.      To deal with any other issue connected with money laundering in India.

Section 3 of the PML Act defines the offence of money-laundering as “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 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.” According to section 4 of the Act the punishment for the offence of money-laundering is rigorous imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine.

It prescribes obligation of banking companies, financial institutions and intermediaries for verification and maintenance of records of the identity of all its clients and also of all transactions and for furnishing information of such transactions in prescribed form to the Financial Intelligence Unit-India (FIU-IND). It empowers the Director of FIU-IND to impose fine on banking company, financial institution or intermediary if they or any of its officers fails to comply with the provisions of the Act as indicated above.

PMLA empowers certain officers of the Directorate of Enforcement to carry out investigations in cases involving offence of money laundering and also to attach the property involved in money laundering. PMLA envisages setting up of an Adjudicating Authority to exercise jurisdiction, power and authority conferred by it essentially to confirm attachment or order confiscation of attached properties. It also envisages setting up of an Appellate Tribunal to hear appeals against the order of the Adjudicating Authority and the authorities like Director FIU-IND.

PMLA envisages designation of one or more courts of sessions as Special Court or Special Courts to try the offences punishable under PMLA and offences with which the accused may, under the Code of Criminal Procedure 1973, be charged at the same trial. PMLA allows Central Government to enter into an agreement with Government of any country outside India for enforcing the provisions of the PMLA, exchange of information for the prevention of any offence under PMLA or under the corresponding law in force in that country or investigation of cases relating to any offence under PMLA.

Composition of Adjudicating Authority
The Authority comprises three Members, one each from the fields of ‘Law’, ‘Administration’ and ‘Finance or accountancy’. Further, one of the Members is appointed as Chairperson of the Adjudicating Authority.   It functions within the Department of Revenue; M/o Finance of the Central Government with its headquarters at New Delhi.

Composition of Appellate Tribunal

The Tribunal consists of a Chairperson and two other Members. The Chairman and one Member of ATFP holds additional charge of the post of Chairman and Member of Tribunal under PMLA.

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