Prevention of Money-laundering Act, 2002 (PMLA)

Government introduces Bill to amend the Prevention of Money-laundering Act, 2002 through Finance Act, 2018.

The Amendments aim at further enhancing the effectiveness of the Act, widen its scope and take care of certain procedural difficulties faced by the Enforcement Directorate in prosecution of PMLA cases.

Measures to enhance effectiveness of PMLA:

• Amendment in definition of “proceeds of crime”: The definition of “proceeds of crime” in PMLA was amended in 2015 to include “property equivalent held within the country” in case proceeds of crime is taken out or held “outside the country”.
• Amendment in bail provisions: The applicability of bail conditions uniform to all the offences under PMLA, instead of only those offences under the schedule which are liable to imprisonment of more than 3 years
• Corporate frauds included as Scheduled offence: To strengthen the PMLA with respect to Corporate frauds.
• Measures to enhance effectiveness of investigations:  The section is proposed to be amended to include the period of stay in this time limit of 180 days and also further period of not more than 30 days to take care of delays if any in communication of judicial orders.
• Measures for restoration of property of persons adversely affected by PMLA investigation:Distribution of confiscated property to the rightful claimants, only after the trial is complete. 

Money laundering

• Money laundering is the illegal process of making “dirty” money appear legitimate instead of ill-gotten.
• Criminals use a wide variety of money laundering techniques to make illegally obtained funds appear clean.
• Online banking and cryptocurrencies have made it easier for criminals to transfer and withdraw money without detection.
• The prevention of money laundering has become an international effort and now includes terrorist funding among its targets.

 process of laundering money

• Placement puts the “dirty money” into the legitimate financial system.
• Layering conceals the source of the money through a series of transactions and bookkeeping tricks.
• In the final step, integration, the now-laundered money is withdrawn from the legitimate account to be used for whatever purposes the criminals have in mind for it.

Money Laundering Variants:

• Smurfing (also known as “structuring”) .
• Investing in commodities such as gems and gold.
• Electronic money laundering cryptocurrencies such as Bitcoins (Blackmail scheme).

Preventing money laundering:

• Anti-money-laundering laws (AML)-to catch up cyber crime.
• The Group of Seven (G-7) formed an international committee called the Financial Action Task Force (FATF) in an attempt to fight money laundering on an international scale. 

ED (Enforcement Directorate):

• It is responsible for enforcement of the Foreign Exchange Management Act, 1999 (FEMA) and certain provisions under the Prevention of Money Laundering Act. 

Functions:

• To collect, develop and disseminate intelligence relating to violations of FEMA, 1999, the intelligence inputs are received from various sources such as Central and State Intelligence agencies, complaints etc.
• To investigate suspected violations of the provisions of the FEMA, 1999 relating to activities such as “hawala” foreign exchange racketeering, non-realization of export proceeds, non-repatriation of foreign exchange and other forms of violations under FEMA, 1999.
• To adjudicate cases of violations of the erstwhile FERA, 1973 and FEMA, 1999.
• To realize penalties imposed on conclusion of adjudication proceedings.
• To handle adjudication, appeals and prosecution cases under the erstwhile FERA, 1973
• To process and recommend cases for preventive detention under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act (COFEPOSA)
• To undertake survey, search, seizure, arrest, prosecution action etc. against offender of PMLA offence.
• To provide and seek mutual legal assistance to/from contracting states in respect of attachment/confiscation of proceeds of crime as well as in respect of transfer of accused persons under PMLA.