Title : PREVENTION OF MONEY LAUNDERING ACT

Date : Nov 30, 2021

Description :

GS III

 

Topic à Indian Economy

 

• About PMLA Act, 2002:

 

• The Prevention of Money-Laundering Act ((PMLA), 2002) is India's special legislation dealing with money laundering.
• The law was passed in India to combat money laundering and has three main goals:
• Money laundering prevention and control.
• To make provisions for the forfeiture and seizure of property obtained through the laundering of funds.
• To deal with any other money-laundering-related concern in India.
• The Enforcement Directorate is authorised to conduct a Money Laundering inquiry under the PMLA Act.
• Other specialised requirements, such as RBI/SEBI/IRDA anti-money laundering regulations Enforcement Directorate, exist in addition to the provisions of the PMLA.

 

• Recent amendments:

 

• The Union government issued a notification in 2019 regarding changes to the Prevention of Money Laundering Act (PMLA), which will give the Enforcement Directorate (ED) more authority in dealing with money laundering cases.

 

• What exactly are the planned changes:

 

• Money laundering will be treated as a separate offence under the amendment.
• Money laundering was previously not a stand-alone criminal; rather, it was dependent on another crime, called as a "predicate offence" or "scheduled offence," the proceeds of which became the subject of the money laundering crime.
• It also broadens the definition of "proceeds of crime" to include property that is "generated or obtained directly or indirectly as a result of any criminal conduct related to the scheduled offence."
• The repeal of clauses in sub-sections (1) of Section 17 (Search and Seizure) and Section 18 (Criminal Procedure) are the most significant changes (Search of Persons).
• Other agencies authorised to investigate the offences listed in the PMLA schedule were obliged to file a FIR or charge sheet under these provisions.
• Section 45 has been amended to clarify that all PMLA offences will be cognizable and non-bailable.
• As a result, ED will be able to arrest an accused without a warrant if specific requirements are met.
• Another important change adds concealment of proceeds of crime, possession, acquisition, usage, projecting as unadulterated money, or claiming as untainted property to the Act's list of separate and full offences.
• Section 72 now gives the Centre the authority to establish an Inter-Ministerial Coordination Committee for inter-departmental and inter-agency coordination at the operational and policy levels, as well as dialogue on anti-money laundering and counter-terrorist financing activities.

 

• What is the definition of money laundering:

 

• Money laundering is the process of making substantial sums of money obtained through criminal activities such as drug trafficking or terrorist financing appear to have originated from a legitimate source.
• Illegal arms sales, smuggling, drug trafficking, prostitution rings, insider trading, bribery, and computer fraud schemes all generate substantial revenues.
• As a result, it offers an incentive for money launderers to use money laundering to "legitimise" ill-gotten gains.
• The money earned in this way is known as 'dirty money,' and money laundering is the act of converting 'dirty money' into 'legal' money.

 

• What is the process of money laundering:

 

• Money laundering is a three-step process that includes the following steps:
• The illicit money is first pumped into the formal financial system, which is the first stage.
• Money injected into the system is layered and spread over different transactions in the second stage in order to obscure the money's contaminated origin.
• Integration: In the third and final stage, money is introduced into the financial system in such a way that the original link to the crime is removed, allowing the offender to use the money as clean money.
• Bulk cash smuggling, cash-intensive businesses, trade-based laundering, shell firms and trusts, round-tripping, bank capture, gambling, real estate, black salaries, fictional loans, Hawala, and false invoicing are all common money laundering methods.
• India's legislative framework for dealing with money laundering

 

• Source à The Hindu à 30/11/21 à Page Number 6

Tags : Hawala,round tripping, black money