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Current Affairs


Date : Nov 30, 2021

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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

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