Prevention of Money Laundering Act, 2002 (PMLA) was enacted to fight against the criminal offence of legalizing the income/profits from an illegal source. The Prevention of Money Laundering Act, 2002 enables the Government or the public authority to confiscate the property earned from the illegally gained proceeds. In simple words, money laundering means converting illegally earned money into legitimate money.
What is Money Laundering?
Money laundering is defined as the process through which an illegal fund, such as black money, is obtained from illegal activities and disguised as legal money, eventually portrayed as white money. The money laundered is passed on through various channels or phases of conversions and transfers to make it legal and eventually reach a legally acceptable institution, like a bank.
Key Definitions
- Money Laundering: Converting illicitly obtained money or assets into legitimate funds.
- Proceeds of Crime: Any assets or property that have been acquired or derived, either directly or indirectly, from illegal or criminal activities.
- Reporting Entity: Individuals, companies, financial institutions, and intermediaries must report suspicious transactions.
Objectives of the Prevention of Money Laundering Act, 2002
- Prevent money-laundering.
- Combat/prevent channelising of money into illegal activities and economic crimes.
- Provide for confiscating property derived from, or involved/used in, money laundering.
- Penalise the offenders of money laundering offences.
- Appointing an adjudicating authority and appellate tribunal for taking charge of money laundering matters.
- Provide for matters connected and incidental to the acts of money laundering.
Common Forms of Money Laundering
- Hawala
- Bulk cash smuggling
- Fictional loans
- Cash-intensive businesses
- Round-tripping
- Trade-based laundering
- Shell companies and trusts
- Real estate
- Gambling
- Fake invoicing
Money Laundering Offence
A person shall be guilty of the offence of money laundering when, he/she has directly or indirectly attempted to indulge, knowingly assisted, knowingly is a party, or is actually involved in one or more of the following processes or activities connected with proceeds of crime:
- Concealment
- Possession
- Acquisition
- Use
- Projecting as untainted property
- Claiming as untainted property
List of Offences
Under PMLA, the commission of any offence, as mentioned in Part A and Part C of the Schedule of PMLA will attract the provisions of PMLA. Some of the Acts and offences, which may attract PMLA, are enumerated below:
- Part A enlists offences under various acts such as: Indian Penal Code, Narcotics Drugs and Psychotropic Substances Act, Prevention of Corruption Act, Antiquities and Art Treasures Act, Copyright Act, Trademark Act, Wildlife Protection Act, and Information Technology Act.
- Part B specifies offences that are Part A offences, but the value involved in such offences is Rs 1 crore or more.
- Part C deals with trans-border crimes and reflects the dedication to tackle money laundering across global boundaries.
FAQs
What is the Prevention of Money Laundering Act (PMLA)?
The Prevention of Money Laundering Act (PMLA) is a law enacted by the Indian government in 2002 to combat money laundering and to confiscate property derived from or involved in money laundering.
What is the main objective of the PMLA?
The main objective of the PMLA is to prevent money laundering, to provide for the confiscation of property derived from money laundering, and to punish those involved in money laundering activities.