GSTN under Prevention of Money Laundering Act

Why in news?

• Recently, the government has issued a notification, bringing the Goods and Services Tax Network (GSTN) under the ambit of the Prevention of Money Laundering Act, 2002 (PMLA).
• These changes have been made under Section 66 of the PMLA, which provides for disclosure of information.

About PMLA:

• PMLA is a comprehensive penal statute to counter the threat of money laundering, specifically stemming from trade in narcotics.
• The provisions of this act are applicable to all financial institutions, banks (Including RBI), mutual funds, insurance companies, and their financial intermediaries.
• The Act enables government authorities to confiscate property and/or assets earned from illegal sources and through money laundering.
• The PLMA has been amended three times, that is, in 2009, 2009 and 2012.
• Under the PMLA, the burden of proof lies with the accused, who has to prove that the suspect property/assets have not been obtained through proceeds of crime.
• Penalties under PMLA
  • Freezing or seizing of property and records, and/or attachment of property obtained through crime proceeds.
  • Rigorous imprisonment for a minimum of 3 years and a maximum of 7 years.
  • Fine.
  • If the crime of money laundering is involved with the Narcotic Drugs and Psychotropic Substances Act, 1985, the punishment can go up to 10 years, along with fine.

Authorities that can investigate under PMLA:

• The Enforcement Directorate (ED) is responsible for investigating offences under the PMLA.
• Also, the Financial Intelligence Unit – India (FIU-IND) is the national agency that receives, processes, analyses and disseminates information related to suspect financial transactions.

About Goods and Services Tax Network (GSTN)

• It is a not for profit, non-Government, private limited company incorporated in 2013.
• The Government of India holds 24.5%equity in GSTN
• All States including NCT of Delhi and Puducherry, and the Empowered Committee of State Finance Ministers (EC), together hold another 24.5%.
• Balance 51% equity is with non Government financial institutions.
• The Company has been set up primarily to provide IT infrastructure and services to the Central and State Governments, tax payers and other stakeholders for implementation of the Goods and Services Tax (GST).
• After rolling out of GST, the Revenue Model of GSTN shall consist of User Charge to be paid by stakeholders who will use the system and thus it will be a self-sustaining organization

PRACTICE QUESTION:

Which of the following statements are correct regarding ‘Prevention of Money Laundering Act 2002 (PMLA)’?

1. Enforcement Directorate (ED) is responsible for investigating offences under the PMLA

2. The Act enables government authorities to confiscate property earned through money laundering.

Select the correct answer using the code given below:

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Answer