Prevention of Money Laundering Act (PMLA)

2022 FEB 23

Preliminary   > Security   >   Money laundering   >   Black money

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Section 3 of the PMLA

It says whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with proceeds of crime and projecting it as ..

  • While examining allegations of rampant misuse of Prevention of Money Laundering Act 2002 (PMLA) by the government and the Enforcement Directorate (ED), the Supreme Court said the very concept of the offence of money laundering in the PMLA is "very wide" and any activity connected with the proceeds of crime is encompassed within the expression of section 3 of the legislation.

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.

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