Laws related to Money laundering in India

Money Laundering is a global menace that cannot be contained by any nation alone. The Prevention of Money Laundering (Amendment) Bill 2011 was necessitated to bring prevention of money laundering legislation on par with global norms. The said Bill is still pending for approval in the Parliament.

The Financial Action Task Force on Money Laundering (FATF) an intergovernmental body established by the G-7 Summit in Paris in 1989 and responsible for setting global standards on anti-money laundering and combating financing of terrorism defines money laundering as the processing of criminal proceeds to disguise their illegal origin in order to "legitimize" the ill-gotten gains of crime."

India became the 34th country member of the Financial Action Task Force in 2010. India is also a signatory to various United Nations Conventions which deal with anti money laundering and countering financing of terrorism.

India has criminalized money laundering under both the Prevention of Money Laundering Act, 2002 (PMLA), as amended in 2005 and 2009, and the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act), as amended in 2001.

In India, before the enactment of the Prevention of Money Laundering Act 2002, a number of statutes addressed scantily the issue of money laundering, albeit without any major affect. These statutes were:

• The Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974,
• The Income Tax Act, 1961,
• The Benami Transactions (Prohibition) Act, 1988,
• The Indian Penal Code and Code of Criminal Procedure, 1973,
• The Narcotic Drugs and Psychotropic Substances Act, 1985,
• The Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic Substances Act, 1988.

The Prevention of Money Laundering Act 2002 is sought to be further amended by The Prevention of Money Laundering (Amendment) Bill, 2011 hereinafter referred to as the 'Bill', which has been introduced by the President of India, Mr. Pranab Mukherjee when he was the Minister of Finance in Lok Sabha on December 27, 2011.

1. The Bill proposes to introduce the concept of 'corresponding law' to link the provisions of Indian law with the laws of foreign countries.
2. It also adds the concept of 'reporting entity' which would include a banking company, financial institution, intermediary or a person carrying on a designated business or profession.
3. The Bill expands the definition of offence under money laundering to include activities like concealment, acquisition, possession and utilization of the proceeds of crime.
4. The Prevention of Money Laundering Act, 2002 levies a fine up to Rupees five lakhs. The Bill proposes to remove this upper limit of fine as it is a meager amount compared to the vastness of the amount of black money hoarded away.
5. The Bill seeks to provide for provisional attachment and confiscation of property of any person for a period not exceeding 180 days if the authority has reason to believe that the offense of money laundering has taken place.
6. The Bill proposes to confer powers upon the Director to call for records of transactions or any additional information that may be required for the purposes of investigation.
7. The Director may also make inquiries for non-compliance of the obligations of the reporting entities.
8. The Bill seeks to make the reporting entity, its designated directors on the Board and employees responsible for omissions or commissions in relation to the reporting obligations.
9. The Bill states that in the proceedings relating to money laundering, the funds shall be presumed to be involved in the offence, unless proven otherwise.
10. The Bill proposes to provide for appeal against the orders of the Appellate Tribunal directly to the Supreme Court within 60 days from the communication of the decision or order of the Appellate Tribunal.
11. The Bill seeks to provide for the process of transfer of cases of the Scheduled offences pending in a court which had taken cognizance of the offence to the Special Court for trial. In addition, on receiving such cases, the Special Court shall proceed to deal with it from the stage at which it was committed.
12. The Bill also proposes to bring all the offences mentioned under Part A of its Schedule to ensure that the monetary thresholds do not apply to the offence of money laundering.