Overview of Prevention of Money Laundering Act, 2002

The Prevention of money laundering act was introduced in the year 2002. The main motive for the implementation of this act was to stop the legitimization of the profits or money that is received from illegal sources or earned by illegal methods. The Prevention of money laundering act of 2002 provides the authority to the government in confiscating the profits or money that is been received by illegal means.

Any person who either in a direct way or in an indirect manner tries to indulge or is already indulged or in any means helps the person in indulging in the illegal act or is a party that is in connection with the criminal proceedings is said to be a person who can be booked under the Prevention of money laundering act 2002. Also, the people who are engaged in illegal activities like holding arms illegally, prostitution, trafficking of drugs, holding of property in an illegal manner will also be held guilty under the Prevention of money laundering act 2002.

What is money laundering?

Money laundering is the means of acquiring profits or money from the parties or the financial institutions in an illegitimate manner. It is also an act of disguising their illegal origin by the processing of dirty money. Dirty money is the source of acquiring income through illegitimate sources that are against the will of the society but are later included in the acts to show that the money is been earned through legit means.

The prevention of money laundering act 2002  has been framed to satisfy the following objectives,

• The act aims to prevent money laundering in society.
• The prevention of money laundering act 2002 also aims at preventing the channelization of money into illegal activities.
• To provide for the property confiscation that is directly or indirectly involved in any means of money laundering.
• Provision for all the matters related to the means of money laundering.

Earning the money by doing a crime, though it may account for funds siphoning but cannot be considered an act of money laundering.

Various features are included in the money laundering act.:

Cash smuggling, fiction loans, hawala, shell companies, round-tripping, fake invoicing, gambling, and real estate are some of the means through which the act of money laundering takes place. The act that involves the property or any source of income that is received directly or in an indirect way as a result of any of the criminal acts of money laundering which relates to a scheduled offense is known as ‘proceeds of crime’.

Money laundering and its prevention.

There are several actions that are been mentioned about the enforcement in the prevention of money laundering act 2002 for the prevention of money laundering.

The properties that are been acquired by the person or the party by the means of illegal actions of money laundering will be seized as per the prevention of money laundering act 2002 to prevent the act of prevention of money laundering. Also, rigid permission in the form of imprisonment for a term of three years may extend anywhere up to the term of seven years if found guilty as per the 2002 act of prevention of money laundering. Thirdly, if found guilty then the imposition of the fine can also take place without any defined limit for the prevention of money laundering as per the prevention of money laundering act 2002. 

For a few decades in the past various methods have been brought into action keeping in mind money laundering and its prevention. The government and various financial institutions have been screening the activities closely and are constantly finding new approaches to tackle the demon of money laundering.

Conclusion

To stop the illegal flow of income in society was needed to be stopped by strict means of action by the government in association with the financial institutions. As a result of the steps taken, there came the formation of the prevention of money laundering act 2002 for the prevention of money laundering. With the help of this law, the scrutiny of the people involved in the illegal means of money handling can be vandalized. The law enforces stricter actions if found guilty and thus ensures there are next to no acts of money laundering in society.