Prevention of Money Laundering Act (PMLA), 2002

Introduction

The Indian government has taken several measures to curb money laundering. India has been classified as a high-risk zone in terms of money laundering. The Prevention of Money Laundering Act of 2002 (PMLA) is the cornerstone of India’s legal framework for combating money laundering. It became effective in 2005. The PMLA outlines a money laundering offence and allows for the freezing, seizure, and confiscation of criminal proceeds. 

• The PMLA has brought organisations like the RBI, SEBI, and IRDA within its jurisdiction; thus, its regulations apply to all financial institutions involving banks, insurance firms, mutual funds, and financial intermediaries. 
• Whoever directly or indirectly attempts to engage in, knowingly assists, is a party to, or is genuinely involved in any process or activity related to the proceeds of crime and portraying it as pristine property is guilty of money laundering, according to Section 3 of the PMLA. 
• The section of the Act authorises designated officials of the Directorate of Enforcement to conduct investigations into money laundering offences and to seize the property implicated in money laundering. 
• This Act envisions the establishment of an adjudicating authority with jurisdiction, power, and authority to confirm attachment or order confiscation of attached properties, as well as an appellate tribunal to hear appeals against the adjudicating authority’s order and authorities such as the Director FIU-IND.

Objectives of The Prevention of Money Laundering Act (PMLA), 2002 

• To prevent and control money laundering. 
• To confiscate and seize the property gained from the laundered money. 
• To deal with any other concerns connected with money laundering in India. 
• The Act also recommends punishment under section 4.