Objectives of prevention of money laundering act 2002 is to

Feb. 15, 2020 • Samiksha Gupta PMLA is the specific legislation encompassing detailed structure and procedure of anti-money laundering rules. With an aim to nip the evil in the bud, the said Act has been enacted which duly identifies and defines the offence of money laundering and its concerned activities, provides- procedure, punishment, powers of adjudicating authority and Court designated, remedy& rights available to the accused. Every year huge amount of money is generated from illegal sources or criminal activities such as tax evasion, false accounting practices, illegal arms sales, smuggling, or drug trafficking. The funds so acquired are tainted and so brought into the usual financial system to make it clean, more usable and legitimate. ‘ Money laundering’ is the name given to the process by which illegally obtained funds are given the appearance of having been legitimately obtained.[1] Legal definition The offence of money laundering is defined under Section 3 of the Prevention of Money Laundering Act, 2002 (hereinafter “PMLA”) which can be read, in the form of its essential ingredients, as: Whosoever directly or indirectly • attempts to indulge; • knowingly assists; • knowingly is a party; or • is actually involved in any process or activity connected with- proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money laundering. The expression “proceeds of crime”...

Vijay Pal Dalmia, Advocate Supreme Court of India & Delhi High Court Email id: [email protected] Mobile No.: +91 9810081079 Linkedin: https://www.linkedin.com/in/vpdalmia/ Facebook: https://www.facebook.com/vpdalmia Twitter: @vpdalmia Money laundering has been a significant problem across the globe, and India is no exception. To tackle this issue, the Indian government enacted the Prevention of Money Laundering Act (PMLA) in 2002, which came into effect on July 1, 2005. The primary objective of this act is to prevent and control money laundering, which is defined as an act of concealing or disguising the proceeds of crime or possession, acquisition or use of such proceeds, or projecting it as untainted property. In this post, we will discuss the various aspects of the Prevention of Money Laundering Act (PMLA) 2002, including its history, definition, and key provisions. A brief history of the origin of the crime Money laundering is not a new phenomenon and has been prevalent since ancient times. However, it gained prominence in the 20th century with the rise of organized crime in the West. Criminals used various means, such as owning laundromats or other legitimate businesses, to mix their illicit earnings with legitimate income to make their stash appear legal. In India, the Hawala system has been a popular method of money laundering, where intermediaries transfer funds between countries without physically moving money. This system has been in existence since the 8th c...

Table of Contents Introduction: Money created by crimes when converted into white money it is known as money laundering. In other words, Money Laundering refers to converting illegal earned money into legitimate money. The main objectives of the Prevention of Money Laundering Act, 2002 is to prevent money laundering as well as to provide for confiscation of property either derived from or involved in, money-laundering. 1. Introduction 1.1 Money Laundering – Meaning Money and crime are related to each other. Crimes are done because lot of money involved in it. Money created by crimes when converted into white money it is known as Money Laundering. In simple words, Money Laundering refers to converting illegal earned money into legitimate money. Those who commit the underlying criminal activity may attempt to launder the money themselves, but increasingly a new class of criminals provides laundering services to Organized Crime. Criminals want their illegal funds laundered because they can then move their money through society freely, without fear that the funds will be traced to their criminal deeds. In addition, laundering prevents the funds from being confiscated by the police. Example: A classic example of money laundering is the case of M/s Chinubhai Patel & Co. Information received by the Directorate of Revenue Intelligence (DRI) indicated that the South Indian Bank Ltd., Nariman Point Branch, Mumbai was involved in a massive money laundering operation. One of the accou...

Introduction: The Political and Global Programme of Action adopted by the General Assembly of the United States calls upon the Member States to adopt Anti Money Laundering legislature Therefore, the Indian parliament considers it necessary and enacted the Prevention of Money Laundering Act, 2002 which came into effect from 1ST JULY,2005 . The objective of the Act: The main objective of the act is to curb money laundering and the prime objective is very well explained Under Section 3 PMLA, 2002 which is time and again subject to amendments and interpretation. Section 3 draws the map of what it takes to fall under “Money laundering “.It states any part of money either intentionally or knowingly, attempted or received uses, possesses, acquired, or concealed under the purview of “untainted property” calls for the action of Money Laundering. Taking into account the apt definition of “untainted Property” it is not defined under the act but the dictionary meaning states illegal money has nexus from sources such asillegal arms, drug trafficking, and prostitution, which can generate huge amounts of money. Also, PMLA does not only include illegal money but legal money which is concealed from public authorities and hence categorized under Scheduled Offences such as to evade payment of Taxes (Income Tax, Excise Duty, Sales Tax, Stamp Duty, etc); Therefore, it’s safe to say that PMLA has two categories i.e. First- Untainted Property (Illegal money) and, Second Scheduled Offences (Legal...

The Prevention of Money Laundering Act,2002, came into force on July 1, 2005. As stated in the Preamble of the Act, the main objective was to prevent money-laundering, provide for confiscation of property derived from or involved in money laundering, and punish those engaged in the commission of the offence of money-laundering. The Government of India proposed the Prevention of Money Laundering Bill 1998in Parliament on August 4, 1998, and the Bill received permission from the President on January 17, 2003. Hence, the specific statute to deal and tackle money laundering cases, i.e., the Prevention of Money Laundering Act, 2002, was introduced. Objectives : The Prevention of Money Laundering Act seeks to combat money laundering in India and has three main objectives: To prevent and control money laundering. To confiscate and seize the property obtained from the laundered money; and To deal with any other issue connected with money laundering in India. Prevention of Money Laundering Act challenged in various case laws Since the inception of the Act, the provisions have been categorized as complex and contentious. They have been in the limelight for their conflicting interests with different Acts. The constitutionality of various provisions of the Prevention of Money Laundering Act has been challenged in the courts time and again in various case laws. Section 45(1) Prevention of Money Laundering Act Section 45(1) of the, 20 Prevention of Money Laundering Act 2002, dealt with ...

An Act to prevent land laundering and to provide for confiscation of property derived from, or involved in, money-laundering and for matters connected therewith or incidental thereto. Citation Enactedby Enacted 17 January 2003 Assentedto 17 January 2003 Commenced 1 July 2005 Amended by Status: In force Prevention of Money Laundering Act, 2002 is an The act was amended in the year 2005, 2009 and 2012. On 24 Nov 2017, in a ruling in favour of citizens' liberty, the Objectives [ ] The PMLA seeks to combat money laundering in India and has three main objectives: • To prevent and control money laundering. • To confiscate and seize the property obtained from the laundered money; and • To deal with any other issue connected with money laundering in India. Key definitions [ ] • Attachment: Prohibition of transfer, conversion, disposition or movement of property by an appropriate legal order. • Proceeds of crime: Any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence. • Money-laundering: Whosoever directly or indirectly attempts to indulge or assist other person or actually involved in any activity connected with the proceeds of crime and projecting it as untainted property. • Payment System: A system that enables payment to be effected between a payer and a beneficiary, involving clearing, payment or settlement service or all of them. It includes the systems enabling credit card, debit card, smart ca...

The term "money laundering" is said to have originated from the mafia boss Al Capone. Capone had set up laundromats across the city as a front to disguise the original source of money which was obtained from the illegal sale of liquor during the Prohibition Era in the US. In India, "money laundering" is popularly known as Hawala transactions. Meaning of Money Laundering Money Laundering refers to converting illegally earned money into legitimate money. So Money Laundering is a way to hide the illegally acquired money. In the method of money laundering; money is invested in such a way that even the investigating agencies can’t trace the main source of wealth. The person who manipulates this money is called "launderer". So the black money invested into capital markets or other ventures returns back to the real money holder as the legitimate money. What is Chit Fund and how does it work? Steps involved in Process of Money Laundering 1. Placement 2. Layering 3. Integration Placement The first step in this process is the investment of black money in the market. The launderer deposits the illegal money through different agents and banks in the form of cash by having a formal or informal agreement. Source : researchgate.net Layering In this process, the launderer hides his real income by making foul play. The launderer deposits funds to investment instruments such as bonds, stocks, and traveler's checks or in their bank accounts abroad. This account is often opened in banks of th...