PREVENTION OF MONEY LAUNDERING ACT

PREVENTION OF MONEY LAUNDERING ACT

Subject: Legislations

Context: The Enforcement Directorate (ED) has registered a case of money laundering against former Maharashtra home minister and Nationalist Congress Party (NCP) leader Anil Deshmukh.

Concept:

• The PMLA was enacted in 2002 and it came into force in 2005. The chief objective of this legislation is to fight money laundering, that is, the process of converting black money into white.
• The Act enables government authorities to confiscate property and/or assets earned from illegal sources and through money laundering.
• 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.
• The provisions of this act are applicable to all financial institutions, banks(Including RBI), mutual funds, insurance companies, and their financial intermediaries.

PMLA Amendment 2019

• The amendment seeks to treat money laundering as a stand-alone crime.
• Till now Money Laundering was not an independent crime; rather depended on another crime, known as the ‘predicate offence’ or ‘scheduled offence’, the proceeds of which are made the subject matter of crime of money laundering.
• It also expands the ambit of “proceeds of crime” to those properties which “may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence.
• The most crucial amendments are the deletion of provisions in sub-sections (1) of Section 17 (Search and Seizure) and Section 18 (Search of Persons).
• These provisions required the pre-requisite of an FIR or charge sheet by other agencies that are authorised to probe the offences listed in the PMLA schedule.
• An explanation is added to Section 45 that clarifies that all PMLA offences will be cognisable and non-bailable.
• Therefore, ED will be empowered to arrest an accused without a warrant, subject to certain conditions.
• Another vital amendment makes concealment of proceeds of crime, possession, acquisition, use, projecting as untainted money, or claiming as untainted property as independent and complete offences under the Act.
• Section 72 will now give power to the Centre to set up an Inter-Ministerial Coordination Committee for inter-departmental and inter-agency coordination for operational and policy level cooperation, for consultation on anti-money laundering and counter-terror funding initiatives.