IIBF AML KYC PREVENTION OF MONEY LAUNDERING

Money laundering is an offence it has been getting committed for so many years. It relates to the laundering of money. Money laundering involves the process of disguising the money that is received on account of crime and then what is integrated into the financial system as if legitimate.

There has been a noticeable rise in the litigations related to money laundering. PMLA (Prevention of Money Laundering Act 2002) has been introduced with the intention to differentiate the offences as ‘parent offences’ and ‘propagated offences’.

PMLA, 2002

To prevent the money laundering issue in India as well as to provide a law to whiskey did the property that has been made out of the money laundering proceeds, this act has been enacted by the Government of India. Even though PMLA has been passed in the year 2002, its rules came into effect on July 1, 2005.

The act and rules that have been notified impose obligations on entities for the examination and verification of their client’s identity, maintenance of necessary records, furnishing of the required information in prescribed forms to FIU-IND.

INVESTIGATION & CONFISCATION

There are certain officers who are authorised by the PMLA Act under the ‘Directorate of Enforcement’. The investigations are conducted in cases that involve the money laundering offences as well as also attached whatever property that is involved in the money laundering offence.

The act also envisages establishing and adjudicating authority where the jurisdiction will be held, who will be conferred with power and authority by the act, so as to establish confirmation attachment or to order the confiscation of the properties that are involved in the offence.

APPEALS AGAINST APPELLATE TRIBUNAL & SPECIAL COURTS

That also envisages that an Appellate Tribunal should be established where the appeals would listen to against the decisions that have been made by Adjudicating Authority and the authorities such as the Director of FIU-IND.

India’s Central Government has set up various special courts number of states and union territories where the money laundering offences will undergo trials.

STAGES IN MONEY LAUNDERING

Money laundering goes through three stages that are mentioned below:

Placement: The first stage is placement, where the money that has been generated from the legitimate source is injected into the normal circulation of money;

Layering: The second step involves layering. Under this stage the criminals try to dissuade the tracks of the illegitimate sources with the purpose to make it tough for the government authorities to track down the original source of their proceeds; and
Integration: The last stage of money laundering happens when the money that has been laundered has actually commented to the circulation and has become a part of the economy, mainly via a system of Banking, it is termed as integration.

STATUTORY FRAMEWORK

With the purpose to broaden the coverage of the act as well as to achieve the purposes for which the act has been set up, the act has provided for the bilateral agreements between countries to get co-operation from them as well as to put a stop on the money laundering offence.

These agreements would enforce the Act’s provision or provide for the exchange of information that can help in the prevention of commission of an expense under this act or the act that is prevailing and that foreign country.

In some of the cases, India’s central government might also be required to seek or provide assistance from or to by contracting state or nation the collection of evidence that would be required in the course of Investigation. This act also provides reciprocal arrangements in aspect to the accused persons.

OBJECTIVES OF PMLA

The act has been enacted the main four objectives which are mentioned below:

Money laundering prevention and control;

Confiscation and seizure of property that is involved in the money laundered money;

To deal with other issues that are connected with the laundering of money in India; and

To provide for punishment for the money laundering offence.

SALIENT FEATURES OF THE MONEY-LAUNDERING ACT: Main features of the money laundering act are discussed below:

Important Topic:- IIBF AML KYC STUDY MATERIAL 2024

Provision of Punishment for money-laundering: It is expressly stated in the Act that a person who is found guilty of the money laundering offence in India, would be punished with imprisonment that could range from 3 to 7 years and in case, the proceeds of the money laundering or any e other offence that has been mentioned under the act as an offence, the punishment of the guilty person could be extended up to 10 years.

Powers of attachment of tainted property: The act has given the power to the appropriate authorities (subject to their appointment by the government of India) who can attach the property that is believed to be involved in the money laundering proceeds, on a provisional basis, for the period of 180 days.

Although the order of attachment requires confirmation by an independent adjudicating authority beforehand.

Adjudicating Authority: The authority which is appointed by the central government of India by the issue of notification, to exercise powers and authority, a jurisdiction that has been stated in the PMLA Act 2002 is known as du adjudicating authority.

It is empowered to decide whether the property that is believed to be involved in the offence of money laundering is actually involved or not.

It is worth mentioning, this adjudicating authority is not bound by the procedures that have been mentioned in the Code of Civil Procedure,1908. Rather, the adjudicating authority will follow the principles of natural justice while adhering to the PMLA 2002 provisions.

The burden of proof: The person who is undergoing the trial under the PMLA Act, has to prove that the alleged proceeds of the offence have actually been originated from lawful sources and not from a legitimate source. Thus, the burden of proof lies only person going through a trial.

Appellate Tribunal: The government of India has been empowered to appoint a body termed as Appellate Tribunal. This appellate Tribunal has been empowered to hear the appeals against the adjudicating authority’s decision or any other authority there has been mentioned so was in the Act.

Special Court: Central government, as stated in section 43 of the PMLA 2002, bi notification can assign one or more session courts as special courts search areas or cases that would be specified in the notification.

Although, this assignment of session Court as special Court has to be made after consulting the chief justice of the appropriate High Court.

Read Also:- IIBF AML KYC NOTES PART 2 2024

ENFORCEMENT DIRECTORATE (ED)

ED i.e directorate of enforcement falls under the purview of the institutional framework. ED has been established in 1956. Its headquarters are in New Delhi.

ED is required to enforce FEMA 1999 (Foreign Exchange Management Act) as well as some provisions under PMLA.

It has also been interested in the work you later did to investigate and prosecute of cases that fall under PMLA. It falls under the administrative control of the Department of Revenue for its operational purposes. While the FEMA Policy aspects, registration and amendments under the control of the Department of Economic Affairs, the PMLA policy aspects are under the control of the Department of Revenue.

Zonal Offices: It has 10 zonal offices which are headed by Deputy Director and each of these zonal offices have 11 sub zonal offices which are further headed by an Assistant Director.

FIU-IND: Indian government established a central National agency named FIU-IND on November 18, 2004, which would be primarily is possible to obtain, process, analyse and impart information related to any suspected financial transactions.

This body has been set up as an independent establishment that has to directly report to EIC (Economic Intelligence Council) which is governed by the Finance Minister of India.

This is the whole structure of the PMLA. So far we have seen the overview of the PMLA Act as to what it is about, the objectives of the act, the framework that has been set by the statute as well as the institutional framework.

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IIBF AML KYC PREVENTION OF MONEY LAUNDERING