ALL YOU NEED TO KNOW ABOUT PMLA | DEFINITIONS | PAPER 1 – PPB JAIIB | MODULE A – INDIAN FINANCIAL SYSTEM | PMLA Act | PART 2

Clause (1) This Act may be called the Prevention of Money laundering Act, 2002.

Clause (2) It’s applicable in all the states of India.

Clause (3)Any reference in any notified provision to the beginning of the PMLA Act shall be read as a reference to the beginning of that provision. It shall take effect on the date that the CG notifies in the Official Gazette. 

Note: PMLA Act, 2002 came into force on July 1, 2005.

Subsection 1 states that unless the context otherwise requires:

Clause (a) states that “Adjudicating Authority” is the one appointed under section 6(1);

Clause (b) states that “Appellate Tribunal” is the Appellate Tribunal defined under section 25(2);

Clause (c) states that “Assistant Director” is one appointed under section 49(1);

Clause (d) “attachment” means prohibition on the transfer, conversion, disposition or movement of property by an order issued under Chapter III (ATTACHMENT, ADJUDICATION AND CONFISCATION – Section 5 to 11A); 

While the sub-clause (da) states that “authorised person” means an authorised person as defined in section 2(c) of the FEMA, 1999;

Clause (e) “banking company” means a banking company or a co-operative bank to which the BR Act, 1949 applies & includes any bank or banking institution referred in section (51) of BR Act;

Sub-clause (fa) states that “beneficial owner” means an individual who has the ultimate control or is the owner of a client of a reporting entity or the person on whose behalf a transaction is being conducted & includes a person who exercises ultimate effective control over a juridical person;

Clause (g) states that “Chairperson” means the Chairperson of the Appellate Tribunal.

Clause (l) “financial institution” means a financial institution which has been defined in clause (c) of section 45-1 of the RBI Act, 1934 and includes: 

• a chit fund company, 
• an authorised person, 
• a housing finance institution, 
• a payment system operator, 
• a NBFC and 
• the Government of India’s Postal Department;

Clause (n) “intermediary” means: 

(i) a stockbroker, a banker or registrar to an issue, a share transfer agent (STA), a trustee to a trust deed, a merchant banker, a portfolio manager, an investment adviser, an underwriter, or any other intermediary involved in the securities market who is registered under section 12 of the SEBI Act, 1992; or

(ii) an association which is registered or recognised under the Forward Contracts (Regulation) Act 1952 or is its’ member; or

(iii) intermediary registered by the PFRDA; or 

(iv) a recognised stock exchange referred to in section 2(f) of the Securities Contracts (Regulation) Act, 1956;

Clause (na) states that “investigation” includes all the proceedings under this Act conducted by the Director or by an authority authorised by CG under the Act for the evidence collection;

Clause (ra) states that “offence of cross border implications”, means:

• any conduct by a person at a place outside India which amounts to an offence at that place; and 

which would have constituted an offence specified in Part A, Part B or Part C of the Schedule of this Act, had it been committed in India and 

if the person involved sends all or some of the proceeds of such behaviour to India; 

or

• any offence listed in the Schedule’s Part A, Part B, or Part C that was committed in India, as well as the proceeds of that offence, or a part of proceeds of crime which have been transferred to a place not in India or any attempt that has been made to transfer such criminal proceeds, or part of such crime proceeds from India to a place outside India.

Clause (s) defines the “person” which includes:

• an individual,
• a HUF (Hindu undivided family),
• a company,
• a partnership firm,
• a group of people (BOI) or an association of people (AOP), whether or not they are corporations

• any artificial juridical person (AJP) not covered by any of the aforementioned sections, and
• any organisation, office, or branch owned or controlled by any of the individuals listed above in the subclauses above;

Clause (sa) defines “person carrying on designated profession or business” to be:

• a person who engages in activities for the purpose of playing games of chance for money or goods, including those activities related to casinos;
• the Central Government may notify the Inspector-General of Registration, who was appointed in accordance with section 3 of the Registration Act of 1908 (16 of 1908);
• real estate agent, as the Central Government may notify;
• dealer in precious metals, precious stones, and other high-value products, as the Central Government may notify;
• a person employed in the custody and management of cash and liquid assets on behalf of others, as the Central Government may notify; or
• a person engaged in any other activities that the Central Government may, from time to time, designate by notification;

The definition of “proceeds of crime” under clause (u) is as follows: 

• any property derived or obtained either: 
• directly or indirectly, 
• by any person by doing any criminal activity (the same which has been defined as a scheduled offence) or 
• the value of any such property or 

• The property equivalent in value that is held within the nation or overseas, if such property is held or taken beyond the nation.

clause (v) states that “property” means: 

• any assets of any kind, whether tangible or intangible, moveable or immovable, corporeal or incorporeal, and 
• includes deeds & instruments providing evidence of title to, or interest in, such property or assets, wherever located;

clause (y) states that “scheduled offence” means:

• the offences that are specified under Schedule- Part A; or
• the offences specified under Schedule- Part B if the total value involved = or > 1,00,00,000.00; or
• the offences specified Schedule- Part C.

a Court of Session designated as a Special Court under section 43(1) is referred to as a “Special Court” in clause (z);

Clause (za) defines “transfer” as any right, title, possession, or lien that is sold, acquired, mortgaged, pled, gifted, loaned, or otherwise transferred;

clause (zb) “value” means the fair market value (FMV) of any property on date acquired (by any person), or if it can’t be determined, the date on which it is possessed by such person.