Context:
The Enforcement Directorate informed a Division Bench of the Kerala High Court that large-scale money laundering had been carried out in various cooperative banks and societies and Enforcement Case Information Report (ECIR) had been registered in respect of 16 banks and two societies under the Prevention of Money Laundering Act.
Prevention of Money Laundering Act (PMLA) 2002
The Prevention of Money Laundering Act (PMLA) is a law in India that aims to prevent money laundering and confiscate property that is the result of money laundering. The PMLA was enacted in January 2003 and came into effect in July 2005.
- Objective
- To curb money laundering in India.
- Primary Objectives
- Prevent control money laundering.
- Confiscate seize property derived from laundered money.
- Address other issues related to money laundering.
What does the PMLA do?
- Defines money laundering
- The PMLA defines money laundering as the act of concealing, possessing, acquiring, using, or claiming property that is the result of a crime.
- Requires financial institutions to verify client identities
- The PMLA requires banks, financial institutions, and other intermediaries to verify the identities of their clients and maintain records of their transactions.
- Requires financial institutions to report suspicious transactions
- The PMLA makes it mandatory for financial institutions to report suspicious transactions to the FIU-IND.
- The FIU-IND is empowered to impose fines. The PMLA has authorized the Director of the FIU-IND to fine financial institutions that fail to comply with the law.
Amendments
2009-2012: Strengthened provisions against financial crimes.
PMLA Main Provisions
- Obligations of Financial Institutions
- Banks, Financial Institutions and Intermediaries need to check their clients identities and retain record of every transaction.
- Functions of Enforcement Directorate (ED)
- Carrying out inquiries about money laundering.
- Adjudicating Authority Appellate Tribunal
- This body will confirm attachment and confiscation orders, hear appeals against confiscation orders.
- Special Courts for PMLA Cases
- This court deals with the offenses related to money laundering. It is designated and can be operated under a specified law International Cooperation.
- The Central Government can make arrangements with foreign countries for their implementing agency.
Section-45 Strict Bail Conditions
- Bail Conditions Twin Test
- Prima Facie Innocence: Court must consider the accused as not having committed a crime.
- No Chance of Tampering: Accused will not be engaged in another crime in case he is released.
- Non-Bailable Offense
- Bail is not a right as of course under PMLA.
