Prevention of Money Laundering Act

July 1, 2022

Syllabus: General Studies Paper 2

The Enforcement Directorate has arrested Delhi Health Minister and senior Aam Aadmi Party (AAP) leader Satyendar Jain under the criminal provisions of the Prevention of Money Laundering Act (PMLA) in connection with his alleged involvement in a ‘hawala transactions’ case.

About The Prevention of Money Laundering Act

It was enacted as a response to India’s global commitment (including the Vienna Convention) to curb the menace of money laundering.

Objectives of the Act: PMLA was enacted in 2002 and it came into force in 2005, to curb money laundering (process of converting black money into white) and to provide for seizure of property derived from money-laundering.

There are mainly 3 objectives of PMLA:

To prevent and control money laundering.
To confiscate and seize the property obtained from the laundered money.
To deal with any other issue connected with money laundering in India.

Dispute Redressal

The Adjudicating Authority is appointed by the central government. It decides whether the property attached or seized is involved in money laundering.
The Adjudicating Authority shall not be bound by the procedure laid down by the Code of Civil Procedure,1908, but shall be guided by the principles of natural justice and subject to the other provisions of PMLA.

Appellate Tribunal: An Appellate Tribunal appointed by the Government is given the power to hear appeals against the orders of the Adjudicating Authority. Orders of the tribunal can be appealed in the appropriate High Court.

Special Court: Provision for establishing special court by the Union government under Prevention of Money Laundering Act, 2002 (PMLA).

PMLA (Amendment) Act, 2012:

Adds the concept of ‘reporting entity’ which would include a banking company, financial institution, intermediary etc.
PMLA, 2002 levied a fine up to Rs 5 lakh, but the amendment act has removed this upper limit.
It has provided for provisional attachment and confiscation of property of any person involved in such activities.