The Prevention of Money Laundering Act (PMLA), 2002 is a cornerstone of India’s legal framework to fight financial crimes. It aims to **curb money laundering, tackle black money, and strengthen financial transparency**. By making money laundering a criminal offense, the Act provides for confiscation of illegally acquired assets (proceeds of crime) and imposes stringent punishments, including rigorous imprisonment and fines.
The Directorate of Enforcement (ED) serves as the nodal agency for investigating money laundering cases, while prosecution is carried out through **Special Courts** designated under the Act.
Key Features of PMLA
* Purpose: To prevent money laundering, discourage black money circulation, and promote compliance with financial regulations.
* Definition of Money Laundering: Concealing, possessing, acquiring, or projecting proceeds of crime as untainted property.
* Scheduled Offences: The Act links money laundering to crimes listed in its Schedule, such as corruption, fraud, drug trafficking, or terrorism financing.
* Enforcement by ED: The ED has wide powers for search, seizure, attachment of property, arrest, and investigation.
* Punishment: Offenders face rigorous imprisonment of 3–7 years (up to 10 years for certain offenses) along with fines.
* Confiscation of Property: Assets involved in money laundering can be seized and permanently confiscated.
* Special Courts: Designated courts handle PMLA cases for speedy trials.
How the PMLA Process Works
1. Reason to Believe
* If an ED officer has written evidence to believe that someone holds proceeds of crime likely to be hidden or transferred, action can be initiated.
2. Attachment of Property
* Suspected assets can be provisionally attached to prevent disposal, ensuring they remain available for future confiscation.
3. Investigation
* The ED investigates both the scheduled offense and its link to money laundering activities.
4. Prosecution
* After investigation, the ED files a complaint or report before the Special Court, which conducts the trial and decides on punishment and confiscation.
📝 At a Glance: PMLA
| Aspect | Details |
| Enacted | 2002 (came into force in 2005) |
| Objective | Prevent money laundering, curb black money, ensure financial transparency |
| Investigating Body | Directorate of Enforcement (ED) |
| Offences Covered | Linked to scheduled crimes (e.g., fraud, corruption, drug trafficking, etc. |
| Punishment | 3–7 years imprisonment (up to 10 years in specific cases) + fines |
| Property Action | Provisional attachment, seizure, and confiscation of assets |
| Trial Authority | Special Courts designated under the Act |
✅ In Summary:
The PMLA is not just a law—it is India’s commitment to protecting the financial system from illicit money flows. For banks, financial institutions, and compliance professionals, understanding its provisions is critical to ensuring due diligence, reporting, and avoiding regulatory risks.
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