This Part of PMLA Contains only Introductory portion of  the Act, this article contained only 2 Chapters.

PMLA, 2002

The Prevention of Money Laundering Act (PMLA), 2002 was enacted in January, 2003.

Objective of the Act- The PML Act seeks to combat money laundering in India and has three main objectives:

  • To prevent and control money laundering
  • To confiscate and seize the property obtained from the laundered money; and
  • To deal with any other issue connected with money laundering in India.
  • The Act also proposes punishment under sec.4.

 Total Chapters- 10 Chapters

 Total Sections– 76 Sections

CHAPTER-I

PRELIMINARY

Total Sections in Chapter I- Two

Section 1- Short title, extent and commencement.-

Act name is Prevention of Money Laundering Act, 2002.

The Act is extents to whole over India.

Section 2- Definitions

Some relevant definitions are discussed here-

Adjudicating Authority-

Means an Adjudicating Authority appointed under sub-section (1) of section 6.

Appellate Tribunal

Means the Appellate Tribunal established under section 25.

Assistant Director

Means an Assistant Director appointed under subsection (1) of section 49.

Beneficial owner-

Means an individual who ultimately owns or controls a client of a reporting entity or the person on whose behalf a transaction is being conducted and includes a person who exercises ultimate effective control over a juridical person.

Deputy Director-

Means a Deputy Director appointed under sub-section (1) of section 49.

Offence of cross border implications-

  • any conduct by a person at a place outside India which constitutes an offence at that place and which would have constituted an offence specified in Part A, Part B or Part C of the Schedule, had it been committed in India and if such person transfers in any manner the proceeds of such conduct or part thereof to India; or
  • any offence specified in Part A, Part B or Part C of the Schedule which has been committed in India and the proceeds of crime, or part thereof have been transferred to a place outside India or any attempt has been made to transfer the proceeds of crime, or part thereof from India to a place outside India.

Explanation.-Nothing contained in this clause shall adversely affect any investigation, enquiry, trial or proceeding before any authority in respect of the offences specified in Part A or Part B of the Schedule to the Act before the commencement of the Prevention of Money laundering (Amendment) Act, 2009.

Payment system-

Means a system that enables payment to be effected between a payer and a beneficiary, involving clearing, payment or settlement service or all of them.

Explanation.-For the purposes of this clause, “payment system” includes the systems enabling credit card operations, debit card operations, smart card operations, money transfer operations or similar operations;

Payment system operator-

Means a person who operates a payment system and such person includes his overseas principal.

Explanation.-For the purposes of this clause, “overseas principal” means,-

(A) in the case of a person, being an individual, such individual residing outside India, who owns or controls or manages, directly or indirectly, the activities or functions of payment system in India;

(B) in the case of a Hindu undivided family, Karta of such Hindu undivided family residing outside India who owns or controls or manages, directly or indirectly, the activities or functions of payment system in India;

(C) in the case of a company, a firm, an association of persons, a body of individuals, an artificial juridical person, whether incorporated or not, such company, firm, association of persons, body of individuals, artificial juridical person incorporated or registered outside India or existing as such and which owns or controls or manages, directly or indirectly, the activities or functions of payment system in India;

Person carrying on designated business or profession-

  • a person carrying on activities for playing games of chance for cash or kind, and includes such activities associated with casino;
  • a Registrar or Sub-Registrar appointed under section 6 of the Registration Act, 1908 (16 of 1908) as may be notified by the Central Government;
  • real estate agent, as may be notified by the Central Government;
  • (iv) dealer in precious metals, precious stones and other high value goods, as may be notified by the Central Government; (v) person engaged in safekeeping and administration of cash and liquid securities on behalf of other persons, as may be notified by the Central Government; or
  • person carrying on such other activities as the Central Government may, by notification, so designate, from time-to time;

 Proceeds of crime-

Means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property.

Scheduled offence-

  • the offences specified under Part A of the Schedule; or
  • the offences specified under Part B of the Schedule if the total value involved in such offences is thirty lakh rupees or more; or
  • the offences specified under Part C of the Schedule.

CHAPTER-II

Offence of Money Laundering

Total Sections in Chapter II- Two

Section 3

Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money-laundering.

Section-4

Whoever commits the offence of money-laundering shall be punishable with rigorous imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine:

Provided that where the proceeds of crime involved in money-laundering relates to any offence specified under paragraph 2 of Part A of the Schedule, the provisions of this section shall have effect as if for the words “which may extend to seven years”, the words “which may extend to ten years” had been substituted.

*Note- The Article on PMLA, 2002 will be in Parts so next Article will post soon.

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