Money Laundering in India

money laundering in india
What is Money Laundering ?
The visualisation of the Lay man will not be far different than the one shown in this picture. The general
guesses from most people would be that it must be something related to drying, washing or may be dry
cleaning of the currency notes. This is rather the human tendency about the world's very big crime.
To some extent correct but layman don't know much of this world's third largest industry. As per IMF
reports the turnover of this industry could be somewhere around $1.5 trillion. However common man
does not pay attention because primarily it seems to be a victimless crime. It has none of the issues
associated with a vanishing of the money from economy or performance of the government or
organisations involved in the same and yet, money laundering can only take place after a predicate
crime (such as a Drug trafficking or the stock market frauds) has taken place.If the person on the street
is the banker he might throw the three letters "KYC" to express his knowledge.
Money laundering is the process by which large amounts of illegally obtained money (from drug
trafficking, terrorist activity or other serious crimes) is given the appearance of having originated from a
legitimate source.
But in simple terms it is the Conversion of Black money into white money. This takes you back to
cleaning the huge piles of cash. Indian newspapers frequently report the money laundering scams
perpetrated by the Political leaders and some of the prominent stars are the chief ministers of UP,
Punjab and Kerala. UP chief minister ms. Mayawati as per the Indian Express reports used some
innovative techniques to launder the money by avoiding the tax in legitimate manner. She accepted the
donations from persons who were road side heroes. When CBI raided these guys were found in no
position to donate huge sums for political motives.
Other Indian star in the laundering Business is Ketan Parekh.It is believed that he shifted the proceeds of
money received from the BoI pay order scam to various tax heavens and ultimately in the Swiss
Banks.These transactions are believd to be just the tip of the iceberg.
If done successfully, it allows the criminals to maintain control over their proceeds and ultimately to
provide a legitimate cover for their source of income. Money laundering plays a fundamental role in
facilitating the ambitions of the drug trafficker, the terrorist, the organised criminal, the insider dealer,
the tax evader as well as the many others who need to avoid the kind of attention from the authorities
that sudden wealth brings from illegal activities. By engaging in this type of activity it is hoped to place
the proceeds beyond the reach of any asset forfeiture laws
Prevention of Money Laundering Act, 2002

The Prevention of Money Laundering Act, 2002 (PMLA 2002) forms the core of the legal framework put in place by
India to combat money laundering. PMLA 2002 and the Rules notified there under came into force with effect from
July 1, 2005 . Director, FIU-IND and Director (Enforcement) have been conferred with exclusive and concurrent
powers under relevant sections of the Act to implement the provisions of the Act.
The PMLA 2002 and rules notified thereunder impose obligation on banking companies, financial institutions and
intermediaries to verify identity of clients, maintain records and furnish information to FIU-IND. PMLA 2002 defines
money laundering offence and provides for the freezing, seizure and confiscation of the proceeds of crime.
Anti Money Laundering Regime in India
The Reserve Bank of India's extensive Anti-Money Laundering (AML) guidelines have become effective
from March 2006. The AML norms such as "Know Your Customer" emphasize that banks must keep a
record of their customers' backgrounds in order to reduce and control the risk of money laundering. Dr.
Krishnan's talk will deal upon some issues that arise from KYC and other norms under the Prevention of
Money Laundering Act 2002 which is the legal regime for AML in India. Though primarily descriptive the
talk will also deal with the possible consequences of such norms on India's financial system and the
economy in general.
Indian readers need no introduction to the term "money laundering". The concept of coloured cash and cleaning
procedures are familiar, but the perception of our lawmakers and citizens have been restricted to tax evasion — with
various laws dedicated to eradicate this phenomenon.
No serious efforts were made to identify the genesis of the problem, the sources of tainted money, accumulation,
modes of channelisation into a nation's financial system - yet India is perceived to be a major centre for "hawala"
transactions, and needs to assess the threat not just to its economy, but its political system and sovereignty.
The amendments to the Prevention of Money Laundering Act (PMLA), 2002, should be aimed at detecting and
identifying money laundering and cross- border proceeds, with appropriate tools for deterrent and detection.
The international community has recognised the adverse consequences of cross-border money laundering
movements as early as the 1980s and taken several initiatives such as the Vienna Convention (1988), dealing with
drug trafficking money, and the Palermo Convention (2000) focusing on transnational crimes, none of which has been
ratified by India. India is yet to become a member of the Financial Action Task Force on Money Laundering (FATF),
which seeks to improve national legal systems by introduction of international standards.
Currently, India has three separate laws dealing with money laundering. The Narcotics and Psychotropic Substances
(NDPS) Act, 1985, applies to proceeds of drug offences in certain limited situations, the Unlawful Activities Act
(UAPA), which under a 2004 amendment, provides for raising funds for terrorism being a predicated offence and
PLMA, which came into effect only when the Rules were in place in 2005, and is intended to deal with all types of
money laundering.
The NDPS Act, which applies only to drug offences, does not require a conviction for the predicate offence. PMLA
requires a predicate offence conviction in order to take cognisance, and the schedules to the Act include corruption,
prosecution of wildlife, drug and human trafficking, but virtually ignore capital and financial markets.
India has, however, taken initiatives in the accountability and supervisory roles of regulator in financial and capital
markets, which are dealt by the Reserve Bank of India (RBI), the Securities and Exchange Board of India (Sebi) and
Insurance Regulatory and Development Authority (Irda). The roles are well defined, and the RBI was the first to
establish the customer due diligence guidelines while Sebi's vigilance in protecting capital markets does not need
elaboration. Sebi promulgated its own guidelines on anti-money laundering measures even before the RBI.
Section 12 of PMLA requires all banks and intermediaries to maintain records of all transactions, according to nature
and value and report to the director - currently under the rules this includes cash transactions involving more than one
million rupees, or even less if connected integrally, involving forgery or counterfeit notes or instruments or any
suspicious debits, credits, payments, loans etc. In all fairness the PMLA rules pertaining to the maintenance of and
verification of records for all the sectors have been in place since 2005. But the existing regimes encompassing
PMLA, UAPA and NDPS have been virtually ineffective, with investigations far and few, and even lesser prosecutions
and convictions till date.
Powers of confiscation, freezing and forfeiture are also largely dependant on the law providing for the predicated
offence. In fact the PMLA provides for confiscation of proceeds of crime, but not of the instrumentalities used in an
offence. International cooperation depends on bilateral arrangements and treaties where they exist, and letters of
request in others. This is where FATF membership would provide a single window.
The proposed amendments seek to incorporate existing key provisions of the PMLA rules in recording and
maintaining information and making reporting mandatory for all intermediaries, particularly for all foreign transactions.
Casinos, money changers and transfer service providers, international credit card gateways are to be subjected to
regulatory and reporting requirements. As of now, the latter are governed by the RBI regulations that mainly deal with
their customer-related operations.
All offences pertaining to insider trading and market manipulation will also be brought into PMLA as well as smuggling
of antiques, terrorism funding, human trafficking other than prostitution, and a wider range of environmental crimes.
To effectively combat cross-border money laundering, India has to make its financial systems FATF compliant,
provide for better tracking measures, and incorporate proper mechanisms for investigation, prosecution, easier
extradition processes, cross border applicability in foreign jurisdictions, even when the predicated offence is
committed in India
The prevention of money laundering in India
Money Laundering Methods and Trends
Send Print The annual FATF typologies exercise brings together experts from the law enforcement and
regulatory authorities of FATF member countries to exchange information on significant money
laundering cases and operations. It also provides a vital opportunity for operational experts to identify
and describe current money laundering trends and effective counter-measures. Building on the analysis
and lessons learned from earlier typologies work, the yearly exercise also attempts to examine a series
of particular concerns in the money laundering area from the operational perspective. Although the
FATF has conducted typologies exercises since its beginning, reports of this work have only been made
public since the 1995 exercise (released in June 1996).
FATF-XVI (10 Juin 2005)
The FATF-XVI meeting of experts on typologies took place in December 2004 in Moscow and was chaired
by Mr. Viktor ZUBKOV, Director of the Federal Service for Financial Monitoring of the Russian Federation
(Rosfinmonitoring, the Russian financial intelligence unit). Major topics covered by the report include:
Alternative remittance system
Money laundering vulnerabilities in the insurance sector
Proceeds from trafficking in human beings and illegal immigration
ML/TF trends and indicators: initial perspectives

FATF-XV (27 February 2004)
The FATF-XV meeting of experts on money laundering and terrorist financing typologies took place in
Oaxaca, Mexico, on 17 and 18 November 2003 chaired by Mrs. María de la Concepción Patiño Cestafe,
Head of the Dirección General Adjunta de Investigación de Operaciones (DGAIO), the Mexican FIU. FATF
members, FATF-style regional bodies, members and international organisations attended. Major topics
covered by the report include:
Wire transfers and terrorist financing
Non-profit organisations and links to terrorist financing
The vulnerabilities of the insurance sector to money laundering
Politically exposed persons (PEPs)
The role of “gatekeepers” or non financial professions in money laundering
FATF-XIV (14 February 2003)
The meeting of experts on typologies for FATF-XIV was held in Rome from 19-21 November 2002 under
the chairmanship of Dr. Carlo Santini, Director General of the Ufficio Italiano dei Cambi. The major
topics of the report are:
Terrorist financing
Money Laundering through the securities sector
The gold and diamond markets
Insurance and money laundering
Credit and debit cards and money laundering

FATF-XIII (1 February 2002)
The FATF-XIII meeting of experts, chaired by Detective Superintendent Bill Bishop, Police National Crime
Manager, New Zealand, took place in Wellington, New Zealand, from 19 to 20 November 2001. Major
topics covered by the report include:
Terrorist financing
Correspondent banking
Corruption and private banking
Bearer securities and other negotiable instruments
Co-ordinated money laundering among organised crime groups
Introduction of euro banknotes
Suspicious transaction reporting and money laundering cases
FATF-XII (1 February 2001)
The FATF-XII meeting of experts was chaired by Mr. Lars Oftedal Broch, Supreme Court Judge, and took
place in Oslo, Norway, from 6 to 7 December 2000. Participation from FATF-style regional bodies was
continued and included representatives from twelve jurisdictions. The major topics of the report are:
On-line banking and Internet casinos
Trust, other non-corporate vehicles and money laundering
Lawyers/notaries, accountants and other professionals
The role of cash vs other payment methods in money laundering schemes
Terrorist related money laundering
FATF-XI (3 February 2000)

The FATF-XI meeting of experts took place in Washington, DC, from 18 to 19 November 1999, under the
chairmanship of Mr. James Sloan, Director, US Treasury Financial Crimes Enforcement Network (FinCEN)
[United States]. For the first time, experts from the member jurisdictions of FATF-style regional bodies
were invited to participate in the FATF meeting. The primary topics of the report include:
On-line Banking: Distinguishing legitimate banking from money laundering services offered through the
Internet.
Alternate Remittance Systems: A world-wide view of their role in money laundering.
Company formation agents and their services.
Trade related activities and money laundering.
Selected case studies.
FATF-X (11 February 1999)
The group of experts for FATF-X met on 17-18 November 1998 in London under the chairmanship of Mr.
Simon Goddard, Head of Intelligence, Strategic and Specialist Intelligence Branch, National Criminal
Intelligence Service (NCIS) [United Kingdom]. The topics covered by the exercise include:
The single European currency and large denomination banknotes.
Offshore financial centres of non-cooperative countries or territories.
The role of the "foreign legal entity" in money laundering.
New payment technologies.
Potential use of the gold market in money laundering operations.
FATF-IX (12 February 1998)

The meeting of experts on typologies for FATF-IX was held in Paris on 19-20 November 1997 under the
chairmanship of Mr. Pierre Fond, Deputy Secretary General of TRACFIN [France]. The primary subject
areas dealt with in the report include:
New payment technologies: Present status and potential vulnerabilities to money laundering.
Money remittance businesses and activities (both formal and informal).
Other observed trends (insurance, money exchange, cross-border movements, the gold market).
Money laundering and non-financial professions (lawyers, notaries, accountants, company formation
agents, real estate, sellers of high-value items).
FATF-VIII (6 February 1997)
The FATF-VIII meeting of experts on typologies took place in Paris on 19-20 November 1996 under the
chairmanship of Mr. Stanley Morris, Director, US Treasury Financial Crimes Enforcement Network
(FinCEN) [United States]. Topics covered during the meeting were:
Attempts to estimate the size of the money laundering problem.
Principal sources of illegal proceeds laundered.
Main money laundering methods detected in the banking, non-bank financial institution and non-
financial business sectors.
Electronic funds transfers and their vulnerability to money laundering.
New money laundering counter-measures (legislative, regulatory, etc.).
Key money laundering trends in non-FATF members.
FATF-VII (28 June 1996)

The meeting of experts on typologies for FATF-VII was held in Paris on 29-29 November 1995 under the
chairmanship of Mr. Jean Spreutels, President, Cellule de Traitement des Informations Financières (CTIF-
CFI) [Belgium]. In addition to the primary topics mentioned above for FATF-VIII, the group of experts also
examined money laundering trends involving the insurance and securities industries.
Money laundering is the practice of disguising illegally obtained funds so that they seem legal.
It is a crime in many jurisdictions with varying definitions. It is a key operation of the
underground economy.
In US law it is the practice of engaging in financial transactions to conceal the identity, source,
or destination of illegally gained money.
In UK law the common law definition is wider. The act is defined as taking any action with
property of any form which is either wholly or in part the proceeds of a crime that will disguise
the fact that that property is the proceeds of a crime or obscure the beneficial ownership of said
property.
In the past, the term "money laundering" was applied only to financial transactions related to
organized crime. Today its definition is often expanded by government and international
regulators such as the US Office of the Comptroller of the Currency to mean any financial
transaction which generates an asset or a value as the result of an illegal act, which may involve
actions such as tax evasion or false accounting. In the UK, it does not even need to involve
money, but any economic good.
As a result, courts may see money laundering committed by private individuals, drug dealers,
businesses, corrupt officials, members of criminal organizations such as the Mafia, and even
states.
As financial crime has become more complex, and "financial intelligence information gathering
intelligence" (FININT) has become more recognized in combating international crime and
terrorism, money laundering has become more prominent in political, economic, and legal
debate. Money laundering is ipso facto illegal; the acts generating the money almost always are
themselves criminal in some way (for if not, the money would not need to be laundered).
Definitions
To save repetition, in this article we use the term "clean" to mean money legally obtained, and
"dirty" to mean money illegally obtained.
[edit] History
[edit] Modern development
Money laundering was not invented during the Prohibition era in the United States, but
techniques were developed and refined then. Many methods were devised to disguise the origins
of money generated by the sale of illegal alcohol. After Al Capone's 19 a Swiss bank into which
he could transfer his illegal funds through a complex system of shell companies, holding
companies, and offshore bank accounts.
In the post-World War II era, legislators found themselves in a quandary as they were confronted
with a growing list of commercial, fiscal, and environmental offences that did not actually cause
direct harm to any one identifiable victim; there was no stinking corpse. What legal instrument
could these legislators use then to punish these criminals and discourage similar crimes in the
future? Since human greed and the profit motive fuel organized crime, they decided that
confiscating the proceeds of crime would adequately deter potential criminals. Anxious to avoid
confiscation, organized criminals now needed to give these huge sums of money---not easily
consumed or invested in the legal economy without raising eyebrows--a patina of legitimacy:
they needed to “launder” it. Money laundering has been dubbed the “Achilles’ heel of organized
crime,” for it compels mobsters to seek out and co-opt established businessmen and women with
highly technical know-how and access to legal institutions like banks to launder their plunder. [1]
The term "money laundering" does not derive, as is often said, from Al Capone having used
laundromats to hide ill-gotten gains. It is more likely to mean that dirty money is made clean. At
some point in the process there must be a switch between the two; necessarily the art is to keep
that switch hidden.
Meyer Lansky perfected a predecessor of money laundering, "capital flight," transferring his
funds to Switzerland and other offshore places. The first reference to the term "money
laundering" itself actually appears during the Watergate scandal. US President Richard Nixon's
"Committee to Re-elect the President" moved dirty campaign contributions to Mexico, then
brought the money back through a company in Miami. It was Britain's The Guardian newspaper
that coined the term, referring to the process as "laundering." (See Jeffrey Robinson's three books
on money laundering, The Laundrymen, The Merger and The Sink.)
Money may be laundered through a complex business network of shell companies and trusts
based in tax havens. "Smurfing" is an example of a money laundering technique.
[edit] Examples
[edit] Cashing up
A business taking large amounts of small change each week (e.g. a convenience store) needs to
deposit that money in a bank. If its deposits vary greatly for no obvious reason this can draw
suspicion; but if the transactions are regular and roughly the same the suspicion is easily
discounted. This is the basis of all money laundering, a track record of depositing clean money
before slipping through dirty money.
In the United States, for example, cash transactions and deposits of more than $10,000 must be
reported by the cashier (the bank etc) as "significant cash transactions" to the Financial Crimes
Enforcement Network FinCEN, with any other suspicious financial activity identified as
"suspicious activity reports" (SARs).
In other jurisdictions suspicion-based requirements may be placed on financial services

employees and firms to report suspicious activity to the authorities.
[edit] Irregular funding
One way to keep cash anonymous is to give it to another who is already legitimately taking in
large amounts of cash. The intermediary then deposits the money in an account, takes a
premium, and writes a cheque. Little attention is drawn because, for the intermediary, it is a
relatively small amount of the usual takings, but for the originator it is all of his takings. This
works well for one-off transactions, but if it happens regularly then the cheques themselves form
a paper trail that can raise suspicion.
[edit] Captive business
Another method is to start a business whose cash inflow cannot be monitored, and funnel the
small change into it and pay taxes on it. But all bank employees are trained to be constantly on
the lookout for transactions that seem to be trying to get around reporting requirements. To avoid
suspicion, shell companies should deal directly with the public, perform some service (not
provide physical goods), and have a business that reasonably would accept cash as a matter of
course. Dealing directly with the public in cash gives a plausible reason for not having a record
of customers.
For example, it is quite reasonable to think that a hairstylist is paid in cash and, even if she
knows her customer's names, does not know their bank details. A record of a haircut must
ostensibly be accepted as prima facie evidence. Service businesses have the advantage of the
anonymity of resources— but the disadvantage that they must deal in cash. A business that sells
computers has to account for the computers, whereas the hairstylist does not have to produce the
cut hair, but the receipt for the computer, even if inflated, exists— that for the haircut probably
does not. It is of course also possible to invent customers, purely for the purpose of accepting
money from them.
[edit] Legislation
Many jurisdictions adopt a list of specific predicate crimes for money laundering prosecutions as
a "self launderer".
[edit] Bangladesh
In Bangladesh, this issue has been dealt with by the Prevention of Money Laundering Act, 2002
(Act No. VII of 2002). In terms of section 2 (tha), “Money Laundering means (a) Properties
acquired or earned directly or indirectly through illegal means; (b) Illegal transfer, conversion,
concealment of location or assistance in the above act of the properties acquired or earned
directly of indirectly through legal or illegal means.” In this Act, “Properties means movable or
immovable properties of any nature and description”.
[edit] India
The Prevention of Money-Laundering Act, 2002 came into effect on 1 July 2005. Section 3 of
the Act makes the offense of money-laundering cover those persons or entities who directly or
indirectly attempt to indulge or knowingly assist or knowingly are party or are actually involved
in any process or activity connected with the proceeds of crime and projecting it as untainted
property, such person or entity shall be guilty of offense of money-laundering.
Section 4 of the Act prescribes punishment for money-laundering 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 which may extend to five lakh rupees and for the offences mentioned
[elsewhere] the punishment shall be up to ten years.
Section 12 (1) prescribes the obligations on banks, financial institutions and intermediaries (a) to
maintain records detailing the nature and value of transactions which may be prescribed, whether
such transactions comprise of a single transaction or a series of transactions integrally connected
to each other, and where such series of transactions take place within a month; (b) to furnish
information of transactions referred to in clause (a) to the Director within such time as may be
prescribed and to (c) verify and maintain the records of the identity of all its clients, As per
Section 12 (2), the records referred to in sub-section (1) as mentioned above, must be maintained
for ten years after the transactions finished.
The provisions of the Act are frequently reviewed and various amendments have been passed
from time to time.
[edit] United Kingdom
The United Kingdom has an "all-crimes" regime[clarification needed].
Money laundering legislation in the UK is governed by three Acts of primary legislation:-
 The Terrorism Act 2000[2]

 The Anti-Terrorist Crime & Security Act 2001[3]
 The Proceeds of Crime Act 2002[4]
Secondary regulation is provided by the Money Laundering Regulations 2003[5] and 2007[6].
Professional guidance (which is submitted to and approved by the UK Treasury) is provided by

industry groups including the Joint Money Laundering Steering Group[7] and the Law Society[8].
In the UK "money laundering" need not involve money (it relates to assets of any kind, both
tangible and intangible, and to the avoidance of a liability) and need not mean passing on the
assets: a thief's possession himself is included. There is no lower limit to what has to be reported
— a suspicious transaction involving a single £5 note must be reported. Technically, everyone,
not just financial services employees or firms, is required to report, and get consent for, his own
involvement in crime or suspicious activities involving money or assets of any kind. So in the
UK a thief who steals a vest from a clothes store commits, as well as common theft, a money
laundering offence: because he has possession of an asset derived from crime. He is technically
required to seek consent from law enforcement for his continued possession of the vest if he is to
avoid risk of prosecution for money laundering.
The UK law makes it a money laundering offence when a person enters into, or becomes
concerned in, an arrangement which facilitates by whatever mean the acquisition, retention, use,
or control of criminal property by another person. This has concerned lawyers and other
professional advisers who act for clients charged with these offences, since they are brought
under the same law themselves.
Because the UK legislation is wide-ranging, the Serious Organised Crime Agency receives many
SARs; in 2005 nearly 200,000. The number of SARs appears to be growing by almost 50% each
year.[verification needed]
The UK legislation was relaxed slightly in 2005 to allow banks and financial institutions to
proceed with low value transactions involving suspected criminal property without requiring
specific consent for every transaction, but the reporting of all transactions is still required.
[edit] Bureaux de change
In the UK, a common way to launder money is to open a bureau de change. Unlike some other
countries, there are no government controls on these facilities— people are free to exchange
currency whenever and wherever they like. The aim is to exchange the dirty money for clean
money— the legitimate business of currency exchange is secondary.
[edit] United States
In US Law[citation needed], "reasonably accepting cash" means the business must regularly perform
services that on average are less than $500 each. It is assumed that above that amount most
people pay with a check, a credit card, or other another (traceable) payment method. The
company should actually function on a legitimate level. In the hairstyler example, it is perfectly
reasonable for a lot of the business to involve mostly labour (dyes and machine oil and so forth
being relatively small concerns), and for most transactions to be settled in cash. But it is
unreasonable for all of the business to work without parts and just on cash. So the legitimate
business will generate a legitimate (if low) level of parts use, and enough traceable transactions
to mask the illegitimate ones.
Anti-money laundering (AML/CFT)[clarification needed] laws typically have other offences such as
"tipping off (warning)", "willful blindness", "not reporting suspicious activity", "conscious
facilitation of a money launderer", "assisting a terrorist financier with moving terrorist
financing".
The Bank Secrecy Act of 1970 requires banks to report cash transactions of $10,000.01 or more.
The Money Laundering Control Act of 1986 further defined money laundering as a federal
crime. The USA PATRIOT Act of 2001 expanded the scope of prior laws to more types of
financial institutions, and added a focus on terrorist financing, specifying that financial
institutions take specific actions to "know your customer" (KYC).
In the United States, Federal law provides: "Whoever ... knowing[ly] ... conducts or attempts to
conduct ... a financial transaction which in fact involves the proceeds of specified unlawful
activity ... with the intent to promote the carrying on of specified unlawful activity ... shall be
sentenced to a fine of not more than $500,000 or twice the value of the property involved in the
transaction, whichever is greater, or imprisonment for not more than twenty years, or both.
While money laundering typically involves the flow of "dirty money" (criminal proceeds) into a
clean bank account or negotiable instrument, terrorist financing frequently involves the reverse
flow: apparently clean funds converted to "dirty" purposes. A hawala may launder drug proceeds
and help fund a terrorist, netting the incoming and outgoing funds with only occasional small net
settlement transactions.
[edit] NASA case
From 1992 to 1996 a nine-agency Federal Task Force investigation led by NASA's Office of
Inspector General investigated Omniplan Corporation of Houston and California. It became the
largest count indictment and conviction in NASA history, with the owner of Omniplan, Ralph
Montijo, being convicted of 179 felonies in his multi-million dollar embezzlement scheme. Five
of his companies were also convicted of felonies, they were, Omniplan, Papa Primo's of Texas,
Papa Primo's of Arizona, Omnipoint Production Services and Mercury Trust. These companies,
together with two unincorporated companies, Space Industries Leasing and Space Industries
Properties were liquidated. Each embezzlement count was associated with a corresponding
money laundering count which resulted in dozens of convictions for money laundering. In a New
York Times story, NASA Office of Inspector General Senior Special Agent Joseph Gutheinz,
who led the Omniplan investigation, said "We didn't get any pizzas, but we got the bills",
referring to the fact that some of the alleged mischarging to the NASA contract also involved
costs associated with two of Ralph Montijo's pizza companies, Papa Primo's of Texas, and Papa
Primo's of Arizona.
[edit] Laundered or not?
Money obtained by an illegal action is not, of itself, laundered money. The laundering offense
comes from the attempt to conceal its source, not because the transaction was itself illegal
(which is a separate offense).
The Supreme Court of the United States on June 2, 2008, rendered 2 judgments in favor of
defendants, narrowing the application of the federal money-laundering statute.
In a 9-0 decision, Justice Clarence Thomas reversed Acuna, Mexico's Humberto Cuellar's
conviction and ruled that "hiding $81,000 in cash under the floorboard of a car and driving
toward Mexico is not enough to prove the driver was guilty of money laundering; instead,
prosecutors must also prove the driver was traveling to Mexico for the purpose of hiding the true
source of the funds." That is, the prosecution had not made its prima facie case. The Court
further ruled "that federal prosecutors have gone too far in their use of money laundering charges
to combat drug traffickers and organized crime; that money laundering charges under the Money
Laundering Control Act of 198, Sec. 18 U.S.C. §1956(a)(2)(B)(i) apply only to profits of an
illegal gambling ring and cannot be used when the only evidence of a possible crime is when a
courier headed to the Texas-Mexico border with $81,000 in cash proceeds of a marijuana
transaction; it cannot be proven merely by showing that the funds were concealed in a secret
compartment of a Volkswagen Beetle; instead, prosecutors must show that the purpose of
transporting funds in a money laundering case was to conceal their ownership, source or control;
the secrecy must be part of a larger design to disguise the source or nature of the money."
Later, in a 5-4 decision, Justice Antonin Scalia reversed Efrain Santos of Indiana and Benedicto
Diaz's convictions for money laundering based on cash from an illegal lottery. Scalia ruled that
the law referred to the "proceeds of some form of unlawful activity; paying off gambling winners
and compensating employees who collect the bets don't qualify as money laundering; the word
“proceeds” in the federal money-laundering statute, 18 U.S.C. §1956, and §1956(a)(1)(A)(i)
and§1956(h), applies only to transactions involving criminal profits, not criminal receipts; those
are expenses, and prosecutors must show that profits were used to promote the illegal activity."
Congress enacted the 1986 statute after the President's Commission on Organized Crime stressed
the problem of "washing" criminal proceeds through overseas bank accounts and legitimate
businesses. It imposes a 20-year maximum prison term.
[edit] Fighting money laundering

Main article: KYC
The first defence against money laundering is the requirement on financial intermediaries to
know their customers— often termed KYC know your customer requirements. Knowing one's
customers, financial intermediaries will often be able to identify unusual or suspicious behavior,
including false identities, unusual transactions, changing behaviour, or other indicators of
laundering. But for institutions with millions of customers and thousands of customer-contact
employees, traditional ways of knowing their customers must be supplemented by technology.
Companies such as Lexis Nexis and WorldCompliance provide software and databases to help
perform these processes. Bank and corporate security directors can also play an important role in
fighting money laundering. expand
[edit] Using information technology
Information technology can never be a replacement for a well-trained investigator, but as money
laundering techniques become more sophisticated, so too does the technology used to fight it.
Before anti-money laundering programs became commonplace, in the U.S. the Bank Secrecy Act
required financial institutions to file Currency Transaction Reports for cash transactions of more
than $10,000. These CTRs prove invaluable for investigators, but money launderers began to
structure their transactions to avoid the reporting requirements. As a result, the U.S. passed laws
against structuring transactions to avoid the reporting requirements, and most structuring would
trigger a Suspicious Activity Report by the financial institution.
The various software packages are capable of name analysis, rule-based systems, statistical and
profiling engines, neural networks, link analysis, peer group analysis, and time sequence
matching. Also, there are specific KYC solutions that offer case-based account documentation
acceptance and rectification, as well as automatic risk scoring of the customer taking account of
country, business, entity, product, transaction risks that can be reviewed intelligently. Other
elements of AML technology include portals to share knowledge and e-learning for training and
awareness.
This software is not used exclusively to track money laundering, but more often the common
theft of credit cards or bank details. Unusal activity on an account may trigger a call from the
card issuer to make sure it has not been misused.
Financial Crimes Enforcement Network FinCEN is an organization created by the United States
Department of the Treasury. FinCEN receives Suspicious Activity Reports from financial
institutions, analyses them, and shares their data with U.S. law enforcement agencies and
Financial Intelligence Units FIUs of other countries. One of its strategic goals is to improve
information-sharing through eGovernment. It offers training and advice to organizations of
foreign governments to help improve the efficacy of their own anti-money laundering programs.
[edit] 9/11 and the international response to the underground economy
After September 11, 2001, money laundering became a major concern of the United States' war
on terror, although critics argue that it has become less and less important for the White House.
Clearstream International, based in Luxembourg, was a central securities depository and clearing
house, a "bank of banks" which practiced financial clearing and centralized debit and credit
operations for hundreds of banks. It was accused of being a major operator of the underground
economy via a system of unpublished accounts. Bahrain International Bank, owned by Osama
bin Laden, would have profited from these transfer facilities.[9] The scandal prompted André
Lussi, Clearstream's CEO, to resign on 31 December 2001; several judicial investigations were
opened and the European Commission was interpelled by Members of the European Parliament
(MEPs) Harlem Désir, Glyn Ford, and Francis Wurtz, who asked the Commission to investigate
the accusations and to ensure that the 10 June 1990 directive (91/308 CE) on control of financial
establishment was applied in all member states, including Luxembourg, effectively.[10]
The international response to the underground economy has been coordinated by the [11]
("FATF," also known by its French acronym of "GAFI"), whose original 40 principles form the
basis of most international responses to money laundering. A further 8 principles, designed to
counteract funding to terrorist organisations, were added on 30 June 2003, in response to the
9/11, with another added 22 October 2004, to form what are now known as the [12] (AML/CFT).
Compliance with these principles, or at least a move towards them, is now seen as a requirement
of an internationally active bank or other financial service entity.[by whom?]
[edit] Amounts
Many regulatory and governmental authorities quote estimates each year for the amount of
money laundered, either worldwide or within their national economy. A frequently cited figure is
2-5% of the worldwide global economy, stated by the IMF. But some academics note that such
figures are usually simply "best guesses". In 1997 the FATF, an arm of the OECD set up to
combat money laundering, frankly admitted "the vast majority of FATF members lack sufficient
data to support any credible estimate."[13] Although admissions of that nature are no longer
maintained, there is still a dearth of data on the actual amounts of money laundered worldwide.
Some academic commentators have expressed real concerns about the reliability and basis of
figures used by governmental and multinational organizations. It is always hard to find out real
figures about illegal acts.
We are faced with the problem that there has been little work to develop an objective
“ academic analysis of the true extent of laundering, which means that we do not have a
framework within which the appropriateness of legislative measures can be evaluated.
Without this, it is difficult to challenge the 'alarmist' position of the authorities whereby
such estimates have been put forward, quoted and repeated, becoming, through such
reptition, seemingly established truths. It can be argued ... that global estimates are little
more than informed guesses: "large numbers are frequently thrown around without serious
support" (Reuter and Truman, 2005, p.56), re-produced to the point at which they gain,
through mere repetition, [they are perceived to have] some form of reliable accuracy.[14]
Page 1
PREVENTION OF MONEY
LAUNDERING
ACT, 2002
Arrangement of Sections
SECTION*
CHAPTER I
PRELIMINARY
1. Short title, extent and commencement
2. Definitions
CHAPTER II
OFFENCE OF MONEY-LAUNDERING
3. Offence of money-laundering
4. Punishment for money-laundering
CHAPTER III
ATTACHMENT, ADJUDICATION AND CONFISCATION
5. Attachment of property involved in money-laundering
6. Adjudicating Authorities, composition, powers, etc.
7. Staff of Adjudicating Authorities
8. Adjudication
9. Vesting of property in Central Government
10. Management of properties confiscated under this Chapter
11. Power regarding summons, production of documents and
evidence, etc.
CHAPTER IV
OBLIGATIONS OF BANKING COMPANIES, FINANCIAL
INSTITUTIONS AND INTERMEDIARIES
12. Banking companies, financial institutions and inter-
mediaries to maintain records
PAGE
2.7
2.7
2.10
2.10
2.10
2.12
2.14
2.14
2.15
2.16
2.16
2.17
2.3
Page 2
PREVENTION OF MONEY-LAUNDERING ACT, 2002 2.4
SECTION PAGE
13. Powers of director to impose fine 2.17
14. No civil proceedings against banking companies, finan-
cial institutions, etc., in certain cases 2.18
15. Procedure and manner of furnishing information by
banking company, financial institution and intermediary 2. IS
CHAPTER V
SUMMONS, SEARCHES AND SEIZURES, ETC.
16. Power of survey 2.78
17. Search and seizure 2.19
18. Search of persons 2.20
19. Power to arrest 2.22
20. Retention of property 2.22
21. Retention of records 2.23
22. Presumption as to records or property in certain cases 2.24
23. Presumption in inter-connected transactions 2.24
24. Burden of proof 2.25
CHAPTER VI
APPELLATE TRIBUNAL
25. Establishment of Appellate Tribunal 2.25
26. Appeals to Appellate Tribunal 2.25
27. Composition, etc., of Appellate Tribunal 2.26
28. Qualifications for appointment 2.26
29. Term of office 2.27
30. Conditions of service 2.27
31. Vacancies 2.27
32. Resignation and removal 2.28
33. Member to act as Chairperson in certain circumstances 2.28
34. Staff of Appellate Tribunal 2.28
35. Procedure and powers of Appellate Tribunal 2.28
36. Distribution of business amongst Benches 2.29
37. Power of Chairperson to transfer cases 2.30
Page 3
2.5 - - ARRANGEMENT OF SECTIONS
SECTION PAGE
38. Decision to be by majority 2.30
39. Right of appellant to take assistance of authorised
representative and of Government to appoint
presenting officers 2.30
40. Members, etc., to be public servants 2.30
41. Civil Court not to have jurisdiction 2.30
42. Appeal to High Court 2.31
CHAPTER VII
SPECIAL COURTS
43. Special Courts 2.31
44. Offences triable by Special Courts 2.31
45. Offences to be cognizable and non-bailable 2.32
46. Application of Code of Criminal Procedure, 1973 to
proceedings before Special Court 2.33
47. Appeal and revision 2.33
CHAPTER VIII
AUTHORITIES
48. Authorities under Act 2.33
49. Appointment and powers of authorities and other officers 2.34
50. Powers of authorities regarding summons, production
of documents and to give evidence, etc. 2.34
51. Jurisdiction of authorities 2.35
52. Power of Central Government to issue directions, etc. 2.35
53. Empowerment of certain officers 2.36
54. Certain officers to assist in inquiry, etc. 2.36
CHAPTER IX
RECIPROCAL ARRANGEMENT FOR ASSISTANCE IN
CERTAIN MATTERS AND PROCEDURE FOR ATTACHMENT
AND CONFISCATION OF PROPERTY
55. Definitions 2.36
56. Agreements with foreign countries 2.37
57. Letters of request to a contracting State in certain cases 2.37
Page 4
SECTION PAGE
58. Assistance to a contracting State in certain cases 2.38
59. Reciprocal arrangements for processes and assistance
for transfer of accused persons 2.38
60. Attachment, seizure and confiscation, etc., of property
in a contracting State or India 2.39
61. Procedure in respect of letter of request 2.40
CHAPTER X
MISCELLANEOUS
62. Punishment for vexatious search 2.40
63. Punishment for false information or failure to give
information, etc. 2.40
64. Cognizance of offences 2.41
65. Code of Criminal Procedure, 1973 to apply 2.41
66. Disclosure of information 2.41
67. Bar of suits in civil courts 2.42
68. Notice, etc., not to be invalid on certain grounds 2.42
69. Recovery of fines 2.42
70. Offences by companies 2.42
71. Act to have overriding effect 2.43
72. Continuation of proceedings in the event of death
or insolvency 2.43
73. Power to make rules 2.44
74. Rules to be laid before Parliament 2.46
75. Power to remove difficulties 2.46
SCHEDULE 2.46
Page 5
PREVENTION OF MONEY
LAUNDERING ACT, 2002
An Act to prevent money-laundering and to provide for confiscation of
property derived from, or involved in, money-laundering and for matters
connected therewith or incidental thereto.
whereas the Political Declaration and Global Programme of Action, an-
nexed to the resolution S-17/2 was adopted by the General Assembly of the
United Nations at its seventeenth special session on the twenty-third day of
February, 1990;
AXU whereas the Political Declaration adopted by the Special Session of the
United Nations General Assembly held on 8th to 10th June, 1998 calls upon
the Member States to adopt national money-laundering legislation and
progranime;
a.mj WHEREAS it is considered necessary to implement the aforesaid resolu-
tion and the Declaration.
Be i; enacted by Parliament in the Fifty-third Year of the Republic of India
as follows :—
CHAPTER I
PRELIMINARY
Short title, extent and commencement.
1.(1) This Act may be called the Prevention of Money Laundering Act,
2002.
(2) It extends to the whole of India.
(3) It shall come into force on such date as the Central Government may,
by notification in the Official Gazette, appoint, and different dates may be
appointed for different provisions of this Act and any reference in any
such provision to the commencement of this Act shall be construed as a
reference to the coming into force of that provision.
Definitions.
2. (1) In this Act, unless the context otherwise requires,—
Page 6
S-2 PREVENTIONOFMO\EY-LAL'NDERINGACT,2002 2.8
(a) "Adjudicating Authority" means an Adjudicating Authority
appointed under sub-section (1) of section 6;
(b) "Appellate Tribunal" means the Appellate Tribunal established
under section 25;
(c) "Assistant Director" means an Assistant Director appointed under
sub-section (1) of section 49;
(d) "attachment" means prohibition of transfer, conversion disposi-
tion or movement of property by an order issued under Chapter
(e) "banking company" means a banking company or a co-operative
bank to which the Banking Regulation Act, 1949 (10 of 1949)
applies and includes any bank or banking institution referred to in
section 51 ofthat Act;
(/) "Bench" means a Bench of the Appellate Tribunal;
(8) "Chairperson" means the Chairperson of the Appellate Tribunal;
(/*) "chit fund company" means a company managing, conducting or
supervising, as foreman, agent or in any other capacity, chits as
defined in section 2 of the Chit Funds Act, 1982 (40 of 1932);
(0 "co-operative bank" shall have the same meaning as assigned to it
in clause {del) of section 2 of the Deposit Insurance and Credit Guar-
antee Corporation Act, 1961 (47 of 1961);
0) "Deputy Director" means a Deputy Director appointed under sub-
section (1) of section 49;
(k) "Director" or "Additional Director" or "Joint Director" means a '
Director or Additional Director or Joint Director as the case may
be, appointed under sub-section (1) of section 49;
(0 "financial institution" means a financial institution as defined in
clause (c) of section 45-1 of the Reserve Bank of India Act, 1934
(2 of 1934) and includes a chit fund company, a co-operative bank
a housing finance institution and a non-banking financial company!
(>n) "housing finance institution" shall have the meaning as assigned to
;Un MofJ"0 °f SeCtÌOn 2 °f the National Housing Bank Act, 1987
(jó or 17o/jj
(») "intermediary" means a stock-broker, sub-broker, share transfer
agent, banker to an issue, trustee to a trust deed, registrar to an
issue, merchant banker, underwriter, portfolio manager, investment
adviser and any other intermediary associated with securities
market and registered under section 12 of the Securities and
exchange Board of India Act, 1992 (15 of 1992);
Page 7
••9 CH. I - PRELIMINARY S. 2
(o) "Member" means a Member of the Appellate Tribunal and includes
thè Chairperson;
O) "Money-laundering" has the meaning assigned to it in section 3;
(q) "non-banking financial company" shall have the same meaning as
assigned to it in clause (f) of section 45-1 of the Reserve Bank of
India Act, 1934 (2 of 1934);
( r) "notification" means a notification published in the Official Gazette;
(s) "person" includes—
(0 an individual,
(/'/) a Hindu undivided family,
(Hi) a company,
(iv) a firm,
(v) an association of persons or a body of individuals, whether
incorporated or not,
(vi) every artificial juridical person, not falling within any of the
preceding sub-clauses, and
(vii) any agency, office or branch owned or controlled by any of
the above persons mentioned in the preceding sub-clauses;
( 0 "prescribed" means prescribed by rules made under this Act;
(") "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 thevalue of any such property;
(v) "property" means any property or assets of every description,
whether corporeal or incorporeal, movable or immovable, tangible
or intangible and includes deeds andlnstruments evidencing title
to, or interest in, such property or assets, wherever located;
(u) "records" include the records maintained in the form of books or
stored in a computer or such other form as may be prescribed;
(a) "Schedule" means the Schedule to this Act;
(y) "scheduled offenee_ü means—
(0 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 offence is thirty lakh rupees or
more.
(z) "Special Court" means a Court of Session designated as Special
Court under sub-section (1) of section 43;
Page 8
S_5 PREVENTION OF MONEY-LAUNDERING ACT, 2002 2.10
(-a) "transfer" includes sale, purchase, mortgage, pledge, gift, loan or
any other form of transfer of right, title, possession or hen;
i-b) "value" means the fair market value of any property on the date of
its acquisition by any person, or if such date cannot be determined,
the date on which such property is possessed by such person.
P) Anv reference, in this Act or the Schedule, to any enactment or any
provision thereof shall, in relation to an area in which such enactment or
such provision is not in force, be construed as a reference to the corres-
ponding law or the relevant provisions of the corresponding law, if any, in
force in that area.
CHAPTER II
OFFENCE OF MONEY-LAUNDERING
Offence of money-laundering.
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 conncctccfwith the proceeds of crime and projecting it as
untainted property shall be guilty of offence of money-laundering.
Punishment for money-laundering.
4 Whoever commits the offence of money-laundering shall be punish-
' able 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 which may extend to five lakh rupees :
Provided that where the proceeds of crime involved in money-laundering
relate to any offence specified under paragraph 2 of Part A of the Sche-
dule 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.
CHAPTER III
ATTACHMENT, ADJUDICATION AND CONFISCATION
Attachment of property involved in money-laundering.
5 (1) Where the Director, or any other officer not below the rank of Deputy
Director authorised by him for the purposes of this section, has reason to
believe (the reason for such belief to be recorded in writing), on the basis
of material in his possession, that—
(a) any person is in possession of any proceeds of crime;
(b) such person has been charged of having committed a scheduled
offence; and
Page 9
2- CH. m - ATTACHMENT, ADJUDICATION & CONFISCATION S. 5
(c) such proceeds of crime are likely to be concealed, transferred or
dealt with in any manner which may result in frustrating any pro-
ceedings relating to confiscation of such proceeds of crime under
this Chapter,
he may, by order in writing, provisionally attach such property for a pe-
riod not exceeding ninety days from the date of the order, in the manner
provided in the Second Schedule to the Income-tax Act, 1961 (43 of 1961)
and the Director or the other officer so authorised by him, as the case
may be, shall be deemed to be an officer under sub-rule (e) of rule 1 of
that Schedule:
Provided that no such order of attachment shall be made unless, in rela-
tion to an offence under—
(0 Paragraph 1 of Part A and Part B of the Schedule, a report has
been forwarded to a Magistrate under section 173 of the Code of
Criminal Procedure, 1973 (2 of 1974); or
(//) Paragraph 2 of Part A of the Schedule, a police report or a com-
plaint has been filed for taking cognizance of an offence by the
Special Court constituted under sub-section ( 1) of section 36 of the
Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985).
(2) The Director, or any other officer not below the rank of Deputy Direc-
tor, shall, immediately after attachment under sub-section (1), forward a
copy of the order, along with the material in his possession, referred to in
that sub-section, to the Adjudicating Authority, in a sealed envelope, in the
manner as may be prescribed and such Adjudicating Authority shall keep
such order and material for such period as may be prescribed.
(3) Every order of attachment made under sub-section (1) shall cease to
have effect after the expiry of the period specified in that sub-section or
on the date of an order made under sub-section (2) of section 8, which-
ever is earlier.
(4) Nothing in this section shall prevent the person interested in the enjoy-
ment of the immovable property attached under sub-section ( 1) from such
enjoyment.
Explanation.—For the purposes of this sub-section,"person interested" in
relation to any immovable property, includes all persons claiming or
entitled to claim any interest in the property.
(5) The Director or any other officer who provisionally attaches any pro-
perty under sub-section (1) shall, within a period of thirty davs from such
attachment, file a complaint stating the facts of such attachment before
the Adjudicating Authority.
Page 10
5. 6 PREVENTION OF MONEY-LAUNDERING ACT, 2002 2.12
Adjudicating authorities, composition, powers, etc.
6. (1) The Central Government shall, by notification, appoint one or more
Adjudicating Authorities to exercise jurisdiction, power and authority con-
ferred by or under this Act.
(2) An Adjudicating Authority shall consist of a Chairperson and two other
Members:
Provided that one Member each shall be a person having experience in
the field of law, administration, finance or accountancy.
(3) A person shall, however, not be qualified for appointment as Member
of an Adjudicating Authority:—
(a) in the field of law, unless he—
(i) is qualified for appointment as District Judge; or
(ii) has been a Member of the Indian Legal Service and has held
a post in Grade I of that service;
(b) in the field of finance, accountancy or administration unless he
possesses such qualifications, as may be prescribed.
(4) The Central Government shall appoint a Member to be the Chairperson
of the Adjudicating Authority.
(5) Subject to the provisions .of this Act,—
(a) the jurisdiction of the Adjudicating Authority may be exercised by-
Benches thereof;
(/?) a Bench may be constituted by the Chairperson of the Adjudicat-
ing Authority with one or two Members as the Chairperson of the
Adjudicating Authority may deem fit;
(c) the Benches of the Adjudicating Authority shall ordinarily sit at
New Delhi and at such other places as the Central Government
may, in consultation with the Chairperson, by notification, specify;
(d) the Central Government shall, by notification, specify the areas in
relation to which each Bench of the Adjudicating Authority may
exercise jurisdiction.
(6) Notwithstanding anything contained in sub-section (5), the Chair-
person may transfer a Member from one Bench to another Bench.
(7) If at any stage of the hearing of any case or matter it appears to the
Chairperson or a Member that the case or matter is of such a nature that
it ought to be heard by a Bench consisting of two Members, the case or
matter may be transferred by the Chairperson or, as the case may be,
referred to him for transfer, to such Bench as the Chairperson may deem
fit.
Page 11
2.1._ CH. HI -ATTACHMENT, ADJUDICATION & CONFISCATION S. 6
(8) The Chairperson and every Member shall hold office as such for a
term of five years from the date on which he enters upon his office:
Provided that no Chairperson or other Member shall hold office as such
after he has attained the age of sixty-two years.
(9) The salary and allowances payable to and the other terms and condi-
tions of service of the Member shall be such as may be prescribed:
Provided that neither the salary and allowances nor the other terms and
conditions of service of the Members shall be varied to his disadvantage
after appointment.
(10) If for reasons other than temporary absence, any vacancy occurs in
the office of the Chairperson or any other Member, then, the Central Gov-
ernment shall appoint another person in accordance with the provisions
of this Act to fill the vacancy and the proceedings may be continued
before the Adjudicating Authority from the stage at which the vacancy is
rilled. J
(H) The Chairperson or any other Member may, by notice in writing
under his hand addressed to the Central Government, resign his office: &
Provided that the Chairperson or any other Member shall unless he is
permitted by the Central Government to relinquish his office sooner con-
tinue to hold office until the expiry of three months from the date of re-
ceipt of such notice or until a person duly appointed as his successor
enters upon his office or until the expiry of his term of office, whichever is
the earliest.
(12) The Chairperson or any other Member shall not be removed from his
office except by an order made by the Central Government after givin^
necessary opportunity of hearing. °
(13) In the event of the occurrence of any vacancy in the office of the
Chairperson by reason of his death, resignation or otherwise the senior-
most Member shall act as the Chairperson of the Adjudicating Authority
until the date on which a new Chairperson, appointed in accordance with
the provisions of this Act to fill such vacancy, enters upon his office.
(14) When the Chairperson of the Adjudicating Authority is unable to dis-
charge his functions owing to absence, illness or any other cause the
senior-most Member shall discharge the functions of the Chairperson of
the Adjudicating Authority until the date on which the Chairperson of the
Adjudicating Authority resumes his duties.
(15) The Adjudicating Authority shall not be bound by the procedure laid
down by the Code of Civil Procedure, 1908 (5 of 1908), but shall be guided
by the principles of natural justice and, subject to the other provisions of
this Act, the Adjudicating Authority shall have powers to regulate its own
procedure.
Page 12
S- 8 PREVENTION OF MONEY-LAUNDERING ACT, 2002 2.14
Staff of Adjudicating Authorities.
7. (1) The Central Government shall provide each Adjudicating Authority
with such officers and employees as that Government may think fit.
(2) The officers and employees of the Adjudicating Authority shall dis-
charge their functions under the general superintendence of the Chair-
person of the Adjudicating Authority.
(3) The salaries and allowances and other conditions of service of the
officers and employees of the Adjudicating Authority shall be such as may
be prescribed.
Adjudication.
8. (1) On receipt of a complaint under sub-section (5) of section 5, or appli-
cations made under sub-section (4) of section 17 or under sub-section (10)
of section 18 if the Adjudicating Authority has reason to believe that any
person has committed an offence under section 3, he may serve a notice
of not less than thirty days on such person calling upon him to indicate
the sources of his income, earning or assets, out of which or by means of
which he has acquired the property attached under sub-section (1) of sec-
tion 5, or, seized under section 17 or section 18, the evidence on which he
relies and other relevant information and particulars, and to show cause
why all or any of such properties should not be declared to be the proper-
ties involved in money-laundering and confiscated bv the Central
Government:
Provided that where a notice under this sub-section specifies anv pro-
perty as being held by a person on behalf of any other person, a copy of
such notice shall also be served upon such other person:
Provided further that where such property is held jointly by more than
one person, such notice shall be served to all persons holding such pro-
perty.
(2) The Adjudicating Authority shall, after—
(a) considering the reply, if any, to the notice issued under sub-section
0);
(b) hearing the aggrieved person and the Director of any other officer
authorised by him in this behalf; and
(c) taking into account all relevant materials placed on record before
him,
by an order, record a finding whether all or any of the properties referred
to in the notice issued under sub-section (1) are involved in money-laun-
dering:
Page 13
2.15 CH. m • ATTACHMENT, ADJUDICATION & CONFISCATION S. 9
Provided that if the property is claimed by a person, other than a person
to whom the notice had been issued, such person shall also be given an
opportunity of being heard to prove that the property is not involved in
money-laundering.
(3) Where the Adjudicating Authority decides under sub-section (2) that
any property is involved in money-laundering, he shall, by an order in
writing, confirm the attachment of the property made under sub-section
(1) of section 5 or retention of property or record seized under section 17
or section 18 and record a finding to that effect, such attachment or
retention of the seized property or record shall—
(a) continue during the pendency of the proceedings relating to any
scheduled offence before a court; and
(/;) become final after the guilt of the person is proved in the trial court
and order of such trial court becomes final.
(4) Where the provisional order of attachment made under sub-section
(1) of section 5 has been confirmed under sub-section (3), the Director or
any other officer authorised by him in this behalf shall forthwith take the
possession of the attached property.
(5) Where on conclusion of a trial for any scheduled offence, the person
concerned is acquitted, the attachment of the property or retention of the
seized property or record under sub-section (3) and net income, if any,
shall cease to have effect.
(6) Where the attachment of any property or retention of the seized pro-
perty or record becomes final under clause (b) of sub-section (3), the Ad-
judicating Authority shall, after giving an opportunity of being heard to
the person concerned, make an order confiscating such property.
Vesting of property in Central Government.
9. Where an order of confiscation has been made under sub-section (6) of
section 8 in respect of any property of a person, all the rights and title in
such property shall vest absolutely in the Central Government free from
all encumbrances:
Provided that where the Adjudicating Authority, after giving an opportu-
nity of being heard to any other person interested in the property attached
under this Chapter, or seized under Chapter V, is of the opinion that any
encumbrance on the property or lease-hold interest has been created with
a view to defeat the provisions of this Chapter, it may, by order, declare
such encumbrances or lease-hold interest to be void and thereupon the
aforesaid property shall vest in the Central Government free from such
encumbrances or lease-hold interest:
Page 14
Provided further that nothing in this section shall operate to discharge
any person from any liability in respect of such encumbrances which may
be enforced against such person by a suit for damages.
Management of properties confiscated under this Chapter.
10. (1) The Central Government may, by order published in the Official
Gazette, appoint as many of its officers (not below the rank of a Joint
Secretary to the Government of India) as it thinks fit, to perform the func-
tions of an Administrator.
(2) The Administrator appointed under sub-section (1) shall receive and
manage the property in relation to which an order has been made under
sub-section (6) of section 8 in such manner and subject to such conditions
as may be prescribed.
(3) The Administrator shall also take such measures, as the Central Gov-
ernment may direct, to dispose of the property which is vested in the Cen-
tral Government under section 9.
Power regarding summons, production of documents and evidence, etc.
11. (1) The Adjudicating Authority shall, for the purposes of this Act have
the same powers as are vested in a civil court under the Code of Civil
Procedure, 1908 (5 of 1908) while trying a suit in respect of the following
matters, namely:— °
(a) discovery and inspection;
(b) enforcing the attendance of any person, including any officer of a
banking company or a financial institution or a companv, and ex-
amining him on oath;
(c) compelling the production of records;
(<r/) receiving evidence on affidavits;
(e) issuing commissions for examination of witnesses and documents-
and
(/) any other matter which may be prescribed.
(2) All the persons so summoned shall be bound to attend in person or
™r°ugh auth°rised agents, as the Adjudicating Authority may direct, and
shall be bound to state the truth upon any subject respecting which they
are examined or make statements, and produce such documents as mav
be required.
(3) Every proceeding under this section shall be deemed to be a judicial
proceeding within the meaning of section 193 and section 228 of the
Indian Penal Code (45 of 1860).
Page 15
2.17 CH. IV - OBLIGATIONS OF BANKING COMPANIES, ETC. S.' 13
CHAPTER IV
OBLIGATIONS OF BANKING COMPANIES, FINANCIAL
INSTITUTIONS AND INTERMEDIARIES
Banking companies, financial institutions and intermediaries to main-
tain records.
12. (1) Every banking company, financial institution and intermediary
shall—
(a) maintain a record of all transactions, the nature and value of which
may be prescribed, whether such transactions comprise of a single
transaction or a series of transactions integrally connected to each
other, and where such series of transactions take place within a
month;
(¿>) furnish information of transactions referred to in clause (a) to the
Director within such time as may be prescribed;
(c) verify and maintain the records of the identity of all its clients, in
such manner as may be prescribed:
Provided that where the principal officer of a banking company or finan-
cial institution or intermediary, as the case may be, has reason to believe
that a single transaction or series of transactions integrally connected to
each other have been valued below the prescribed value so as to defeat
the provisions of this section, such officer shall furnish information in
respect of such transactions to the Director within the prescribed time.
(2) The records referred to in sub-section (1) shall be maintained for a
period of ten years from the date of cessation of the transactions between
the clients and the banking company or financial institution or intermedi-
ary, as the case may be.
Powers of director to impose fine.
13. (1) The Director may, cither of his own motion or on an application
made by any authority, officer or person, call for records referred to
in sub-section (1) of section 12 and may make such inquiry or cause such
inquiry to be made, as he thinks fit.
(2) If the Director, in the course of any inquiry, finds that a banking com-
pany, financial institution or an intermediary or any of its officers has
failed to comply with the provisions contained in section 12, then, without
prejudice to any other action that may be taken under any other provi-
sions of this Act, he may, by an order, levy a fine on such banking com-
pany or financial institution or intermediary which shall not be less than
ten thousand rupees but may extend to one lakh rupees for each failure.
Page 16
S. 16 PREVENTION OF MONEY-LAUNDERING ACT, 2002 2.18
(3) The Director shall forward a copy of the order passed under sub-sec-
tion (2) to every banking company, financial institution or intermediary or
person who is a party to the proceedings under that sub-section.
No civil proceedings against banking companies, financial institutions,
etc., in certain cases.
14. Save as otherwise provided in section 13, the banking companies,
financial institutions, intermediaries and their officers shall not be liable
to any civil proceedings against them for furnishing information under
clause (b) of sub-section (1) of section 12.
Procedure and manner of furnishing information by banking company,
financial institution and intermediary.
15. The Central Government may, in consultation with the Reserve Bank
of India, prescribe the procedure and the manner of maintaining and fur-
nishing information under sub-section (1) of section 12 for the purpose of
implementing the provisions of this Act.
CHAPTER V
SUMMONS, SEARCHES AND SEIZURES, ETC.
Power of survey.
16. (1) Notwithstanding anything contained in any other provisions of this
Act, where an authority, on the basis of material in his possession, has
reason to believe (the reasons for such belief to be recorded in writing)
that an offence under section 3 has been committed, he may enter any
place—
(;) within the limits of the area assigned to him; or
( ii) in respect of which he is authorised for the purposes of this section
by such other authority, who is assigned the area within which
such place is situated,
at which any act constituting the commission of such offence is carried
on, and may require any proprietor, employee or any other person who
may at that time and place be attending in any manner to, or helping in,
such act so as to,—
(z) afford him the necessary facility to inspect such records as he may
require and which may be available at such place;
(ii) afford him the necessary facility to check or verify the proceeds of
crime or any transaction related to proceeds of crime which may
be found therein; and
Page 17
2.19^ CU. V - SUMMONS, SEARCHES & SEIZURES S. 17
(in) furnish such information as he may require as to any matter which
may be useful for, or relevant to, any proceedings under this Act.
Explanation.—For the purposes of this sub-section, a place, where an act
which constitutes the commission of the offence is carried on, shall also
include any other place, whether any activity is carried on therein or not,
in which the person carrying on such activity states that any of his records
or any part of his property relating to such act are or is kept.
(2) The authority referred to in sub-section (1) shall, after entering any
place referred to in that sub-section immediately after completion of sur-
vey, forward a copy of the reasons so recorded along with material in his
possession, referred to in that sub-section, to the Adjudicating Authority
in a scaled envelope in the manner as may be prescribed and such Adjudi-
cating Authority shall keep such reasons and material for such period as
may be prescribed.
(3) An authority acting under this section may—
(i) place marks of identification on the records inspected by him and
make or cause to be made extracts or copies therefrom,
(ii) make an inventory of any property checked or verified by him,
and
(Hi) record the statement of any person present in the place which may
be useful for, or relevant to, any proceeding under this Act.
Search and seizure.
17. (1) Where the Director, on the basis of information in his possession,
has i cason to believe (the reason for such belief to be recorded in writing)
that any person—
(i) has committed any act which constitutes money-laundering, or
(ii) is in possession of any. proceeds of crime involved in money-laun-
dering, or
(Hi) is in possession of any records relating to money-laundering,
then, subject to the rules made in this behalf, he may authorise any officer
subordinate to him to—
(a) enter and search any building, place, vessel, vehicle or aircraft where
he has reason to suspect that such records or proceeds of crime
arc kept;
(b) break open the lock of any door, locker, safe, almirah or other re-
ceptacle for exercising the powers conferred by clause (a) where
the keys thereof are not available;
(c) seize any record or property found as a result of such search;
Page 18
S. 18 PREVENTION'OF MONEY-LAUNDERING ACT, 2002 2.20
(d) place marks of identification on such record or make or cause to
be made extracts or copies therefrom;
(e) make a note or an inventory of such record or property;
(/) examine on oath any person, who is found to be in possession or
control of any record or property, in respect of all matters relevant
for the purposes of any investigation under this Act:
Provided that no search shall be conducted unless, in relation to an of-
fence under—
(a) Paragraph 1 of Part A and Part B of the Schedule, a report has
been forwarded to a Magistrate under section 173 of the Code of
Criminal Procedure, 1973 (2 of 1974); or
(/;) Paragraph 2 of Part A of the Schedule, a police report or a com-
Special Court constituted under sub-section (1) of section 36 of the
Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985).
(2) The authority, who has been authorised under sub-section (1) shall,
immediately after search and seizure, forward a copy of the reasons so
recorded along with material in his possession, referred to in that sub-
section, to the Adjudicating Authority in a sealed envelope, in the manner,
as may be prescribed and such Adjudicating Authority shall keep such
reasons and material for such period, as may be prescribed.
(3) Where an authority, upon information obtained during survey under
section 16, is satisfied that any evidence shall be or is likely to be con-
cealed or tampered with, he may, for reasons to be recorded in writing,
enter and search the building or place where such evidence is located and
seize that evidence :
Provided that no authorisation referred to in sub-section (1) shall be re-
quired for search under this sub-section.
(4) The authority, seizing any record or property under this section, shall,
within a period of thirty days from such seizure, file an application,
requesting for retention of such record or property, before the Adjudicat-
ing Authority.
Search of persons.
18. (1) If an authority, authorised in this behalf by the Central Govern-
ment by general or special order, has reason to believe (the reason for
such belief to be recorded in writing) that any person has secreted about
his person or in anything under his possession, ownership or control, any
record or proceeds of crime which may be useful for or relevant to any
Page 19
ZZ1 CH- V-SUMMpNS, SEARCHES & SEIZURES • S, 18
proceedings under this Act, he may search that person and seize such
record or property which may be useful for or relevant to any proceed-
ings under this Act.
(2) The authority, who has been authorised under sub-section (1) shall
immediately after search and seizure, forward a copy of the reasons so
recorded along with material in his possession, referred to in that sub-
section, to the Adjudicating Authority in a sealed envelope, in the manner
as may be prescribed, and such Adjudicating Authority shall keep such
reasons and material for such period, as may be prescribed.
(3) Where an authority is about to search any person, he shall if such
person so requires, take such person within twenty-four hours to the near-
est Gazetted Officer, superior in rank to him, or a Magistrate:
Provided that the period of twenty-four hours shall exclude the time nec-
essary for the journey undertaken to take such person to the nearest
Gazetted Officer, superior in rank to him, or Magistrate's Court.
(4) If the requisition under sub-section (3) is made, the authority shall not
detain the person for more than twenty-four hours prior to taking him
betöre the Gazetted Officer, superior in rank to him, or the Magistrate
referred to in that sub-section:
Provided that the period of twenty-four hours shall exclude the time nec-
essary for the journey from the place of detention to the office of the
Gazetted Officer, superior in rank to him, or the Magistrate's Court.
(5) The Gazetted Officer or the Magistrate before whom any such person
in brought shall, if he sees no reasonable ground for search, forthwith
discharge such person but otherwise shall direct that search be made.
(6) Before making the search under sub-section (1) or sub-section (5) the
authority shall call upon two or more persons to attend and witness the
search, and the search shall be made in the presence of such persons.
(7) The authority shall prepare a list of record or property seized in the
course of the search and obtain the signatures of the witnesses on the list.
(3) Xo female shall be searched by any one except a female.
(9) The authority shall record the statement of the person searched under
sub-section (1) or sub-section (5) in respect of the records or proceeds of
crime found or seized in the course of the search:
Provided that no search of any person shall be made unless, in relation to
an orrence under—
(a) Paragraph 1 of Part A or Paragraph 1 or Paragraph 2 or Paragraph
3 or Paragraph 4 or Paragraph 5 of Part B of the Schedule, a report
has been forwarded to a Magistrate under section 173 of the Code
of Criminal Procedure, 1973 (2 of 1974); or
Page 20
(b) Paragraph 2 of Part A of the Schedule, a police report or a com-
Special Court constituted under sub-section ( 1) of section 36 of the
Narcotic Drugs and Psychotropic Substances Act, 1985(61 of 1985).
(10) The authority, seizing any record or property under sub-section (1)
shall, within a period of thirty days from such seizure, file an application
requesting for retention of such record or property, before the Adjudicat-
ing Authority.
Power to arrest.
19. (1) If the Director, Deputy Director, Assistant Director or any other
officer authorised in this behalf by the Central Government by general or
special order, has on the basis of material in his possession reason to
believe (the reason for such belief to be recorded in writing) that any per-
son has been guilty of an offence punishable under this Act, he may arrest
such person and shall, as soon as may be, inform him of the grounds for
such arrest.
(2) The Director, Deputy Director, Assistant Director or any other officer
shall, immediately after arrest of such person under sub-section (1), for-
ward a copy of the order along with the material in his possession, re-
ferred to in that sub-section, to the Adjudicating Authority in a sealed
envelope, in the manner, as may be prescribed and such Adjudicating
Authority shall keep such order'and material for such period, as may be
prescribed.
(3) Every person arrested under sub-section (1) shall, within twenty-four
hours, be taken to a Judicial Magistrate or a Metropolitan Magistrate, as
the case may be, having jurisdiction:
Provided that the period of twenty-four hours shall exclude the time
necessary for the journey from the place of arrest to the Magistrate's Court.
Retention of property.
20. ( 1) Where any property has been seized under section 17 or section 18,
and the officer authorised by the Director in this behalf has, on the basis
of material in his possession, reason to believe (the reason for such belief
to be recorded by him in writing) that such property is required to be
retained for the purposes of adjudication under section 8, such property
may be retained for a period not exceeding three months from the end of
the month in which such property was seized.
(2) The officer authorised by the Director immediately after he has passed
an order for retention of the property for purposes of adjudication under
section 8 shall forward a copy of the order along with the material in his
possession, referred to in sub-section (1), to the Adjudicating Authority in
Page 21
2.2á~ CH. V-SUMMONS, SEARCHES & SEIZURES S. 21
a sealed envelope, in the manner as may be prescribed and such Adjudi-
cating Authority shall keep such order and material for such period as'
may be prescribed.
(3) On the expiry of the period specified in sub-section (1), the property
shall be returned to the person from whom such property was seized un-
less the Adjudicating Authority permits retention of such property beyond
the said period.
(4) The Adjudicating Authority, before authorising the retention of such
property beyond the period specified in sub-section (1), shall satisfy him-
self that the property is prima facie involved in money-laundering and the
property is required for the purposes of adjudication under section 8.
(5) After passing the order of confiscation under sub-section (6) of section
8, the Adjudicating Authority shall direct the release of all properties other
than the properties involved in money-laundering to the person from whom
such properties were seized.
(6) notwithstanding anything contained in sub-section (5), the Director or
any officer authorised by him in this behalf may withhold the release of
any property until filing of appeal under section 26 or forty-five days from
the date of order under sub-section (5), whichever is earlier, if he is of the
opinion that such property is relevant for the proceedings before the
Appellate Tribunal.
Retention of records.
21. (1) Where any records have been seized, under section 17, or section
IS, and the Investigating Officer or any other officer authorised by the
Director in this behalf has reason to believe that any of such records are
required to be retained for any inquiry under this Act, he may retain such
records for a period not exceeding three months from the end of the month
in which such records were seized.
(2) The person, from whom records were seized, shall be entitled to obtain
copies of records retained under sub-section (1).
(3) On the expiry of the period specified under sub-section (1), the records
shall be returned to the person from whom such records were seized un-
less the Adjudicating Authority permits retention of such records beyond
the said period.
(4) The Adjudicating Authority, before authorising the retention of such
records beyond the period mentioned in sub-section (1), shall satisfy him-
self that the records are required for the purposes of adjudication under
section 8.
Page 22
S. 23
(5) After passing of an order of confiscation under sub-section (6) of sec-
tion 8, the Adjudicating Authority shall direct the release of the records to
the person from whom such records were seized.
(6) Notwithstanding anything contained in sub-section (5), the Director or
any officer authorised by him in this behalf may withhold the release of
any records until filing of appeal under section 26 or after forty-five days
from the date of order under sub-section (5), whichever is earlier if hc'is
of the opinion that such records are relevant for the proceedings before
the Appellate Tribunal.
Presumption as to records or property in certain cases.
22. (1) Where any records or property are or is found in the possession or
control of any person in the course of a survey or a search, it shall be
presumed that—
(0 such records or property belong or belongs to such person;
(/'/) the contents of such records are true; and
(Hi) the signature and every other part of such records which purport
to be in the handwriting of any particular person or which mav
reasonably be assumed to have been signed by, or to be in the
handwriting of, any particular person, are in that person's hand-
writing, and in the case of a record, stamped, executed or attested,
that it was executed or attested by the person by whom it purports
to have been so stamped, executed or attested.
(2) Where any records have been received from any place outside India
duly authenticated by such authority or person and in such manner as
may be prescribed, in the course of proceedings under this Act the
Special Court, the Appellate Tribunal or the Adjudicating Authority a's the
case may be, shall—
(a) presume, that the signature and every other part of such record
which purports to be in the handwriting of any particular person
or which the court may reasonably assume to have been signed
by, or to be in the handwriting of, any particular person, is in that
person's handwriting; and in the case of a record executed or
attested, that it was executed or attested by the person by whom it
purports to have been so executed or attested;
(b) admit the document in evidence, notwithstanding that it is not duly
stamped, if such document is otherwise admissible in evidence.
Presumption in inter-connected transactions.
23. Where money-laundering involves two or more inter-connected trans-
actions and one or more such transactions is or are proved to be involved
in money-laundering, then for the purposes of adjudication or confisca-
Page 23
S. 26
2/><i CH. VI - APPELLATE TRIBUNAL
tion under section 8, it shall, unless otherwise proved to the satisfaction of
the Adjudicating Authority, be presumed that the remaining transactions
torm part of such inter-connected transactions.
Burden of proof.
24. When a person is accused of having committed the offence under
section 3 the burden of proving that proceeds of crime are untainted pro-
perty shall be on the accused.
CHAPTER VI
APPELLATE TRIBUNAL
Establishment of Appellate Tribunal.
25. The Central Government shall, by notification, establish an Appellate
Tribunal to hear appeals against the orders of the Adjudicating Authority
and the authorities under this Act.
Appeals to Appellate Tribunal..
26. (1) Save as otherwise provided in sub-section (3), the Director or anv
person aggrieved by an order made by the Adjudicating Authority under
this Act, may prefer an appeal to the Appellate Tribunal.
(2) Any banking company, financial institution or intermediary a^rWed
by any order of the Director made under sub-section (2) of section 13
may prefer an appeal to the Appellate Tribunal.
(3) Every appeal preferred under sub-section (1) or sub-section (2) shall be
tiled within a period of forty-five days from the date on which a copy of
the order made by the Adjudicating Authority or Director is received and
it shall be in such form and be accompanied bv such fee as may be pre-
scribed:
Provided that the Appellate Tribunal may, after giving an opportunity of
being heard entertain an appeal after the expiry of the said period of forty-
dve days if it is satisfied that there was sufficient cause for not füinc'it
within that period. °
(4) On receipt of an appeal under sub-section (1) or sub-section (2) the
Appellate Tribunal may, after giving the parties to the appeal an opportu-
nity of being heard, pass such orders thereon as it thinks fit, confirming
modifying or setting aside the order appealed against. °'
(5) The Appellate Tribunal shall send a copy of every order made by ü to
the parties to the appeal and to the concerned Adjudicating Authority or
the Director, as the case may be.
(6) The appeal filed before the Appellate Tribunal under sub-section (1) or
sub-section (2) shall be dealt with by it as expeditiously as possible and
Page 24
endeavour shall be made by it to dispose of the appeal finally within six
months from the date of filing of the appeal.
Composition, etc., of Appellate Tribunal.
27. (1) The Appellate Tribunal shall consist of a Chairperson and two other
Members.
(2) Subject to the provisions of this Act —
(a) the jurisdiction of the Appellate Tribunal may be exercised by
Benches thereof;
(b) a Bench may be constituted by the Chairperson with one or two
Members as the Chairperson may deem fit;
(c) the Benches of the Appellate Tribunal shall ordinarily sit at New
Delhi and at such other places as the Central Government may, in
consultation with the Chairperson, by notification, specify;
(d) the Central Government shall, by notification, specify the areas in
relation to which each Bench of the Appellate Tribunal may exer-
cise jurisdiction.
(3) Notwithstanding anything contained in sub-section (2), the Chair-
person may transfer a Member from one Bench to another Bench.
(4) If at any stage of the hearing of any case or matter it appears to the
Chairperson or a Member that the case or matter is of such a nature that
it ought to be heard by a Bench consisting of two Members, the case or
matter may be transferred by the Chairperson or, as the case may be,
referred to him for transfer, to such Bench as the Chairperson may deem
fit.
Qualifications for appointment.
28. (1) A person shall not be qualified for appointment as Chairperson
unless he is or has been a Judge of the Supreme Court or of a High Court.
(2) A person shall not be qualified for appointment as a Member unless
he-
ia) is or has been a Judge of a High Court; or
(b) has been a Member of the Indian Legal Service and has held a post
in Grade I of that Service for at least three years; or
(c) has been a member of the Indian Revenue Service and has held
the post of Commissioner of Income-tax or equivalent post in that
Service for at least three years; or
(d) has been a member of the Indian Economic Service and has held
the post of Joint Secretary or equivalent post in that Service for at
least three years; or
Page 25
ve) has been a member of the Indian Customs and Central Excise
Service and has held the post of a Joint Secretary or equivalent
post in that Service for as least three years; or
(/) has been in the practice of accountancy as a chartered accountant
under the Chartered Accountants Act, 1949 (38 of 1949) or as a
registered accountant under any law for the time being in force or
partly as a registered accountant and partly as a chartered accoun-
tant for at least ten years:
Provided that one of the members of the Appellate Tribunal shall
be from category mentioned in clause (/); or
(g) has been a member of the Indian Audit and Accounts Service and
has held the post of Joint Secretary or equivalent post in that
Service for at least three years.
(3) No sitting Judge of the Supreme Court or of a High Court shall be
appointed under this section except after consultation with the Chief
Justice of India.
Term of office.
29. The Chairperson and every other Member shall hold office as such for
a term of five years from the date on which he enters upon his office:
Provided that no Chairperson or other Member shall hold office as such
at ter he has attained,—
(a) in the case of the Chairperson, the age of sixty-eight years;
(b) in the case of any other Member, the age of sixty-five years.
Conditions of service.
30. The salary and allowances payable to and the other terms and condi-
tions of service of the Chairperson and other Members shall be such as
may be prescribed:
Provided that neither the salary and allowances nor the other terms and
conditions of service of the Chairperson or any other Member shall be
varied to his disadvantage after appointment.
Vacancies.
I1" V°r ?f °n °ther than temP°rar>' absence, any vacancy occurs in
the office of the Chairperson or any other Member, then the Central Gov-
ernment shall appoint another person in accordance with the provisions
of this Act to fill the vacancy and the proceedings may be continued be-
fore the Appellate Tribunal from the stage at which the vacancy is filled
Page 26
S. 35 PREVENTION OF iMONEY-LAUNDERING ACT, 2002 2.28
Resignation and removal.
32. (1) The Chairperson or any other Member may, by notice in writing
under his hand addressed to the Central Government, resign his office:
Provided that the Chairperson or any other Member shall, unless he is
permitted by the Central Government to relinquish his office sooner, con-
tinue to hold office until the expiry of three months from the date of
receipt of such notice or until a person duly appointed as his successor
enters upon his office or until the expiry of his term of office, whichever is
the earliest.
(2) The Chairperson or any other Member shall not be removed from his
office except by an order made by the Central Government on the ground
of proved misbehaviour or incapacity, after an inquiry made by a person
appointed by the President in which such Chairperson or any other Mem-
ber concerned had been informed of the charges against him and given a
reasonable opportunity of being heard in respect of those charges.
Member to act as Chairperson in certain circumstances.
33. (1) In the event of the occurrence of any vacancy in the office of the
Chairperson by reason of his death, resignation or otherwise, the senior-
most Member shall act as the Chairperson until the date on which a new
Chairperson, appointed in accordance with the provisions of this Act to fill
such vacancy, enters upon his office.
(2) When the Chairperson is unable to discharge his functions owing to
absence, illness or any other cause, the scniormost Member shall discharge
the functions of the Chairperson until the date on which the Chairperson
resumes his duties.
Staff of Appellate Tribunal.
34. (1) The Central Government shall provide the Appellate Tribunal with
such officers and employees as that Government may think fit.
(2) The officers and employees of the Appellate Tribunal shall discharge
their functions under the general superintendence of the Chairperson.
(3) The salaries and allowances and other conditions of service of the
officers and employees of the Appellate Tribunal shall be such as may be
prescribed.
Procedure and powers of Appellate Tribunal.
35. (1) The Appellate Tribunal shall not be bound by the procedure laid
down by the Code of Civil Procedure, 1908 (5 of 1908), but shall be guided
by the principles of natural justice and, subject to the other provisions of
this Act, the Appellate Tribunal shall have powers to regulate its own pro-
cedure.
Page 27
219 f'n T tu vìi-appellate tribunal'^ -> :.
(2jThe Appellate Tribunal shall have, for the purposes of discharging its
functions under this Act, the same powers as are vested in a civil court
under the Code of Civil Procedure, 1908 (5 of 1908) while .trying a suit in
respect of the following matters, namely:—
(a) summoning and enforcing the attendance of any person and
examining him on oath;
(b) requiring the discovery and production of documents;
(c) receiving evidence on affidavits;
(d) subject to the provisions of sections 123 and 124 of the Indian
Evidence Act, 1872 (1 of 1872), requisitioning any public record or
document or copy of such record or document from any office;
(e) issuing commissions for the examination of witnesses or docu-
ments;
(/) reviewing its decisions;
(g) dismissing a representation for default or deciding it ex parte;
(/?) setting aside any order of dismissal of any representation for
default or any order passed by it ex parte; and
(0 any other matter, which may be, prescribed by the Central Gov-
ernment.
(3) An order made by the Appellate Tribunal under this Act shall be
executable by the Appellate Tribunal as a decree of civil court and for this
purpose, the Appellate Tribunal shall have all the powers of a civil court.
(4) Notwithstanding anything contained in sub-section (3) the Appellate
Tribunal may transmit any order made by it to a civil court havin» local
jurisdiction and such civil court shall execute the order as if it were a
decree made by that court.
(5) All proceedings before the Appellate Tribunal shall be deemed to be
judicial proceedings within the meaning of sections 193 and 228 of the
Indian Penal Code (45 of 1860) and the Appellate Tribunal shall'be deemed
to be a civil court for the purposes of sections 345 and 346 of the Code of
Criminal Procedure, 1973 (2 of 1974).
Distribution of business amongst Benches.
36. Where any Benches are constituted, the Chairperson mav, from time
to time, by notification, make provisions as to the distribution of the busi-
ness of the Appellate Tribunal amongst the Benches and also provide for
the matters which may be dealt with bv each Bench.
Page 28
Power of Chairperson to transfer cases.
37. On the application of any of the parties and after notice to the parties,
and after hearing such of them as he may desire to be heard, or on his
own motion without such notice, the Chairperson may transfer any case
pending before one Bench, for disposal, to any other Bench.
Decision to be by majority.
38. If the Members of a Bench consisting of two Members differ in opin-
ion on any point, they shall state the point or points on which they differ,
and make a reference to the Chairperson who shall either hear the point
or points himself or refer the case for hearing on such point or points by
one or more of the other Members of the Appellate Tribunal and such
point or points shall be decided according to the opinion of the majority of
the Members of the Appellate Tribunal who have heard the case, includ-
ing those who first heard it.
Right of appellant to take assistance of authorised representative and of
Government to appoint presenting officers.
39. (1) A person preferring an appeal to the Appellate Tribunal under this
Act may either appear in person or take the assistance of an authorised
representative of his choice to present his case before the Appellate Tribu-
nal.
Explanation.—For the purposes of this sub-section, the expression
"authorised representative" shall have the same meaning as assigned to it
under sub-section (2) of section 288 of the Income-tax Act, 1961 (43 of
1961).
(2) The Central Government or the Director may authorise one or more
authorised representatives or any of its officers lo act as presenting offic-
ers and every person so authorised may present the case with respect to
any appeal before the Appellate Tribunal.
Members, etc., to be public servants.
40. The Chairperson, Members and other officers and employees of the
Appellate Tribunal, the Adjudicating Authority, Director and the officers
subordinate to him shall be deemed to be public servants'within the mean-
ing of section 21 of the Indian Penal Code (45 of 1860).
Civil court not to have jurisdiction.
41. No civil court shall have jurisdiction to entertain any suit or proceed-
ing in respect of any matter which the Director, an Adjudicating Author-
ity or the Appellate Tribunal is empowered by or under this Act to deter-
mine and no injunction shall be granted by any court or other authority in
respect of any action taken or to be taken in pursuance of any power
conferred by or under this Act.
Page 29
Appeal to High Court.
42. Any person aggrieved by any decision or order of the Appellate Tribu-
nal may file an appeal to the High Court within sixty days from the date of
communication of the decision or order of the Appellate Tribunal to him
on any question of law or fact arising out of such order:
Provided that the High Court may, if it is satisfied that the appellant was
prevented by sufficient cause from filing the appeal within the said pe-
riod, allow it to be filed within a further period not exceeding sixty days.
Explanation.—For the purposes of this section, "High Court" means—
(i) the High Court within the jurisdiction of which the aggrieved party
ordinarily resides or carries on business or personally works for
gain; and
(ii) where the Central Government is the aggrieved party, the High
Court within the jurisdiction of which the respondent, or in a case
where there are more than one respondent, any of the respondents,
ordinarily resides or carries on business or personally works for
gain.
CHAPTER VII
SPECIAL COURTS
Special Courts.
43. (1) The Central Government, in consultation with the Chief Justice of
the High Court, shall for trial of offence punishable under section < by
notification designate one or more Courts of Session as Special Court or
Special Courts for such area or areas or for such case or class or group of
cases as may be specified in the notification.
Explanatioii.—In this sub-section, "High Court" means the High Court of
the State in which a Sessions Court designated as Special Court was func-
tioning immediately before such designation.
(2) While trying an offence under this Act, a Special Court shall also try an
offence other than an offence referred to in sub-section (1), with which
the accused may, under the Code of Criminal Procedure, 1973 (2 of 1974),
be charged at the same trial.
Offences triable by Special Courts.
44. (1) Notwithstanding anything contained in the Code of Criminal Pro-
cedure, 1973 (2 of 1974),— '
(a) the scheduled offence and the offence punishable under section 4
shall be triable only by the Special Court constituted for the area
in which the offence has been committed:
Page 30
Provided that the Special Court, trying a scheduled offence before
the commencement of this Act, shall contribute to try such sched-
uled offence; or
(b) a Special Court may, upon perusal of police report of the facts
which constitute an offence under this act or upon a complaint
made by an authority authorised in this behalf under this Act take
cognizance of the offence for which the accused is committed to it
for trial.
(2) Nothing contained in this section shall be deemed to affect the special
powers of the High Court regarding bail under section 439 of the Code of
Criminal Procedure, 1973 (2 of 1974) and the High Court may exercise
such powers including the power under clause (b) of sub-section (1) of
that section as if the reference to "Magistrate" in that section includes also
a reference to a "Special Court" designated under section 43.
Offences to be cognizable and non-bailable.
45. (1) Notwithstanding anything contained in the Code of Criminal Pro-
cedure, 1973 (2 of 1974),—
(a) every offence punishable under this Act shall be cognizable;
(b) no person accused of an offence punishable for a term of impris-
onment of more than three years under Part A of the Schedule
shall be released on bail or on his own bond unless—
(0 the Public Prosecutor has been given an opportunity to op-
pose the application for such release; and
(it) where the Public Prosecutor opposes the application, the court
is satisfied that there are reasonable grounds for believing
that he is not guilty of such offence and that he is not likely to
commit any offence while on bail :
Provided that a person, who, is under the age of sixteen years,
or is a woman or is sick or infirm, may be released on bail, if
the Special Court so directs :
Provided further that the Special Court shall .not take cogni-
zance of any offence punishable under section 4 except upon
a complaint in writing made by—
(0 the Director; or
(n) any officer of the Central Government or State Govern-
ment authorised in writing in this behalf by the Central
Government by a general or a special order made in this
behalf by that Government.
Page 31
2 " CH.Vm- AUTHORITIES $.4$
(2) The limitation on granting of bail specified in clause (b) of sub-section
(1) is in addition to the limitations under the Code of Criminal Procedure,
1973 (2 of 1974) or any other law for the time being in force on granting of
bail.
Application of Code of Criminal Procedure, 1973 to proceedings before
Special Court.
46. (1) Save as otherwise provided in this Act, the provisions of the Code
of Criminal Procedure, 1973 (2 of 1974) (including the provisions as to
bails or bonds), shall apply to the proceedings before a Special Court and
for the purposes of the said provisions, the Special Court shall be deemed
to be a Court of Session and the persons conducting the prosecution be-
fore the Special Court, shall be deemed to be a Public Prosecutor :
Provided that the Central Government may also appoint for any case or
class or group of cases a Special Public Prosecutor.
(2) A person shall not be qualified to be appointed as a Public Prosecutor
or a Special Public Prosecutor under this section unless he has been in
practice as an Advocate for not less than seven years, under the Union or
a State, requiring special knowledge of law.
(3) Every person appointed as a Public Prosecutor or a Special Public Pros-
ecutor under this section shall be deemed to be a Public Prosecutor within
the meaning of clause (it) of section 2 of the Code of Criminal Procedure,
1973 (2 of 1974) and the provisions of that Code shall have effect accord-
ingly.
Appeal and revision.
47. The High Court may exercise, so far as may be applicable, all the pow-
ers conferred by Chapter XXIX or Chapter XXX of the Code of Criminal
Procedure, 1973 (2 of 1974), on a High Court, as if a Special Court within
the local limits of the jurisdiction of the High Court were a Court of Ses-
sion trying cases within the local limits of the jurisdiction of the High Court.
CHAPTER VIII
AUTHORITIES
Authorities under Act.
48. There shall be the following classes of authorities for the purposes of
this Act, namely :—
(a) Director or Additional Director or Joint Director,
(b) Deputy Director,
(c) Assistant Director, and
Page 32
(cl) such other class of officers as may be appointed for the purposes
of this Act.
Appointment and powers of authorities and other officers.
49. (1) The Central Government may appoint such persons as it thinks fit
to be authorities for the purposes of this Act.
(2) Without prejudice to the provisions of sub-section (1), the Central Gov-
ernment may authorise the Director or an Additional Director or a Joint
Director or a Deputy Director or an Assistant Director appointed under
that sub-section to appoint other authorities below the rank of an Assis-
tant Director.
(3) Subject to such conditions and limitations as the Central Government
may impose, an authority may exercise the powers and discharge the du-
ties conferred or imposed on it under this Act.
Powers of authorities regarding summons, production of documents and
to give evidence, etc.
50. (1) The Director shall, for the purposes of section 13, have the same
powers as are vested in a Civil Court under the Code of Civil Procedure,
1908 (5 of 1908) while trying a suit in respect of the following matters,
namely :—
(a) discovery and inspection;
(b) enforcing the attendance of any person, including any officer of a
banking company or a financial institution or a company, and ex-
amining him on oath;
(c) compelling the production of records;
(d) receiving evidence on affidavits;
(e) issuing commissions for examination of witnesses and documents;
and
(/) any other matter which may be prescribed.
(2) The Director, Additional Director, Joint Director, Deputy Director or
Assistant Director shall have power to summon any person whose atten-
dance he considers necessary whether to give evidence or to produce any
records during the course of any investigation or proceeding under this
Act.
(3) All the persons so summoned shall be bound to attend in person or
through authorised agents, as such officer may direct, and shall be bound
to state the truth upon any subject respecting which they are examined or
make statements, and produce such documents as may be required.
Page 33
(4) Every proceeding under sub-sections (2) and (3) shall be deemed to be
a judicial proceeding within the meaning of section 193 and section 228 of
the Indian Penal Code (45 of 1860).
(5) Subject to any rules made in this behalf by the Central Government
any officer referred to in sub-section (2) may impound and retain in his
custody for such period, as he thinks fit, any records produced before him
in any proceedings under this Act :
Provided that an Assistant Director or a Deputy Director shall not—
(a) impound any records without recording his reasons for so doing;
oi-
Cè) retain in his custody any such records for a period exceeding three
months, without obtaining the previous approval of the Director.
Jurisdiction of authorities.
51.(1) The authorities shall exercise all or any of the powers and perform
all or any of the functions conferred on, or, assigned, as the case may be
to such authorities by or under this act or the rules framed thereunder in
accordance with such directions as the Central Government may issue
tor the exercise of powers and performance of the functions by all or any
of the authorities.
(2) In issuing the directions or orders referred to in sub-section (1), the
Central Government may have regard to any one or more of the following
criteria, namely:— °
(a) territorial area;
(b) classes of persons;
(c) classes of cases; and
(ct) any other criterion specified by the Central Government in this
behalf.
Power of Central Government to issue directions, etc.
52. The Central Government may, from time to time, issue such orders
instructions and directions to the authorities as it may deem fit for the
proper administration of this Act and such authorities and all other per-
sons employed in execution of this Act shall observe and follow such or-
ders, instructions and directions of the Central Government :
Provided that no such orders, instructions or directions shall be issued so
as to—
(a) require any authority to decide a particular case in a particular
manner; or
(b) interfere with the discretion of the Adjudicating Authority in exer-
cise of his functions.
Page 34
Empowerment of certain officers.
53. The Central Government may, by a special or general order, empower
an officer not below the rank of Director of the Central Government or of
a State Government to act as an authority under this Act:
Provided that the Central Government may empower an officer below
the rank of Director if the officer of the rank of the Director or above are
not available in a particular area.
Certain officers to assist in inquiry, etc.
54. The following officers are hereby empowered and required to assist
the authorities in the enforcement of this Act, namely:—
(a) officers of the Customs and Central Excise Departments;
(b) officers appointed under sub-section (1) of section 5 of the Nar-
cotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985);
(c) income-tax authorities under sub-section (1) of section 117 of the
Income-tax Act, 1961 (43 of 1961);
(ct) officers of-the stock exchange recognised under section 4 of the
Securities Contracts (Regulation) Act, 1956 (42 of 1956);
(e) officers of the Reserve Bank of India constituted under sub-sec-
tion (1) of section 3 of the Reserve Bank of India Act 1934 (2 of
1934); ^
(/) officers of Police;
(g) officers of enforcement appointed under sub-section (1) of section
36 of the Foreign Exchange Management Act, 1999 (40 of 1999);
(h) officers of the Securities and Exchange Board of India established
under section 3 of the Securities and Exchange Board of India Act
1992 (15 of 1992);
(0 officers of any other body corporate constituted or established
under a Central Act or a State Act;
0) such other officers of the Central Government, State Government,
; local authorities or banking companies as the Central Government
may, by notification, specify, in this behalf. ,.'
CHAPTER IX . ••.-.-
RECIPROCAL ARRANGEMENT FOR ASSISTANCE IN CERTAIN
MATTERS AND PROCEDURE FOR ATTACHMENT AND
CONFISCATION OF PROPERTY
"'* Definitions. . - ■'.-•. ~ "'
_ . ^^ tn&Chaptery unless the context otherwise requires,— 1 !
Page 35
respfctbf1^6" meansany Tntrl br Place- °utside',India in
respect or which arrangements have been made, by the Central
XS ^ernment of such country through a treaty
(¿) "identifying" includes establishment of a proof that the property
sTcdonT ' °r USed Ìn the COmmiss^ °f an offencTuS
{C) ment"iftleT^ ^7?^ the nature, source, disposition, move-
ment, title or ownership of property.
Agreements with foreign countries.
56. (1) The Central Government may enter into an agreement with the
Government of any country outside India for- -reemcnt wth the
(a) enforcing the provisions of this Act;
(b) exchange of information for the prevention of any offence under
n 4 IT fr the COr,reSp0nding laW in forcc in t hat country or
investigation of cases relating to any offence under this Act-
and may, by notification in the Official Gazette, make such provisions ^
may be necessary for implementing the agreement. Pm^°™ as
(2) The Central Government may, by notification in the Official Gazette
direct hat the application of this Chapter in relation to a con ac in. S ate
i h which reciprocal arrangements have been made, sh^sublectto
noïLCa0Soï0nS' eXCCPtÌOnS °r «uaüficatí™ - -e specificdÄ salì
Letters of request to a contracting State in certain cases.
:>7 (1) Notwithstanding anything contained in this Act or the Code of Crimi
nal Procedure, 1973 (2 of 1974) if, in the course of an investigation intoni'
offence or other proceedings under this Act, an application,smade ?oa
Spccal Court by the Investigating Officer or anv officer superior S Ank
to the Investigating Officer that any evidence is requiredl!, connection
m h investigation into an offence or proceedings under this Act in The is
of the opinion that such evidence may be available in anv place ?n a con
t acting State, and the Special Court, on being satisfied ?W such rvT
cence ,s required in connection with the investigai^tt an o fenCe or
P oceedmgs under this Act, may issue a letter of request to the court or an
authority in the contracting State competent to ileal with such request
(0 examine facts and circumstances of the case
00 requeSstandePS " ^ ^^ C°Urt ^ ^ in Such '"ter of
Page 36
S. 59
(Hi) forward all the evidence so taken or collected to the Special Court
issuing such letter of request.
(2) The letter of request shall be transmitted in such manner as the Cen-
tral Government may specify in this behalf.
(3) Every statement recorded or document or thing received under sub-
section (1) shall be deemed to be the evidence collected during the course
of investigation.
Assistance to a contracting State in certain cases.
58. Where a letter of request is received by the Central Government from
a court or authority in a contracting State requesting for investigation
into an offence or proceedings under this Act and forwarding to such
court or authority any evidence connected therewith, the Central Gov-
ernment may forward such letter of request to the Special Court or to any
authority under the Act as it thinks fit for execution of such request in
accordance with the provisions of this Act or as the case may be any
other law for the time being in force. '
Reciprocal arrangements for processes and assistance for transfer of
accused persons.
59. (1) Where a Special Court, in relation to an offence punishable under
section 4, desires that—
(a) a summons to an accused person, or
(b) a warrant for the arrest of an accused person, or
(c) a summons to any person requiring him to attend and produce a
document or other thing, or to produce a document or other thing
or to produce it, or
(d) a search warrant,
issued by it shall be served or executed at any place in any contracting
btate, it shall send such summons or warrant in duplicate in such form to
such Court, Judge or Magistrate through such authorities, as the Central
Government may, by notification, specify in this behalf and that Court
Judge or Magistrate, as the case may be, shall cause the same to be exe-
cuted.
(2) Where a Special Court, in relation to an offence punishable under sec-
tion 4 has received for service or execution—
(a) a summons to an accused person, or
(b) a warrant for the arrest of an accused person, or
(c) a summons to any person requiring him to attend and produce a
document or other thing, or to produce it, or
(d) a search-warrant,
Page 37
2.39 CH.IX- ARRANGEMENT & PROCEDURE,FÇRATTACHMENT. ETC. .8.00
received by ,,from another^* " £ ^rìfo™^"
execution within its local jurisdiction; and where-
(Ö beWdcTwSfh^St ^ been eXlCrd' the PCrSOn arrested «hall,
section 19 accordance with the procedure specified under^
(ii) a search warrant has been executed, the things found n this search
shall, so far as possible be dealt with in accordance with the proce
dure specified under sections 17 and 18: P
Provided that in a case where a summon or search warrant received from
ducT Zg ST Hï been eXeCUted"the documents or 1er Sngs ^
duced or things found in the search shall be forwarded to the Court issu
mgithe summons or search warrant through such authority as the Cen-"
tial Government may, by notification, specify in this behalf
(3) Where a person transferred to a contracting State pursuant to sub
section (2) is a prisoner in India, the Special Court or the^Cen ^Govern"
mem may impose such conditions as that Court or Governmentdc™ fS"
(4 Where the person transferred to India pursuant to sub-section (I) is a
St"::h„nMndir,ZUrC and COnfiSCali0n' etC- °f I™™ - • "i„g
60. (1) Where the Director has made an order for attachment of anv nron
appointed under sub-section (1) of section 10, as the case iTvbe m,v
a2cpo^
con iscation of the property in India, derived or obtained dïccdv^r indi
rectly by any person from the commission of an offence uñde ec ion 3
committed in that contracting State the Central Govcrnmen m for
uard such letter of request to the Director, as it thinks fit, forexclut ion in
accordance with the provisions of this Act. execution in
Page 38
(3) The Director shall, on receipt of a letter of request under section 58 or
section 59, direct any authority under this Act to take all steps necessary
for tracing and identifying such property.
(4) The steps referred to in sub-section (3) may include any inquiry, inves-
tigation or survey in respect of any person, place, property, assets,' docu-
ments, books of account in any bank or public financial institutions or
any other relevant matters.
(5) Any inquiry, investigation or survey referred to in sub-section (4) shall
be carried out by an authority mentioned in sub-section (3) in accordance
with such directions issued in accordance with the provisions of this Act.
(6) The provisions of this Act relating to attachment, adjudication, confis-
cation and vesting of property in Central Government contained in Chap-
ter III and survey, searches and seizures contained in Chapter V shall
apply to the property in respect of which letter of request is received from
a court or contracting State for attachment or confiscation of property.
Procedure in respect of letter of request.
61. Every letter of request, summons or warrant, received by the Central
Government from and every letter of request, summons or warrant, to be
transmitted to a contracting State under this Chapter shall be transmitted
to a contracting State or, as the case may be, sent to the concerned Court
in India and in such form and in such manner as the Central Government
may, by notification, specify in this behalf.
CHAPTER X
MISCELLANEOUS
Punishment for vexatious search.
62. Any authority or officer exercising powers under this Act or anv rules
made thereunder, who, without reasons recorded in writing —
to'
(a) searches or causes to be searched any building or place; or
(b) detains or searches or arrests any person,
shall for every such offence be liable on conviction for imprisonment for a
term which may extend to two years or fine which may extend to fifty
thousand rupees or both.
Punishment for false information or failure to give information, etc.
63. (1) Any person wilfully and maliciously giving false information and
so causing an arrest or a search to be made under this Act shall on convic-
tion be liable for imprisonment for a term which may extend to two years
or with fine which may extend to fifty thousand rupees or both.
Page 39
2.4T ' ' .'ÇH.X.MISCELLANEOUS '-, v 1-. . ' ^S. 66
(2) If,ariy person,-p- \ '-. • • 't
(a) being legally bound to state the truth of any matter relating tp an
offence under section 3, refuses to answer any question put to him
by an authority in the exercise of its powers under this Act; of
(b) refuses to sign any statement made by him in the course of any
proceedings under this Act, which an authority may legally require
to sign; or /
(c) to whom a summon is issued under section 50 either to attend to
give evidence or produce books of account or other documents at
a certain place and time.prnits to attend or produce books of ac-
count or documents at the place or time,
he shall pay, by way of penalty, a sum which shall not be less than five
hundred rupees but which may extend to ten thousand rupees for each
such default or failure.
(3) No order under this section shall be passed by an authority referred to
in sub-section (2) unless the person on whom the penalty is proposed to be
imposed is given an opportunity of being heard in the matter by such
authority.
Cognizance of offences.
64. (1) No court shall take cognizance of any offence under section 62 or
sub-section (1) of section 63 except with the previous sanction of the Cen-
tral Government.
(2) The Central Government shall, by an order cither give sanction or refuse
to give sanction within ninetv days of the receipt of the request in this
behalf.
Code of Criminal Procedure, 1973 to apply.
65. The provisions of the Code of Criminal Procedure, 1973 (2 of 1974)
shall apply, in so far as they are not inconsistent with the provisions of this
Act, to arrest, search and seizure, attachment, confiscation, investigation,
prosecution and all other proceedings under this Act.
Disclosure of information.
66. The Director or any other authority specified by him by a general or
special order in this behalf may furnish or cause to be furnished to—
(;) any officer, authority or body performing any functions under
any law relating to imposition of any tax, duty or cess or to deal-
ings in foreign exchange, or prevention of illicit traffic in the
narcotic drugs and psychotropic substances under the Narcotic
Drugs and Psychotropic Substances Act, 1985 (61 of 1985); or
(n) such other officer, authority or body performing functions under
any other law as the Central Government may, if in its opinion it is
Page 40
necessary so to do in the public interest, specify, by notification in
the Official Gazette, in this behalf, any information received or
obtained by such Director or any other authority, specified by him
in the performance of their functions under this Act, as may, in the
opinion of the Director or the other authority, so specified by him,
be necessary for the purpose of the officer, authority or bodyspeci-
fied in clause (;) or clause (it) to perform his or its functions under
that law.
Bar of suits in civil courts.
67. \To suit shall be brought in any civil court to set aside or modify any
proceeding taken or order made under this Act and no prosecution, suit
or other proceeding shall lie against the Government or any officer of the
Government for anything done or intended to be done" in good faith
under this Act.
Notice, etc., not to be invalid on certain grounds.
68. No notice, summons, order, document or other proceeding, furnished'
or made or issued or taken or purported to have been furnished or made
or issued or taken in pursuance of any of the provisions of this Act shall be
invalid, or shall be deemed to be invalid merely by reason of any mistake,
defect or omission in such notice, summons, order, document or other
proceeding if such notice, summons, order, document or other proceed-
ing is in substance and effect in conformity with or according to the intent
and purpose of this Act.
Recovery of fines.
69. Where any fine imposed on any person under section 13 or section 63
is not paid within six months from the day of imposition of fine, the Direc-
tor or any other officer authorised by him in this behalf may proceed to
recover the amount from the said person in the same manner as
prescribed in Schedule II of the Income-tax Act, 1961 (43 of 1961) for the
recovery of arrears and he or any officer authorised by him in this behalf
shall have all the powers of the Tax Recovery Officer mentioned in the
said Schedule for the said purpose.
Offences by companies.
70. (1) Where a person committing a contravention of any of the provi-
sions of this Act or of any rule, direction or order made thereunder is a
company, every person who, at the time the contravention was commit-
ted, was in charge of, and was responsible to the company, for the con-
duct of the business of the company as well as the company, shall be
deemed to be guilty of the contravention and shall be liable to be pro-
ceeded against and punished accordingly :'
Page 41
Provided that nothing containing in this sub-section shall render ahy such
person liable to punishment if he proves that the contravention took place
without his knowledge or that he exercised all due diligence.to prevent
such contravention.
(2) Notwithstanding anything contained in sub-section (1), where a con-
travention of any of the provisions of this Act or of any rule, direction or
order made thereunder has been committed by a company and it is proved
that the contravention has taken place with the consent or connivance of,
or is attributable to any neglect on the part of any director, manager, sec-
retary or other officer of any company, such director, manager, secretary
or other officer shall also be deemed to be guilty of the contravention and
shall be liable to be proceeded against and punished accordingly.
Explanation.—For the purposes of this section,—
(i) "company" means any body corporate and includes a firm or other
association of individuals; and
(ii) "director", in relation to a firm, means a partner in the firm.
Act to have overriding effect.
71. The provisions of this Act shall have effect notwithstanding anything
inconsistent therewith contained in any other law for the time being in
force.
Continuation of proceedings in the event of death or insolvency.
72.(1) Where-
of) any property of a person has been attached under section 8 and no
appeal against the order attaching such property has been pre-
ferred; or
(b) any appeal has been preferred to the Appellate Tribunal, and—
(;) in a case referred to in clause (a), such person dies or is adju-
dicated an insolvent before preferring an appeal to the Appel-
late Tribunal; or
(ii) in a case referred to in clause (b), such person dies or is adju-
dicated an insolvent during the pendency of the appeal,
thon, it shall be lawful for the legal representatives of such person or the
official assignee or the official receiver, as the case may be, to prefer an
appeal to the Appellate Tribunal or as the case may be, to continue the
appeal before the Appellate Tribunal, in place of such person and the pro-
visions of section 26 shall, so far as may be, apply, or continue to apply, to
such appeal.
Page 42
S- 73 PREVENTION' OF MONEY-LAUNDERING ACT, 2002 2.44
(2) Where—
(a) after passing of a decision or order by the Appellate Tribunal, no
appeal has been preferred to the High Court under section 42; ov
(b) any such appeal has been preferred to the High Court,—
then—
(0 in a case referred to in clause (a), the person entitled to file the
appeal dies or is adjudicated an insolvent before preferring
an appeal to the High Court, or
(ii) in a case referred to in clause (b), the person who had filed the
appeal dies or is adjudicated an insolvent during the pendency
of the appeal before the High Court,
then, it shall be lawful for the legal representatives of such person, or the
official assignee or the official receiver, as the case may be, to prefer an
appeal to the High Court or to continue the appeal before the High Court
in place of such person and the provision of section 42 shall, so far as may
be, apply, or continue to apply to such appeal.
(3) The powers of the official assignee or the official receiver under sub-
section (1) or sub-section (2) shall be exercised by him subject to the pro-
visions of the Presidency-towns Insolvency Act, 1909 (3 of 1909) or the
Provincial Insolvency Act, 1920 (5 of 1920), as the case may be.
Power to make rules.
73. (1) The Central Government may, by notification, make rules for car-
rying out the provisions of this Act.
(2) In particular, and without prejudice to the generality of the foregoing
power, such rules may provide for all or any of the following matters]
namely :—
(a) the form in which records referred to in this Act may be main-
tained;
(b) the manner in which the order and the materiafreferred to in sub-
section (2) of section 5 to be maintained;
(c) matters in respect of experience of Members under sub-section (3)
of section 6;
(d) the salaries and allowances payable to and other terms and condi-
tions of service of Members of the Adjudicating Authority under
(e) the salaries and allowances payable to and other terms and condi-
tions of service of the officers and employees of the Adjudicating
Authority under sub-section (3) of section 7;
Page 43
•(/) the manner in whldh and the conditions* Subject tö which thViSrop
erties confiscated may bé received arid managed under sub-sec-
tion (2) of section 10;
(g) the additional matters in respect of which the Adjudicating Au-
thority may exercise the powers of a civil court under clause (/) of
(h) the nature and value of transactions in respect of which records
shall be maintained under clause (a) of sub-section (1) of section
(0 the time within which the information of transactions under clause
(b) of sub-section (1) of section 12 shall be furnished;
(;) the manner in which records shall be verified and maintained by
banking companies, financial institutions and intermediaries un-
der clause (c) of sub-section (1) of section 12;
(k) the procedure and the manner of maintaining and furnishing in-
formation under sub-section (1) of section 12 as required under
section 15;
(t) the manner in which the reasons and the material referred to in
sub-section (2) of section 16 shall be maintained;
(m) the rules relating to search and seizure under sub-section (1) of
section 17;
(n) the manner in which the reasons and the material referred to in
(o) the manner in which the reasons and the material referred to in
(p) the manner in which the order and the material referred to in sub-
section (2) of section 19 shall be maintained;
(q) the manner in which records authenticated outside India may be
received under sub-.section (2) of section 22;
(;■) the form of appeal and the fee for filing such appeal, under sub-
(s) the salary and allowances payable to and the other terms and con-
ditions of service of the Chairperson and other Members of the
Appellate Tribunal under section 30;
(0 the salaries and allowances and the conditions of service of the
officers and employees of the Appellate Tribunal under sub-sec-
tion (3) of section 34;
Page 44
Sch. PREVENTION OF MONEY-LAUNDERING ACT, 2002 2.46
(it) the additional matters in respect of which the Appellate Tribunal
may exercise the powers of a civil court under clause (i) of sub-
(v) the additional matters in respect of which the authorities may ex-
ercise powers of a civil court under clause (/) of sub-section (1) of
section 50;
(u1) the rules relating to impounding and custody of records under sub-
(x) any other matter which is required to be, or may be, prescribed.
Rules to be laid before Parliament.
74. Every rule made under this Act shall be laid, as soon as may be after it
is made, before each House of Parliament, while it is in session, for a total
period of thirty days which may be comprised in one session or in two or
more successive sessions, and if, before the expiry of the session immedi-
ately following the session or the successive sessions aforesaid, both Houses
agree in making any modification in the rule or both Houses agree that
the rule should not be made, the rule shall thereafter have effect only in
such modified form or be of no effect, as the case may be; so, however,
that any such modification or annulment shall be without prejudice to the
validity of anything previously done under that rule.
Power to remove difficulties.
75. (1) If any difficulty arises in giving effect to the provisions of this Act,
the Central Government may, by order, published in the Official Gazette,
make such provisions not inconsistent with the provisions of this Act as
may appear to be necessary for removing the difficulty :
Provided that no order shall be made under this section after the expiry
of two years from the commencement of this Act.
(2) Every order made under this section shall be laid, as soon as may be
after it is made, before each House of Parliament.
SCHEDULE
[See section 2(j)]
PARTA
PARAGRAPH 1
OFFENCES UNDER THE INDIAN PENAL CODE
Section Description of offence
121 Waging, or attempting to wage war or abetting waging of
war, against the Government of India.
Page 45
121A Conspiracy to commit offences punishable by section 121
against the State.
PARAGRAPH 2
OFFENCES UNDER THE NARCOTIC DRUGS AND PSYCHOTROPIC
SUBSTANCES ACT, 1985
15 Contravention in relation to poppy straw.
18 Contravention in relation to opium poppy and opium.
20 Contravention in relation to cannabis plant and cannabis.
22 Contravention in relation to psychotropic substances.
23 Illegal import into India, export from India or transhipment
of narcotic drugs and psychotropic substances.
24 External dealings in narcotic drugs and psychotropic sub-
stances in contravention of section 12 of the Narcotic
Drugs and Psychotropic Substances Act, 1985.
25A Contravention of orders made under section 9A of *he
Narcotic Drugs and Psychotropic Substances Act, 1985.
27A Financing illicit traffic and harbouring offenders.
29 Abetment and criminal conspiracy.
PARTB
PARAGRAPH 1
OFFENCES UNDER THE INDIAN PENAL CODE
Scciion Description of offence
302 Murder.
304 Culpable homicide not amounting to murder, if act by
which the death is caused is done with the intention of
causing death.
307 Attempt to murder.
308 Attempt to commit culpable homicide.
327 Voluntary causing hurt to extort property, or a valuable
security, or to constrain to do anything which is illegal or
which may facilitate the commission of the offence.
329 Voluntary causing grievous hurt to extort property, or a
valuable security, or to constrain to do anything which is
Page 46
illegal or which may facilitate the commission of the of-
fence.
364A Kidnapping for ransom, etc.
384 to 389 Offences relating to extortion.
392 to 402 Offences relating to robbery and dacoity.
467 Forgery of a valuable security, will or authority to make
or transfer any valuable security, or to receive any moncv,
etc.
489A Counterfeiting currency notes or bank notes.
4S9B Using as genuine, forged or counterfeit currency notes or
bank notes.
PARAGRAPH 2
OFFEXCES U.XDER THE ARMS ACT, 1959
25 To manufacture, sell, transfer, convert, repair or test or
prove or expose or offer for sale or transfer or have in his
possession for sale, transfer, conversion, repair, test or
proof, any arms or ammunition in contravention of sec-
tion 5 of the Arms Act, 1959.
To acquire, have in possession or carry any prohibited arms
or prohibited ammunition in contravention of section 7 of
the Arms Act, 1959.
Contravention of section 24A of the Arms Act, 1959 relat-
ing to prohibition as to possession of notified arms in dis-
turbed areas, etc.
Contravention of section 24B of the Arms Act, 1959 relat-
ing to prohibition as to carrying of notified arms in or
through public places in disturbed areas.
Other offences specified in section 25.
26 To do any act in contravention of any provisions of sec-
, tion 3, 4, 10 or 12 of the Arms Act, 1959 in such manner as
specified in sub-section (1) of section 26 of the said Act.
To do any act in contravention of any provisions of sec-
tion 5, 6, 7 or 11 of the Arms Act, 1959 in such manner as
- specified in sub-section (2) of section 26 of the said Act.
.• -, Other offences specified in section 26.
Page 47
?49 OFFENCES UNDER WILD LIFE^PROTECTION) ACT Seh/
Section Description of offence ~*J \ : - : ■ ' • ■' r—_~ ~ "
27 Use of ai™s or ammunition:* in contravention of section 5
or use of any arms or ammunition in contravention of
section 7 of the Arms Act, 1959. •-
28 Use and possession of fire arms or imitation fire arms in
certain cases.
29 Knowingly purchasing arms from unlicensed person or
for delivering arms, etc., to person not entitled to possess
the same.
30 Contravention of any condition of a licence or any provisions of the Arms Act, 1959
or any rule made thereunder.
PARAGRAPH 3
OFFENCES UNDER THE WILD LIFE (PROTECTION) ACT, ¡972
Section Description of offence "
51 Contravention of provisions of section 17A
read with section 17A relating to prohibition of picking, uprooting, etc.,
of specified plants.
3 ' Contravention of provisions of section 39 relat-
read with section 39 ing to wild animals, etc., to be Government prop-
erty. .'....:
31 Contravention of provisions of section 44 relat-
read with section 44 ing to dealings in trophy and animal articles with-
out licence prohibited.
3 ' Contravention of provisions of section 48 relat-
read with section 48 ing to purchase of animal, etc., by licensee.
D' Contravention of provisions of section. 49B re-
read with section 49B lating to prohibition of dealings in trophies, ani-
mal articles, etc., derived from scheduled ani-
mals.
Page 48
PARAGRAPH 4
OFFEXCES UNDER THE IMMORAL TRAFFIC (PREVENTION) ACT, 1956
5 Procuring, inducing or taking person for the sake of prosti-
tution.
6 Detaining a person in premises where prostitution is car-
ried on.
8 Seducing or Soliciting for purpose ot prostitution.
9 Seduction of a person in custody.
PARAGRAPHS
( ;/■ / /i'.YC 'ES I XDER THE PR E1 'EXTIOX OF COR RI P TlOX ACT, I ■) > S
7 Public servant taking gratification other than legal remu-
neration in respect of an official Act.
8 Taking gratification in order, by corrupt or illegal means,
to influence public servant.
9 Taking gratification for exercise of personal influence, with
public servant.
10 Abetment by public servant of offences defined in section
S or section 9 of the Prevention of Corruption .Act, 1988.

Money Laundering in India

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Money Laundering in India

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money laundering in india

What is Money Laundering ?

Prevention of Money Laundering Act, 2002

Anti Money Laundering Regime in India

Money Laundering Methods and Trends

FATF-XVI (10 Juin 2005)

Alternative remittance system

Money laundering vulnerabilities in the insurance sector

Proceeds from trafficking in human beings and illegal immigration

ML/TF trends and indicators: initial perspectives

Wire transfers and terrorist financing

Non-profit organisations and links to terrorist financing

The vulnerabilities of the insurance sector to money laundering

Politically exposed persons (PEPs)

The role of “gatekeepers” or non financial professions in money laundering

FATF-XIV (14 February 2003)

Money Laundering through the securities sector

The gold and diamond markets

Insurance and money laundering

Credit and debit cards and money laundering

Corruption and private banking

Bearer securities and other negotiable instruments

Co-ordinated money laundering among organised crime groups

Introduction of euro banknotes

Suspicious transaction reporting and money laundering cases

FATF-XII (1 February 2001)

On-line banking and Internet casinos

Trust, other non-corporate vehicles and money laundering

Lawyers/notaries, accountants and other professionals

The role of cash vs other payment methods in money laundering schemes

Terrorist related money laundering

FATF-XI (3 February 2000)

Alternate Remittance Systems: A world-wide view of their role in money laundering.

Company formation agents and their services.

Trade related activities and money laundering.

Selected case studies.

FATF-X (11 February 1999)

The single European currency and large denomination banknotes.

Offshore financial centres of non-cooperative countries or territories.

The role of the "foreign legal entity" in money laundering.

New payment technologies.

Potential use of the gold market in money laundering operations.

Selected case studies.

FATF-IX (12 February 1998)

Money remittance businesses and activities (both formal and informal).

Selected case studies.

FATF-VIII (6 February 1997)

Attempts to estimate the size of the money laundering problem.

Principal sources of illegal proceeds laundered.

Electronic funds transfers and their vulnerability to money laundering.

New money laundering counter-measures (legislative, regulatory, etc.).

Key money laundering trends in non-FATF members.

FATF-VII (28 June 1996)

In other jurisdictions suspicion-based requirements may be placed on financial services

[edit] Irregular funding

[edit] Captive business

[edit] United Kingdom

The United Kingdom has an "all-crimes" regime[clarification needed].

Money laundering legislation in the UK is governed by three Acts of primary legislation:-

 The Terrorism Act 2000[2]

Professional guidance (which is submitted to and approved by the UK Treasury) is provided by

[edit] Bureaux de change

[edit] United States

[edit] NASA case