Prevention of money laundering act, 2002 by Hetal Bhadra
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Prevention of money laundering act, 2002 by Hetal Bhadra

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Prevention of money laundering act, 2002 by Hetal Bhadra Prevention of money laundering act, 2002 by Hetal Bhadra Presentation Transcript

  • PREVENTION OF MONEY LAUNDERING ACT, 2002 PRESENTED BY : HETAL BHADRA
  • INTRODUCTION  The Prevention of Money Laundering Act came into force w.e.f. 1st July,2005.  The Act was amended by the prevention of money laundering (Amendment) act 2009 w.e.f. 1st June,2009.  Further it amended by the prevention of money laundering act (Amendment) act 2012 w.e.f. 15th Feb,2013  This Act extends to whole of India including the state of Jammu & Kashmir.
  • OBJECT OF THIS ACT  It is an act to prevent Money Laundering and to provide for confiscation of property derived from, or involved in, money laundering and to punish those who commit the offence of money laundering.
  • WHAT IS MONEY LAUNDERING?  The goal of a large number of criminal activities is to generate profit for an individual or a group. Money laundering is the processing of these criminal proceeds to disguise their illegal origin.  Illegal arms sales, smuggling, other organized crime, drug trafficking and prostitution rings can generate huge mounts of money. The money so generated is tainted and is in the nature of ‘dirty money’. Money Laundering is the process of conversion of such proceeds of crime, the ‘dirty money’, to make it appear as ‘legitimate’ money.
  • MONEY Thef LAUNDERING INCLUDES : Tax evasion t Fraud Human trafficking Drug trafficking Robbery Prostitution Terrorism Arms smuggling Corrupt practices
  • IMPORTANT DEFINITIONS 1. “Attachment" means prohibition of transfer, conversion, disposition or movement of property by an order issued under Chapter III. 2. Person Includes - An Individual, HUF, Company , Firm , AOPs , BOIs, 3. "proceeds of crime" means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property. [Section 2(1)(u)]
  • 4. "scheduled offence" means –  The offences listed in the Schedule to the Prevention of Money Laundering Act, 2002 are scheduled offences10 in terms of Section 2(1)(y) of the Act. The scheduled offences are divided into two parts - Part A & Part C.  In part A, offences to the Schedule have been listed in 28 paragraphs Part ‘C’ deals with trans-border crimes, and is a vital step in tackling Money Laundering across International Boundaries.  Annexure - A
  • 5. "property" means any property or assets of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible and includes deeds and instruments evidencing title to, or interest in, such property or assets, wherever located;
  • WHAT IS THE OFFENCE OF MONEY LAUNDERING?  Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money laundering (Section 3)
  • HOW DOES MONEY LAUNDERING TAKE PLACE ? The process of Money Laundering generally involve the following three stages :
  • 1. Placement This is the first step of the money-laundering process and the ultimate aim of this phase is to remove the cash from the location of acquisition so as to avoid detection from the authorities. Ex: Dividing large amount of money into less smaller terms that are deposited directly into different bank account.
  • 2. Layering Layering involves moving funds around the financial system, often in a complex serious of transactions to create confusion and complicate the paper trail. Ex: Exchanging money in larger or smaller amount, or transferring funds to numerous accounts in one or more financial institutions. Acct 1, Bank C Acct 1, Bank A Acct 2, Bank B Acct 1, Bank D Acct 2, Bank B Acct X, Bank Y
  • 3. Integration The ultimate goal of money laundering process is integration. Once the funds are in the financial system and insulated through the layering stage, the integration stage is used to create the appearance of legality through additional transactions. Ex: Purchase or resale of real estate, investment in securities etc. Or funnel such money into various dummy firms and get repaid through salaries, rent, leas on non- existing assets.
  • .
  • ACTIVITIES RESPONSIBLE FOR MONEY LAUNDERING:  Conversion or transfer of property knowing that the property is the result of a committed crime in order to conceal the illicit origin of the property;  Assistance to any person involved in committing of such a crime in order to avoid legal consequences of these activities;  Hiding or concealing the true nature, source, location, availability and movement of derived ownership rights or property knowing that the property is the result of a committed crime;  Gaining, possession or use of goods or things or values knowing at the time of their receipt that they are the result of illicit trafficking of narcotics;  Collusion in order to commit, attempt, assist, instigate, facilitate or advise to commit crime of trafficking of narcotics including money laundering.
  • WHO CAN INVESTIGATE A CASE OF MONEY LAUNDERING ?  As per Sections 48 & 49 of the PMLA, the officers of the Directorate of Enforcement have been given powers to investigate cases of Money Laundering. The officers have also been authorised to initiate proceedings for attachment of property and to launch prosecution in the designated Special Court for the offence of money laundering.
  • WHAT ARE THE POSSIBLE ACTIONS WHICH CAN BE TAKEN AGAINST PERSONS / PROPERTIES INVOLVED IN MONEY LAUNDERING ? 1. Attachment of property u/s 5. 2. Imprisonment for a term not less than 3 years, it may extend up to 7 years and shall be liable to fine which may extend to 5 Lakh rupees. (It may extend up to 10 years and In case offence is punishable under the Narcotics and Psychotropic substances Act, 1985) 3. The prosecution or conviction of any legal juridical person is not contingent on the prosecution or conviction of any individual.
  • THANK YOU….