The document discusses money laundering and the Prevention of Money Laundering Act of 2002 in India. It defines money laundering as making illegally obtained money appear to come from legitimate sources. The Act aims to stop this process by applying to the financial, banking, and insurance sectors in India. It requires reporting entities to follow know-your-customer due diligence and maintain records to prevent money laundering activities. Violators can be found guilty of money laundering for attempting to or assisting with concealing the proceeds of criminal acts.

1. Vibhu Sharma (ACS, LL.B)
Money laundering is the problem for every regulatory authority and government on all over
the world. Under this process, the unauthorized and illegal property is converting into
authorized and legal. The objective of money laundering are different, to stop this process the
Indian legislation on the year of 2002 passed the Prevention of Money Laundering Act, 2002.
The Prevention of Money Laundering Act, 2002 is applicable to the financial, Banking and
insurance sector on India and applicable on whole of India.
I. Meaning Money laundering- According to Investopedia, “Money laundering is the process
of creating the appearance that large amounts of money obtained from criminal activity,
originated from a legitimated source. The money from the illicit activity is considered dirty,
and the process “launders” the money to make it look clean”.
These three steps under the money-laundering process,
The placement stage represents the entity of the illegal cash or proceeds of crime into the
financial statement.
The layering all possible acts for hiding the original source of illegal sources of money and
property some time the international launders are also includes. It’s a complex stage.
The Integration, final stage where the money and property are returned to the criminal and
other holders from what seem to be legitimated sources. Now they used for any other
purposes.
II. Offence of Money- Laundering under The Prevention of Money Laundering Act, 2002
The section 3 of Prevention of Money landing Act, 2002 give the information of offence
under money-laundering as 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 and projecting it as untainted property shall be guilty of
offence of money-laundering.

2. Vibhu Sharma (ACS,LL.B)
Proceeds of Crime – means any property derived or obtained, directly or indirectly, by any person as a
result of criminal activity relating to a schedule offence or the value of any such property.
Property Schedule offence
Any property or assets of every disruption 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, whenever located.
Offences under Indian Penal Code, 1869-
Offences under The Narcotic Drugs and-
Psychotropic Substances, Act 1985
Offences under Arms Act, 1959-
Offences under The Wildlife (Protection) Act,-
1972
Offences under The Immoral Traffic-
(Protection) Act, 1956
Offences under The Prevention of Corruption-
Act, 1988
III. Compliance under The Prevention of money-laundering (maintenance of Records)
Rules, 2005.
These rules are widely explained the about the document and record maintained by the report
entities, but the rule 9 and rule 10 is important as per compliance.
- : - under the rule the report entity comply due diligence for everyRule 9 Due Diligence for Clients
type of client whether individual, Body Corporate and any other but here we have discussed about the
individual clients (in short). Under 9 (4) Where the client is an individual, submit to the reporting
entity, one certified copy of an ‘officially valid document’ containing details of his identity and
address, one recent photograph and such other documents including in respect of the nature of
business and financial status of the client as may be required by the reporting entity.
Rule 10- All records maintenance by the reporting entities-
RBI All Banks, NBFC and other financial related incorporated
bodies
SBI All Intermediaries (according to SEBI)
IRDA All Intermediaries and Insurance Company
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For Full Study please read The prevention of Money Laundering Act, 2002 and related rules.
Only for education purpose, not claim any copyright and legal accuracy.