This article Apprises Various Amendments With Key Changes In Money Laundering Prevention Act 2002.
In India, the Prevention of Money Laundering Act is one of the most methodical law concocted to combat money laundering in India. PMLA and the Rules notified there under came into force as from July 1, 2005.
Preamble opines action, that it is an action designed to:
- Prevent money laundering,
- Providing confiscation of property derived from or involved in money laundered,
- Punish those who committed violations of money laundering.
There are three stages to money laundering transactions:
The first stage is the placement, in which criminals put the proceeds of crime into the financial system to normal.
The second stage is layering, where money is introduced into the financial system to normal layered or spread to various transactions in the financial system so that any link with the origin of the property lost.
The third stage is the integration, where the benefits or proceeds of crime provided by the criminal as tainted money.
The definition of money laundering is provided u / s 3 of PMLA, 2002, which states that:
whoever: directly or indirectly attempts to indulge or knowingly assists, conscious may be a party or is really involved within the process or activity associated with the proceeds of crime, including hiding it or ownership or acquisition or use and project and claim it as pure will be guilty of offense of Money Laundering
Therefore, it appears that the definition is very broad definition and is incomplete and almost any kind of deal with the results / fruits of the crime, were brought within the scope of section.
The word Results Of Crime has been outlined above because of the important properties that bring a money laundering offense as defined above and liability for the penalty u / s 4 interested only when the property was washed falls within the definition of “proceeds of crime ‘. Explanation of the newly inserted and amended section reads as under:
Section 2 (1) (u) of PMLA, defines the term to mean any property derived or obtained, directly or indirectly, by any person as a result of criminal activity associated with a scheduled offense or the value of each property.
The PMLA also mentions a list of offenses that are classified as’ scheduled offense is sebagai’kejahatan. The increasing number of financial crimes and high profile embezzlement has become a serious concern. As a result of which he was the Finance Act 2019 has introduced some changes to curb the same PMLA.
Amendments provide tight and in certain cases even cruel referrals for investigation, confiscation, expropriation and adjudication. Amendments also apprises much confused on certain necessary clarification on the ambiguity that existed prior to the amendment. It is important to note that changes have been made to include the ‘Company’.
Elucidation of Article 2 (u) included:
This explanation describes the position of ‘proceeds of crime’. Now, ‘proceeds of crime’ will be understood relate to any property which is directly or indirectly derived or obtained through relatable activities scheduled for violations.
Thus, the money laundering offense is not an independent crime but in seriousness depending on other crimes, known as ‘scheduled offense’ results was made the subject of money laundering.
Elucidation of Article 3:
Section 3 of PMLA related to money laundering violations. Explanation u / s said, someone must commit money laundering if the person involved directly or intentionally parties to one or more of the following processes, connected with the ‘proceeds of crime’:
Concealment, (b) Possession, (c) acquisition, (d) the use, (e) Projecting as tainted property, (f) Claims for property tainted by any means.
The explanation also states that the processes or activities related to the proceeds of crime continue until such time a person directly or indirectly enjoy the fruits of the crime. Thus, the entire process / activities that are connected to the proceeds of crime is a violation continues.
The above explanation is inserted on the basis of the observations made by the Financial Action Task Force (FATF), which concealment, possession, acquisition and use of the proceeds of crime not previously criminalized under Section 3 of PMLA.
The provisions of Article 17 (1) and 18 (1) omitted:
Eliminating the above provisions now provide the competent authority under the PMLA authority to enter any property for the purpose of search and seizure, and a search of every person, even in the absence of reporting violations is scheduled to judge or other competent authority in this regard.
Where before the amendment was given, that there is no search (also inc. People) do except, in relation to the infringement was scheduled, a report has been forwarded to the Judge under section 157 of the Criminal Code 1973 (which regulates Inspection Procedures) or complaints have been given submitted by the person, authorized to investigate offenses mentioned in the schedule, before the judge or court to take the responsibility of a scheduled offense, as the case may be.
Changes in Section 44 of PMLA:
Section 44 of the PMLA include provisions for offenses that can be prosecuted by the Special Court. A requirement has been incorporated into Section 44 (1) (b) of PMLA are talking about the sending of ‘Closing Statement’ at the end of the investigation. It states that if there is no money laundering offense can be determined after the investigation, the authority must submit a ‘Closure Report’ before the Special Court. It insists on closing the case in which the investigation is complete and no violations found.
An explanation has been incorporated into Section 44 (1) (d) of PMLA which gives exclusive jurisdiction of the Special Court is scheduled offense. Explanation states that the tests conducted by the Special Court for violations due to be different from any other experiment performed for the same scheduled offense. It will not be considered a joint trial. Further explanation adds that the Complaint includes following complaints that arise as a result of further investigation of every person who is accused. It applies to everyone, whether that person was included in the original complaint.
Elucidation of Article 45 (2) of PMLA:
This explanation is injected in section 45 to clarify that the money laundering offense is an offense cognizable and non-bailable. Thus, the authorized officer may capture the accused without a warrant. Which in the mean common language that the person arrested is not entitled to bail as a matter of right, and the guarantee becomes a matter of discretion for the court and if the offense gives more penalties than 3 years, then the guarantee can only be given after hearing the prosecution and only after the court came to the conclusion that there are reasonable grounds to believe that he was not guilty of the offense and that he was not likely to commit any offense while on bail.
Amendment to the Prevention of Money Laundering Act, 2002, which was brought by the Finance Act 2019 brought much-needed clarity on various aspects of money laundering unresolved. It could be argued that this amendment now confers the authority to command better, about the investigation, seizure, search, confiscation, closure and adjudication.
However, an important question to consider would be whether the change will apply retrospectively? As the changes have been made by Finance Act 2019 and it is unclear whether they would have the surgery retrospectively or prospectively, Given over clarificatory in nature, because it explains what has been argued in the definition of “proceeds of crime”, therefore, in my opinion, is likely to have retrospective effect. It is also believed that the courts in the future may throw some light on the same by way of litigation that may arise during the hearing of these things.
Author: VAMSI KRISHNA,
IFIM LAW SCHOOL 1ST YEAR