Prevention of Money Laundering Act (PMLA), 2002

• The PMLA is India’s primary legislation aimed at preventing money laundering and enabling the confiscation of assets acquired through criminal activities (scheduled offenses).

• Enforced from July 1, 2005, the Act defines the offense of money laundering, outlines penalties, and empowers the Directorate of Enforcement (ED) to investigate and prosecute offenders.

Key Objectives

• Combat Money Laundering

  • Prevents the concealment of the origins of illegally obtained funds by stopping attempts to disguise them as legitimate.

• Confiscation of Proceeds of Crime

  • Enables authorities to attach and confiscate properties derived from or linked to money laundering activities.

• Establish a Comprehensive Framework

  • Ensures a robust legal structure aligned with global standards to safeguard financial systems and national security from laundering threats.

Key Features

• Scheduled Offenses

  • Links money laundering to an extensive list of predicate crimes, including drug trafficking, extortion, corruption, and other serious offenses.

• Role of the Directorate of Enforcement (ED)

  • Empowered to conduct investigations, execute searches and seizures, make arrests, and attach properties involved in money laundering.

• Attachment of Property

  • ED may provisionally attach suspected “proceeds of crime” for up to 180 days.

• Adjudicating Authority

  • An independent authority reviews and confirms ED’s attachment orders and adjudicates matters under the Act.

• Financial Intelligence Unit – India (FIU-IND)

  • Collects, analyzes, and shares financial transaction information received from banks and other reporting entities to counter money laundering.

• Punishments

  • Provides for rigorous imprisonment along with monetary penalties for individuals found guilty of money laundering.