Government of India is committed to tackle the menace of Money Laundering and has always been part of the global efforts in this direction. India is signatory to the following UN Conventions, which deal with Anti Money Laundering / Countering the Financing of Terrorism:
As a consequence of the political Declaration adopted by the special session of the United Nations General Assembly (UNGASS) held on 8th to 10th June 1998 (of which India is one of the signatories) calling upon member States to adopt Anti-Money Laundering Legislation & Programme, the Parliament has enacted a special law called the ‘Prevention of Money Laundering Act, 2002’ (PMLA 2002). This Act has been substantially amended, by way of enlarging its scope, in 2009 (w.e.f. 01.06.2009), by enactment of Prevention of Money Laundering (Amendment) Act, 2009. The Act was further amended by Prevention of Money Laundering (Amendment) Act, 2012 w.e.f. 15-02-2013.
Money laundering is the processing of criminal proceeds to disguise their illegal origin, given that the goal of a large number of criminal activities is to generate profit for an individual or a group. Examples of money laundering activities are as; Illegal arms sales, Smuggling, Drug trafficking and Prostitution Rings. Embezzlement, Insider trading, Bribery, Computer Fraud Schemes. 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.
Whoever 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 will be guilty of offence of money-laundering. (Sec.3)
Whoever commits the offence of money-laundering will be punishable with rigorous imprisonment for a term which shall not be less than three years but which may extend to seven years and will also be liable to fine which may extend to five lakh rupees. But if the proceeds of crime involved in money laundering relates to any offence specified under paragraph 2 of Part A of the Schedule i.e. offences specified under the Narcotic Drugs and Psychotropic Substances Act, 1985, then the term of imprisonment may extend to ten years. (Sec.4)
Any person who willfully and maliciously gives false information and causes an arrest or a search to be made under this Act shall on conviction 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. (Sec.63(1))
If any person legally bound to give information relating to any offence of money laundering, refuses to answer any question put forth by the authorities or give evidence or produce books of accounts or other documents at a certain place or time, 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. (Sec.63(2))
We at Chartered Accountant India not only advices our client how to handle your affairs in such a fashion not to get into any transactions which lead you to indulge into the draconian provisions of the Act but also assist you to get rid of the clichés of this Act if alleged under this Act.