What is PMLA Act 2002?

The objective of the PMLA legislation is to list money laundering as a separate offence . If a person is found guilty or involved in criminal activities, whether actively or inactively, they will be penalized under the money laundering act of Section 3 of the PMLA. It is essential to protect the cyber laws of the country for the welfare of the nation. Black Money Plastic Money

What is the PMLA's full form?

PMLA’s full form is the Prevention of Money Laundering Act . It was passed in 2002 to limit the increasing practices of money laundering by individuals or groups. If found guilty, the person or the group can be subject to monetary punishment or a term of imprisonment.

What was the requirement of enacting the prevention of money laundering act 2002?

With growing times, money laundering problems have become a serious threat to society not only in financial terms but also hampering the integrity and sovereignty of the country . Therefore to curb such activities, the prevention of money laundering bill was introduced into Lok Sabha before the standing committee in 1999 which in 2002 became the PMLA Act.

Who introduced the prevention of money laundering act 2002?

The prevention of money laundering act 2002 was enacted by the NDA government to restrict the increasing practices of money laundering. This act was introduced to curb the growing problem of money laundering that led to various dangerous social issues like drug smuggling and terror funding.

Which body controls the money laundering act in India?

All the finance and revenue-related Government and public bodies like the Enforcement Directorate, Department of Revenue, Ministry of Finance, SEBI, and The Government of India are responsible for controlling the money laundering act and related activities in the country.

Are the money laundering act and prevention of money laundering act 2002 the same?

The money laundering act is the same as the prevention of money laundering act 2002, where the prime purpose is to combat money laundering and to allow for the confiscation of property obtained from the culprit.

What are the threats of money laundering to society?

One of the most heinous crimes in India is money laundering, which not only undermines the social and economical infrastructure of the country but also contributes to inspiring other serious offences like the smuggling of drugs and increased terrorism in the country, both of which have lately increased in India. Money laundering instances are increasing which is a major problem that requires strict action and constant attention.

What are the features of PMLA?

Money laundering is considered to be a serious crime. It was implemented in 2002 with the objective of preventing money laundering activities. It included confiscating the properties found in the search. If any individual is found to be guilty of money laundering activities, actions will be taken against them. This act is applicable to all individuals in the country, organizations, businesses etc. This act facilitates the government authority with absolute rights to seize the property or assets attained through Money laundering.

What are special courts under the Prevention of Money Laundering Act 2002?

The special courts have been established in accordance with section 43, one or more special courts are designated for the trials. These special courts are established in any areas or cases that have been designated for some specific purpose and have been prescribed in the notification.

When was PMLA introduced?

The prevention of money laundering act 2002 is implemented to prevent the activities pertaining to money laundering . It was presented in the Parliament in 1998, it was approved by the NDA government. It is considered a serious crime, this act facilitates the individuals to confiscate properties and assets. It is applicable to all individuals, corporations, and offices.

What are the objectives of Prevention of Money Laundering Act?

Money laundering is considered a serious crime and puts sovereignty and integrity at stake. The main objective of the PMLA act is to combat the activities pertaining to money laundering cases. It furnishes the authorities to take action and find the ones who are found guilty. The recent amendments to the PMLA Act have strengthened it.

Which agency is responsible for enforcing the Prevention of Money Laundering Act 2002?

The Directorate of Enforcement is the agency that is endowed with the responsibility of enforcing the laws pertaining to the Prevention of Money Laundering Act 2002. They pursue the investigation, confiscation of properties, and persecution of the accused. This law is considered to be highly effective in the field of stopping the prevention of money laundering cases.

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PMLA Act – Amendments of Prevention of Money Laundering Act 2002, PMLA UPSC PDF

By BYJU'S Exam Prep

Updated on: November 14th, 2023

The Prevention of Money Laundering Act [PMLA] is an act enacted to combat the growing problem of money laundering in the country. With the enactment of the PMLA, the government and other public authorities are authorized to seize the property derived from the alleged culprit. Money laundering simply can be defined as the assets or properties that have been converted and given false representation that is acquired unlawfully through dishonest means. The Prevention of Money Laundering Act, established in 2002, has gone through many substantial amendments in the last few years to increase its capacity to counter the cases of money laundering.

Numerous petitions submitted around the country have questioned the practically limitless power provided to ED under the PMLA for locating, seizing, looking into, and posting the properties believed to be the profits of the crimes committed. The topic PMLA UPSC or prevention of money laundering act is part of the Indian polity subject of the syllabus. You can download this document as a PDF to prepare for exams.

Table of content

1. What is PMLA Act?
2. Objectives of PMLA
3. Offences under the Prevention Of Money Laundering Act
4. Penalties Under PMLA
5. Recent Amendments in Prevention of Money Laundering Act 2002
6. Key Terms under Money Laundering Act
7. PMLA – Way Forward
8. PMLA UPSC

What is PMLA Act?

The government of NDA approved the prevention of the money laundering act 2002 in order to fight the prevailing practices of money laundering and form the required provisions to confiscate the assets attained in the search process. Initiated on July 1st the prevention of money laundering activities and the rules there on were implemented.

Money laundering is a very serious crime. Therefore, any person or group found guilty or blamed to be part of this crime is liable to be booked and taken action under the guidelines of the PMLA Act 2002.
The prevention of the money laundering act applies to every individual in the country, business owners, partnerships, organizations of individuals, corporations, and all the offices, agencies, or branches owned or run by anyone of the above-described individuals.
The prevention of money laundering act provides the government all the rights to seize the assets and properties acquired via money laundering for other illegal means. According to the PMLA, it is the accused’s responsibility to demonstrate that the illegally acquired property or assets were not acquired via criminal activity.

Objectives of PMLA

Money laundering has seriously threatened the integrity and sovereignty of many other Nations’ financial systems as well, including that of India. Following are a few of PMLA’s main objectives-

The Parliament passed comprehensive legislation to combat money laundering and associated activities, including the seizure of illicit profits, the creation of agencies, methods of combating it, and other things, in order to oppose such dangers.
The prevention of money laundering act also aims to deal with any other issue relating to money laundering in India, confiscate and seize the assets on the wire money laundering and recommend harsh penalties for violators.
The PMLA act empowers the government and public authorities to take action against every person who is found suspected or guilty in the case of money laundering to restrict such activities in the future.

Offences under the Prevention Of Money Laundering Act

Any offence that is scheduled under the category of Part A, B, and C and committed by any person, individual, or group, then, is liable to be taken action under the Prevention of Money Laundering Act 2002. Some of the offences as mentioned under Part A, B, and C are-

Part A: IPC( Indian Penal Code), Drugs, Narcotics, and Psychotropic Substances, Prevention of Corruption Act, Antiquities and Art Treasures Act, Copyright Act, Trademark Act, Information Technology Act, Wildlife Act.
Part B: Part B includes all the offences as mentioned in Part A and defines the number of rupees involved in money laundering to be ₹1 crore or even more.
Part C: Part C deals with money laundering cases and financial scams that have international connections. The topic of transnational crimes is covered, and it demonstrates the dedication to eradicating money laundering internationally.

Penalties Under PMLA

For the people found guilty in cases related to the money laundering act, there are strict provisions regarding the penalties. Below mentioned are some of the strict actions taken against the individual or a group who is caught involved in the case-

The body can freeze the assets, properties, and records of the criminal.
The person found guilty in the case under the prevention of money laundering act is heavily fined without any limit and is/or also eligible to be imprisoned for three to seven years.
Under the money laundering act, if a person is found guilty of the drugs, narcotics, and psychotropic substances act, then the term of imprisonment can be increased to 10 years along with the increased sum fine.

Recent Amendments in Prevention of Money Laundering Act 2002

Money laundering was a crime that depended on another, called a scheduled offense or predicate rather than being an independent offense. Therefore with the amendments, it was clarified that money laundering is a stand-alone separate crime.

The Prevention of Money Laundering Act 2002 current provisions are to be filed in by the PMLA Act 2019.
It aims to tighten up existing restrictions and improve their ability to spot dubious activities.
The money laundering act clarifies section 3 and states that a person will be charged with money laundering if they are discovered for having directly or indirectly attempted to engage in, knowingly assisted, knowingly participated in, or knowingly been a party to any of the processes or activities listed in section 3, or both.
Provisions in accordance with section 157 of the 1973 code of criminal procedure sections 17(1) and 18(1) were repealed and the Enforcement Directorate was given the authority to conduct searches even and the lack of a report.
Additionally, the money laundering act aims to fight the funding of terrorism and other aspects also.

Key Terms under Money Laundering Act

For learning about the PMLA topic, the aspirants should be well aware of the terminologies related to the money laundering act. Following are some of the key terms related to the Prevention of Money Laundering Act-

Provision for Money Laundering Act

According to the act, anyone convicted of money laundering in India will face a sentence of strict imprisonment between 3 to 7 years. If the proceeds of the crime are connected to any of the offences listed and part a of the schedule paragraph 2, which deals with offences under the drug narcotics and psychotropic substances act, then the term of imprisonment can be increased even to 10 years.

Powers of Attachment of Tainted Property

The Government of India must select the proper appropriate authorities before they can temporarily take items that are thought to be proceeds of 180 days. Such an order should be subject to confirmation by an impartial adjudicating body.

Adjudicating Authority

The Federal Government of India has designated the adjudicating authority as the body with the authorities, jurisdictions, and powers specified under the provincial money laundering act of 2002. It establishes if the confiscated property or associated assets are used in money laundering.

Additionally, the adjudicating authority is governed by natural justice principles and is subject to various other provisions of the money laundering act 2002 rather than being constrained by any of the processes outlined in the code of civil procedure, 1908.

Burden of Proof

A person who is charged with money laundering must demonstrate that the purported profits of the crime are indeed legal assets.

Appellate Tribunal

It is the institution chosen by the Indian government to hear appeals from judgments rendered by adjudicating authority created in accordance with the money laundering act. It is important to remember that decisions made by tribunals may be challenged first in the high court and then later in the supreme court.

Special Court

According to section 43 of the prevention of money laundering act 2002, the central government shall designate one or more Courts of the session as the special court by notification for any areas or cases that are specified for some special purpose of the trial of an offence punishable under Section 4.

PMLA – Way Forward

The legislation has given the branch of enforcement directorate the minimal power to address the issues related to money laundering that increases the possibility of political misuse. Therefore in order to sustain the reality of the PMLA section that clarifies the investigation, an agreement between the adjudicating officer and enforcement directorate personnel is necessary to be signed. The increased authority of the enforcement directorate must be welcome to the strong dedication that will help to resolve the cases quickly so that both the judicial system and law enforcement sector may proceed with rapid prosecutions and verdicts.

PMLA UPSC

PMLA topic is part of Indian Polity and has a higher chance of appearing in the UPSC examinations. This is because, recently, the Enforcement Directorate has been very active and many eminent leaders have been accused and charged for being involved in money laundering cases. Since static and dynamic portions are both important in the exam, hence, along with polity, PMLA is also important from the perspective of the Current Affairs section for the IAS exam.

PMLA UPSC Questions

Indian Polity should be thoroughly studied by the UPSC aspirants because it carries a good weightage of questions in exams. PMLA 2002 topic is important for UPSC aspirants to learn as many high-profile cases have been highlighted in case of money laundering and the past some years. The following are the main sample questions. You may expect similar questions in the forthcoming UPSC exam.

Question: Discuss the role that globalization and development technology have in the increasing cases of money laundering and provide comprehensive solutions to the issue of money laundering on both a National and international scale. [Mains Sample 2002].

Question: Elaborate on how do you think that the surge in emerging technologies and globalization can lead to an increase in money laundering cases. Suggest some measures to combat the ordeals of money laundering at the national and international levels.

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