5 Pmla
5 Pmla
5 Pmla
Sec 2: Definitions
PM: What are Proceeds of crime?
Ans:
Provision: [Relevant Section 2 of PMLA, 2002]
Section 2(1)(u) defines "proceeds of crime" as any property derived or obtained, directly or indirectly, by any
person as a result of criminal activity relating to a scheduled offence or the value of any such property.
PM: Explain the term "Offence of Money Laundering" within the meaning of the Prevention of Money Laun-
dering Act, 2002. State the punishment for the offence of money laundering.
Ans:
Provision: [Relevant Section 2, 3 & 4 of PMLA, 2002]
Offence of Money Laundering: Section 2(1)(y) of the Prevention of Money Laundering Act, 2002 defines the
term “scheduled offence", which accordingly means –
(i) the offences specified under Part A of the Schedule; or
(ii) the offences specified under Part B of the Schedule if the total value involved in such offences is One
Crore rupees or more.
(iii) The offences specified under Part C of the Schedule.
These Schedule to the Act gives a list of all the above offences. Section 3 deals with the offence of money
laundering. Punishment for the Offence of Money Laundering Section 4 of the said act provides for the pun-
ishment for Money-Laundering. Whoever commits the offence of money-laundering shall be punishable with:
i) Rigorous imprisonment for a term which shall not be less than three years, but may be extended to seven
years, and shall also be liable to fine.
ii) But, where the proceeds of crime involved in money-laundering relates to any offence specified under
paragraph 2 of Part A of the Schedule (Offences under the Narcotic Drugs and Psychotropic Substances
Act, 1985), the maximum punishment may extend to ten years instead of seven years.
Sec 3: offence of money laundering
Sec 4: punishment for Money-Laundering
PM: What is the punishment for the offence of money laundering?
Ans:
Provision: [Relevant Section 3 & 4 of PMLA, 2002]
Chapter II comprises of Sections 3 and 4. Section 3 deals with the offence of money laundering. Section 4 pro-
vides for the punishment for Money-Laundering. Whoever commits the offence of money-laundering shall be
punishable with rigorous imprisonment for a term Corporate and Allied Laws which shall not be less than three
years but which may extend to seven years and shall also be liable to fine. But where the proceeds of crime
involved in money-laundering relate to any offence specified under paragraph 2 of Part A of the Schedule, (Of-
fences under the Narcotic Drugs and Psychotropic Substances Act, 1985), the maximum punishment may ex-
tend to ten years instead of seven years.
PM: Explain the meaning of the term “Money Laundering”. Z, a known smuggler was caught in transfer of
funds illegally exporting narcotic drugs from India to some countries in Africa. State the maximum punish-
ment that can be awarded to him under Prevention of Money Laundering Act, 2002.
Ans:
Provision: [Relevant Section 3 & 4 of PMLA, 2002]
Chap 5: Prevention Of Money Laundering Act, 2002
Money Laundering: 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. Section 3 of the Prevention of Money Laun-
dering Act, 2002 deals with the offence of money laundering. Paragraph 2 of Part A of the Schedule to the Pre-
vention of Money Laundering Act, 2002, covers Offences under the Narcotic Drugs And Psychotropic Substanc-
es Act, 1985. Whereby, illegal import into India, export from India or transhipment of narcotic drugs and psy-
chotropic substances (section 23) is covered under paragraph 2 of Part A.
Punishment: Section 4 of the said Act provides for the punishment for Money-Laundering. Whoever commits
the offence of money-laundering shall be punishable with rigorous imprisonment for a term which shall not be
less than 3 years but which may extend to 7 years and shall also be liable to fine. But where the proceeds of
crime involved in money-laundering relate to any offence specified under paragraph 2 of Part A of the Sched-
ule, the maximum punishment may extend to 10 years instead of 7 years.
Sec 12: Obligation of Banking Companies, Financial Institutions and Intermediaries or
a person carrying on a designated business or profession
PM: Enumerate the obligations of banking companies under the Prevention of Money Laundering Act, 2002.
Ans:
Provision: [Relevant Section 12 of PMLA, 2002]
Section 12 provides for the obligation of Banking Companies, Financial Institutions and Intermediaries. Accord-
ing to subsection (1), every banking company, financial institution and intermediaries shall –
(a) maintain a record of all transactions, including information relating to transactions covered under clause
b, in such manner as to enable it to reconstruct individual transactions;
(b) furnish to the Director within such time as may be prescribed, information relating to such transactions,
whether attempted or executed, the nature and value of which may be prescribed;
(c) verify the identity of its clients in such manner and subject to such conditions, as may be prescribed;
(d) identify the beneficial owner, if any, of such of its clients, as may be prescribed;
(e) maintain record of documents evidencing identity of its clients and beneficial owners as well as account
files and business correspondence relating to its clients.
Every information maintained, furnished or verified, save as otherwise provided under any law for the time
being in force shall be kept confidential. The records referred to in clause (a) of sub-section (I) shall be main-
tained for a period of five years from the date of transaction between a client and the reporting entity. The
records referred to in clause (e) of sub-section (I) shall be maintained for a period of five years after the busi-
ness relationship between a client and the reporting entity has ended or the account has been closed, which-
ever is later. The Central Government may, by notification, exempt any reporting entity or class of reporting
entities from any obligation under this chapter.
Sec 26: The right and time frame to make an appeal to the Appellate Tribunal
PM: The Adjudicating Authority appointed under the Prevention of Money Laundering Act, 2002 issued an
order attaching certain properties of XYZ Limited alleged to be involved in money laundering for a specified
period. The company aggrieved by the order of the Adjudicating Authority seeks your advice about the rem-
edy that is available under the Act. Advise explaining the relevant provisions of the Prevention of Money
Laundering Act, 2002.
Ans:
Provision: [Relevant Section 25, 26 & 42 of PMLA, 2002]
Section 25 of Prevention of Money Laundering Act, 2002 empowers the Central Government to establish an
Appellate Tribunal to hear appeal against order of the Adjudicating Authority and other authorities under the
Act. Section 26 deals with the right and time frame to make an appeal to the Appellate Tribunal.
Explanation:
Any person aggrieved by an order made by the Adjudicating Authority may prefer an appeal to the Appellate
Tribunal within a period of 45 days from the date on which a copy of the order is received by him. The appeal
shall be in such form and be accompanied by such fee as may be prescribed. The Appellate Tribunal may ex-
tend the period if it is satisfied that there was sufficient cause for not filing it within the period of 45 days. The
Appellate Tribunal may after giving the parties to the appeal an opportunity of being heard, pass such order as
it thinks fit, confirming, modifying or setting aside the order appealed against. The Act also provides further