Money Laundering can be divided into three stages-
- Placement– the money obtained through illegal acts is invested in legal financial institutions
- Layering– Breaking the funds invested into small units to avoid any kind of suspicion, and
- Integration– The funds invested returns clean to the person concerned
Generally, the Indian Penal Code has provisions pertaining to corruption as well as concerning money laundering under Section- 169 and Section- 409 of IPC, but Prevention of Money Laundering Act, 2002 specifically deals with it.
The Prevention of Money Laundering Act, 2002
- The offence of money lists out certain acts such as concealment, possession, acquisition or use and projecting or claiming an untainted property as an offence under Section 3 – even a mere attempt to indulge in the listed activities is an offence.
- All the cases under PMLA are investigated by the Directorate of Enforcement (ED) and enforcement case information report (ECIR) is registered under Section 3 of the Act. The summons are issued under Section 50 of PMLA to the accused and unlike Section 162 of CRPC and Section 25 of Evidence, here the statements made to ED is admissible in Trial.
- An adjudicating authority (powers to that of Civil Court) is formed under Section 6 of this Act and under Section 8 acting upon a complaint it has the power to attach a suspicious property (Section 5), search & seizure (Section 17) and search of persons (Section 18), but before exercising these powers on a reasonable suspicions the authority shall serve a notice of not less than 30 days. And only after due procedure followed, the authority shall order search & seizure or retention of property.
- Section 19 – The Power of Arrest has been given but only on the basis of reasons recorded in writing.
- Section 24 – Burden of Proof is on the person who is charged under this Act.
- An appeal from adjudicating authority lies to the Appellate Tribunal within a period of 45 days from the day a copy is received of such order (Section- 26) and the second appeal lies to the High Court (within the jurisdiction where aggrieved party resides or carries on business) within 60 days under Section- 42.
- Section 43 – The cases of Money Laundering shall be tried by Special Courts and such Courts shall be the Courts of Session and appeal, revision shall lie to the High Court (Section 47).
- Legislative changes to the PMLA, 2018 have included ‘fraud‘ under the Companies Act, 2013 as one of the identified crimes that will attract the application of the PMLA.
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