PMLA (Syllabus: GS Paper 3 – Economy)

Context: Recently, a three-member bench, led by Justice Sanjay Kishan Kaul, agreed to reconsider a Supreme Court judgement on the Prevention of Money Laundering Act (PMLA), acknowledging that the judges are "not infallible.

Prevention of Money Laundering Act (PMLA)

• About: Money laundering is the process of hiding the source of money obtained from illegal sources and converting it to a clean source, for the purpose of avoiding prosecution, conviction, and confiscation of the criminal funds.
• Aim: To prevent money-laundering

o To provide for confiscation of property derived from or involved in money-laundering

• The Department of Revenue within the Ministry of Finance oversees the investigation of money laundering offenses under the PMLA through the Enforcement Directorate (ED).

Features

• Confiscation of property: The PMLA addresses the confiscation of both movable and immovable property.
• Intermediaries: The Act mandates that every banking company, financial institution, and intermediaries maintain transaction records.
• Appellate Tribunal: An Appellate Tribunal, established by the Central Government, hears appeals against the decisions of the Adjudicating Authority and other authorities under this Act.
• Special Courts: Special Courts, appointed by the Central Government in consultation with the Chief Justice of India, are designated to handle Money Laundering offences.
• Location of an entity: The Act prohibits entities from having third parties in countries classified as 'high risk' by the Financial Action Task Force (FATF).