Benami Transaction (Prohibition) Act 1988

Recent Context

• The Supreme Court of India recently declared Section 3(2) of the Benami Transactions (Prohibition) Act 1988 unconstitutional, citing its manifestly arbitrary nature.

About the act

• Definition of Benami Transaction: The Act defines a benami transaction as a transaction where a property is held by or transferred to one person, but the consideration for the property is provided by another person, and the property owner denies knowledge of ownership or the transaction involves a fictitious name.

Conclusion

• Money laundering has been a major worldwide issue and it will continue to become even a bigger threat if the right regulations are not followed strictly. The annual losses by money laundering are equal to 2-5% of the global economy. Banks and financial institutions need to follow AML regulations set up by international financial associations.