Understanding The Prevention Of Money Laundering Act (PMLA) 2002

• Law Firm: Vaish Associates Advocates
• Subject Matter: Government, Public Sector, Tax, Criminal Law, Money Laundering, Crime, Property Taxes
• Author: Mr Vijay Pal Dalmia
• Published date: 24 April 2023

Vijay Pal Dalmia, Advocate

Supreme Court of India & Delhi High Court

Email id: vpdalmia@vaishlaw.com

Mobile No.: +91 9810081079

Linkedin: https://www.linkedin.com/in/vpdalmia/

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Money laundering has been a significant problem across the globe, and India is no exception. To tackle this issue, the Indian government enacted the Prevention of Money Laundering Act (PMLA) in 2002, which came into effect on July 1, 2005. The primary objective of this act is to prevent and control money laundering, which is defined as an act of concealing or disguising the proceeds of crime or possession, acquisition or use of such proceeds, or projecting it as untainted property.

In this post, we will discuss the various aspects of the Prevention of Money Laundering Act (PMLA) 2002, including its history, definition, and key provisions.

A brief history of the origin of the crime

Money laundering is not a new phenomenon and has been prevalent since ancient times. However, it gained prominence in the 20th century with the rise of organized crime in the West. Criminals used various means, such as owning laundromats or other legitimate businesses, to mix their illicit earnings with legitimate income to make their stash appear legal.

In India, the Hawala system has been a popular method of money laundering, where intermediaries transfer funds between countries without physically moving money. This system has been in existence since the 8th century and has been used to transfer large sums of money across borders.

Understanding the definition of money laundering

The Prevention of Money Laundering Act (PMLA) 2002 defines money laundering as an act of directly or indirectly attempting to indulge or knowingly assisting or knowingly being a party or actually involved in concealing, possessing, acquiring, using, projecting as untainted property, or claiming as untainted property, in any manner whatsoever, the proceeds of crime.

The definition also states that the process or activity connected with proceeds of crime is a continuing activity and continues until a person is directly or indirectly enjoying the proceeds of crime by concealing, possessing, acquiring, using, projecting it as untainted property, or claiming it as untainted property in any manner whatsoever.

Understanding the key provisions of the PMLA 2002

The Prevention of Money Laundering Act (PMLA) 2002 has several key provisions aimed at preventing and controlling...