A financial institution or an economy with poor/improper Anti Money Laundering smirks its reputation by raising a threat to its integrity, which is a valuable asset for any institution. The criminal proceeds creeping into the financial system can shake the stability of the economy and deterrent to the functioning of a country. The money laundering process creates separate governance within government in an economy and this will hamper the growth and reputation of the country badly.
As you are aware that insurance companies are treated by some miscreants and a conduit of Money laundering. They generally use Single Premium Polices and Free Look cancellation period provided to the prospects to check and give their accent on the policies issued to them as money laundering tool. Free Look Period is a time period given to the policyholder to check the terms and conditions of the insurance policy issued to them and inform the insurer within Free Look Period , whether terms and conditions are acceptable to him or not. The person in case of Money Laundering cancel the policy in FLP and his premium amount will be refunded through banking channels.
The Government of India to prevent Money laundering and Terrorism Funding amended provisions of UAPA,1967.
The Unlawful Activities (Prevention) Act, 1967 (UAPA) was amended and notified on 31.12.2008, which, inter-alia, inserted Section 51A to the Act.
1. SECTION 51A READS AS UNDER
Section 51 in The Unlawful Activities (Prevention) Act, 1967
51. Impounding of passport and arms licence of person charge-sheeted under the Act.—Notwithstanding anything contained in any other law for the time being in force, the passport and the arms licence of a person, who is charge-sheeted for having committed any offence under this Act, shall be deemed to have been impounded for such period as the court may deem fit.
Section 51A in The Unlawful Activities (Prevention) Act, 1967
"51A. For the prevention of, and for coping with terrorist activities, the Central Government shall have power to -
(a) freeze, seize or attach funds and other financial assets or economic resources held by, on behalf of or at the direction of the individuals or entities Listed in the Schedule to the Order, or any other person engaged in or suspected to be engaged in terrorism;
(b) prohibit any individual or entity from making any funds, financial assets or economic resources or related services available for the benefit of the individuals or entities Listed in the Schedule to the Order or any other person engaged in or suspected to be engaged in terrorism;
(c) prevent the entry into or the transit through India of individuals Listed in the Schedule to the Order or any other person engaged in or suspected to be engaged in terrorism",
THE UNLAWFUL ACTIVITIES (PREVENTION) ACT DEFINE "ORDER" AS UNDER
"Order" means the Prevention and Suppression of Terrorism (Implementation of Security Council Resolutions) Order, 2007, as may be amended from time to time.
IN ORDER TO EXPEDITIOUSLY AND EFFECTIVELY IMPLEMENT THE PROVISIONS OF SECTION 51A, THE FOLLOWING PROCEDURES SHALL BE FOLLOWED
APPOINTMENT AND COMMUNICATION OF DETAILS OF UAPA NODAL OFFICERS
2. As regards appointment and communication of details of UAPA nodal officers -
(i) The UAPA nodal officer for IS-I division would be the Joint Secretary (IS.I), Ministry of Home Affairs. His contact details are 011-23092736 (Tel), 011-23092569 (Fax) and jsis@nic.in (e-mail id).
(ii) The Ministry of External affairs, Department of Economic affairs, Foreigners Division of MHA, FIU-IND; and RBI, SEBI, IRDA (hereinafter referred to as Regulators) shall appoint a UAPA nodal officer and communicate the name and contact details to the IS-I Division in MHA.
(iii) The States and UTs should appoint a UAPA nodal officer preferably of the rank of the Principal Secretary / Secretary, Home Department and communicate the name and contact details to the IS-I Division in MHA.
(iv) The IS-I Division in MHA would maintain the consolidated list of all UAPA nodal officers and forward the list to all other UAPA nodal officers.
(v) The RBI, SEBI, IRDA should forward the consolidated list of UAPA nodal officers to the Banks, stock exchanges / depositories, intermediaries regulated by SEBI and insurance companies respectively
(vi) The consolidated list of the UAPA nodal officers should be circulated to the nodal officer of IS-I Division of MHA in July every year and on every change. Joint Secretary (IS-I), being the nodal officer of IS-I Division of MHA, shall cause the amended list of UAPA nodal officers to be circulated to the nodal officers of Ministry of External Affairs, Department of Economic affairs, Foreigners Division of MHA, RBI, SEBI, IRDA and FIU-IND.
COMMUNICATION OF THE LIST OF DESIGNATED INDIVIDUALS / ENTITIES
3. As regards communication of the list of designated individuals / entities -
(i) The Ministry of External Affairs shall update the list of individuals and entities subject to UN sanction measures on a regular basis. On any revision, the Ministry of External Affairs would electronically forward this list to the Nodal officers in Regulators, FIU-IND, IS-I Division and Foreigners' Division in MHA.
(ii) The Regulators would forward the list mentioned in (i) above (referred to as designated lists) to the banks, stock exchanges / depositories, intermediaries regulated by SEBI and insurance companies respectively.
(iii) The IS-I Division of MHA would forward the designated lists to the UAPA nodal officer of all States and UTs.
(iv) The Foreigners Division of MHA would forward the designated lists to the immigration authorities and security agencies.
REGARDING FUNDS, FINANCIAL ASSETS OR ECONOMIC RESOURCES OR RELATED SERVICES HELD IN THE FORM OF BANK ACCOUNTS, STOCKS OR INSURANCE POLICIES ETC.
4. As regards funds, financial assets or economic resources or related services held in the form of bank accounts, stocks or Insurance policies etc., the Regulators would forward the designated lists to the banks, stock exchanges / depositories, intermediaries regulated by SEBI and insurance companies respectively. The RBI, SEBI and IRDA would issue necessary guidelines to banks, stock exchanges / depositories, intermediaries regulated by SEBI and insurance companies requiring them to -
(i) Maintain updated designated lists in electronic form and run a check on the given parameters on a regular basis to verify whether individuals or entities listed in the schedule to the Order, herein after, referred to as designated individuals / entities are holding any funds, financial assets or economic resources or related services held in the form of bank accounts, stocks or Insurance policies etc., with them.
(ii) In case, the particulars of any of their customers match with the particulars of designated individuals / entities, the banks, stock exchanges / depositories, intermediaries regulated by SEBI and insurance companies shall immediately, not later than 24 hours from the time of finding out such customer, inform full particulars of the funds, financial assets or economic resources or related services held in the form of bank accounts, stocks or Insurance policies etc., held by such customer on their books to the Joint Secretary (IS.I), Ministry of Home Affairs, at Fax No.011-23092569 and also convey over telephone on 011-23092736. The particulars apart from being sent by post should necessarily be conveyed on e-mail id :jsis@nic.in
(iii) The banks, stock exchanges / depositories, intermediaries regulated by SEBI and insurance companies shall also send a copy of the communication mentioned in (ii) above to the UAPA nodal officer of the state / UT where the account is held and Regulators and FIU-IND, as the case may be.
(iv) In case, the match of any of the customers with the particulars of designated individuals / entities is beyond doubt, the banks, stock exchanges / depositories, intermediaries regulated by SEBI and insurance companies would prevent designated persons from conducting financial transactions, under intimation to the Joint Secretary (lS.I), Ministry of Home Affairs, at Fax No.011-23092569 and also convey over telephone on 011- 23092736. The particulars apart from being sent by post should necessarily be conveyed on e-mail id :jsis@nic.in
(v) The Banks, stock exchanges / depositories, intermediaries regulated by SEBI and insurance companies, shall file a Suspicious Transaction
REPORT (STR) WITH FIU-IND COVERING ALL TRANSACTIONS IN THE ACCOUNTS COVERED BY PARAGRAPH (II) ABOVE, CARRIED THROUGH OR ATTEMPTED AS PER THE PRESCRIBED FORMAT
5. On receipt of the particulars referred to in paragraph 3 (ii) above, IS-I Division of MHA would cause a verification to be conducted by the State Police and / or the Central Agencies so as to ensure that the individuals / entities identified by the Banks, stock exchanges / depositories, intermediaries regulated by SEBI and Insurance Companies are the ones listed as designated individuals / entities and the funds, financial assets or economic resources or related services, reported by banks, stock exchanges / depositories, intermediaries regulated by SEBI and insurance companies are held by the designated individuals / entities. This verification would be completed within a period not exceeding 5 working days from the date of receipt of such particulars.
6. In case, the results of the verification indicate that the properties are owned by or are held for the benefit of the designated individuals / entities, an order to freeze these assets under section 51A of the UAPA would be issued within 24 hours of such verification and conveyed electronically to the concerned bank branch, depository, branch of insurance company branch under intimation to respective Regulators and FlU-IND. The UAPA nodal officer of IS-I Division of MHA shall also forward a copy thereof to all the Principal Secretary / Secretary, Home Department of the States or UTs, so that any individual or entity may be prohibited from making any funds, financial assets or economic resources or related services available for the benefit of the designated individuals / entities or any other person engaged in or suspected to be engaged in terrorism. The UAPA nodal officer of IS-I Division of MHA shall also forward a copy of the order under section 51A, to all Directors General of Police / Commissioners of Police of all states / UTs for initiating action under the provisions of Unlawful Activities (Prevention) Act.
The order shall take place without prior notice to the designated individuals / entities.
REGARDING FINANCIAL ASSETS OR ECONOMIC RESOURCES OF THE NATURE OF IMMOVABLE PROPERTIES
7. IS-I Division of MHA would electronically forward the designated lists to the UAPA nodal officer of all States and UTs with the request to have the names of the designated individuals / entities, on the given parameters, verified from the records of the office of the Registrar performing the work of registration of immovable properties in their respective jurisdiction.
8. In case, the designated individuals / entities are holding financial assets or economic resources of the nature of immovable property and if any match with the designated individuals / entities is found, the UAPA nodal officer of the state / UT would cause communication of the complete particulars of such individual/ entity along with complete details of the financial assets or economic resources of the nature of immovable property to Joint Secretary (ISI), Ministry of Home Affairs, immediately within 24 hours at Fax No.011- 23092569 and also convey over telephone on 011-23092736. The particulars apart from being sent by post would necessarily be conveyed on e-mail id :jsis@nic.in.
9. The UAPA nodal officer of the state / UT may cause such inquiry to be conducted by the State Police so as to ensure that the particulars sent by the Registrar performing the work of registering immovable properties are indeed of these designated individuals / entities. This verification would be completed within a maximum of 5 working days and should be conveyed within 24 hours of the verification, if it matches with the particulars of the designated individual / entity to Joint Secretary (IS-I), Ministry of Home Affairs at the Fax, telephone numbers and also on the e-mail id given below.
10. A copy of this reference should be sent to Joint Secretary (IS.I), Ministry of Home Affairs, at Fax No.011-23092569 and also convey over telephone on 011- 23092736. The particulars apart from being sent by post would necessarily be conveyed on e-mail id :jsis@nic.in. MHA may have the verification also conducted by the Central Agencies. This verification would be completed within a maximum of 5 working days.
11. In case, the results of the verification indicate that the particulars match with those of designated individuals / entities, an order under section 51A of the UAPA would be issued within 24 hours, by the nodal officer of IS-I Division of MHA and conveyed to the concerned Registrar performing the work of registering immovable properties and to FIU-IND under intimation to the concerned UAPA nodal officer of the state / UT.
THE ORDER SHALL TAKE PLACE WITHOUT PRIOR NOTICE, TO THE DESIGNATED INDIVIDUALS / ENTITIES
12. Further, the UAPA nodal officer of the state / UT shall cause to monitor the transactions / accounts of the designated individual / entity so as to prohibit any individual or entity from making any funds, financial assets or economic resources or related services available for the benefit of the individuals or entities Listed in the Schedule to the Order or any other person engaged in or suspected to be engaged in terrorism. The UAPA nodal officer of the state / UT shall upon coming to his notice, transactions and attempts by third party immediately bring to the notice of the DGP / Commissioner of Police of the State / UT for also initiating action under the provisions of Unlawful Activities (Prevention) Act.
IMPLEMENTATION OF REQUESTS RECEIVED FROM FOREIGN COUNTRIES UNDER U.N. SECURITY COUNCIL RESOLUTION 1373 OF 2001
13. U.N. Security Council Resolution 1373 obligates countries to freeze without delay the funds or other assets of persons who commit, or attempt to commit, terrorist acts or participate in or facilitate the commission of terrorist acts; of entities owned or controlled directly or indirectly by such persons; and of persons and entities acting on behalf of, or at the direction of such persons and entities, including funds or other assets derived or generated from property owned or controlled, directly or indirectly, by such persons and associated persons and entities. Each individual country has the authority to designate the persons and entities that should have their funds or other assets frozen. Additionally, to ensure that effective cooperation is developed among countries, countries should examine and give effect to, if appropriate, the actions initiated under the freezing mechanisms of other countries.
14. To give effect to the requests of foreign countries under U.N. Security Council Resolution 1373, the Ministry of External Affairs shall examine the requests made by the foreign countries and forward it electronically, with their comments, to the UAPA nodal officer for IS-I Division for freezing of funds or other assets.
15. The UAPA nodal officer of IS-I Division of MHA, shall cause the request to be examined, within 5 working days, so as to satisfy itself that on the basis of applicable legal principles, the requested designation is supported by reasonable grounds, or a reasonable basis, to suspect or believe that the proposed designee is a terrorist, one who finances terrorism or a terrorist organization, and upon his satisfaction, request would be electronically forwarded to the nodal officers in Regulators, FIU-IND and to the nodal officers of the States / UTs. The proposed designee, as mentioned above would be treated as designated individuals / entities.
16. Upon receipt of the requests by these nodal officers from the UAPA nodal officer of IS-I Division, the procedure as enumerated at paragraphs 4 to 12 above shall be followed.
The freezing orders shall take place without prior notice to the designated persons involved.
Procedure for Unfreezing of Funds, Financial Assets or Economic Resources or related Services of Individuals / Entities Inadvertently affected by the Freezing Mechanism upon Verification that the Person or Entity is not a Designated Person
17. Any individual or entity, if it has evidence to prove that the freezing of funds, financial assets or economic resources or related services, owned / held by them has been inadvertently frozen, they shall move an application giving the requisite evidence, in writing, to the concerned bank, stock exchanges / depositories, intermediaries regulated by SEBI, insurance companies, Registrar of Immovable Properties and the State / UT nodal officers.
18. The banks, stock exchanges / depositories, intermediaries regulated by SEBI, insurance companies, Registrar of Immovable Properties and the State / UT nodal officers shall inform and forward a copy of the application together with full details of the asset frozen given by any individual or entity informing of the funds, financial assets or economic resources or related services have been frozen inadvertently, to the nodal officer of IS-I Division of MHA as per the contact details given in paragraph 4 (ii) above, within two working days.
19. The Joint Secretary (IS-I), MHA, being the nodal officer for IS-I Division of MHA shall cause such verification as may be required on the basis of the evidence furnished by the individual / entity and if he is satisfied, he shall pass an order, within 15 working days, unfreezing the funds, financial assets or economic resources or related services, owned / held by such applicant, under intimation to the concerned bank, stock exchanges / depositories, intermediaries regulated by SEBI, insurance company and the nodal officers of States / UTs. However, if it is not possible for any reason to pass an Order unfreezing the assets within 15 working days, the nodal officer of IS-I Division shall inform the applicant.
COMMUNICATION OF ORDERS UNDER SECTION 51A OF UNLAWFUL ACTIVITIES (PREVENTION) ACT
20. All Orders under section 51A of Unlawful Activities (Prevention) Act, relating to funds, financial assets or economic resources or related services, would be communicated to all the banks, depositories / stock exchanges, intermediaries regulated by SEBI, insurance companies through respective Regulators, and to all the Registrars performing the work of registering immovable properties, through the state / UT nodal officer by IS-I Division of MHA.
REGARDING PREVENTION OF ENTRY INTO OR TRANSIT THROUGH INDIA
21. As regards prevention of entry into or transit through India of the designated individuals, the Foreigners Division of MHA, shall forward the designated lists to the immigration authorities and security agencies with a request to prevent the entry into or the transit through India. The order shall take place without prior notice to the designated individuals / entities.
22. The immigration authorities shall ensure strict compliance of the Orders and also communicate the details of entry or transit through India of the designated individuals as prevented by them to the Foreigners' Division of MHA.
PROCEDURE FOR COMMUNICATION OF COMPLIANCE OF ACTION TAKEN UNDER SECTION 51A
23. The nodal officers of IS-I Division and Foreigners Division of MHA shall furnish the details of funds, financial assets or economic resources or related services of designated individuals / entities frozen by an order, and details of the individuals whose entry into India or transit through India was prevented, respectively, to the Ministry of External Affairs for onward communication to the United Nations.
CONCLUSION
The prevention and prohibition of Mooney Laundering is the most important for the development of a country. The large ML transactions / transborder ML transactions are generally done to finance terrorism and India also has felt the heat and is continuing the feel the heat of terrorism. There are many countries suffering from this terrorism, thus it is necessary to take strict steps to curb this nexus of ML and Terrorism. The government to coup with above has made changes in Anti Money Laundering Act, 2002 and Unlawful Activities (Prevention) Act, 1967. The government has also kept in mind the Resolution Passed in UN Security Council 1373 of 2001 on ML & TF.
DISCLAIMER: The article produced here is only for information and knowledge of readers. The article has been prepared on the basis of available material at the time of preparation. It is advisable to take professional advise before acting on any part of this article. The author will not be responsible for any damage or loss to the readers acting any part of this article.
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