A Practical Guide to The Prevention of Money Laundering Act 2002

by Sunil Kumar Gupta & Pawan Singh Tomar

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CONTENTS

INTRODUCTION	1
Basic Steps of Money-Laundering	2
Statement of Objects and Reasons	3
The PMLA, 2002	4
Frequently Asked Questions (FAQs)	6
CHAPTER 1: PRELIMINARY	14
Section 1. Short title, extent and commencement	14
Case Laws	14
Section 2. Definitions	15
Case Law	16
Frequently Asked Questions (FAQs)	38
CHAPTER 2 : OFFENCE OF MONEY-LAUNDERING	46
Section 3 – Offence of Money-laundering	46
Explanation	46
Methods of Money-laundering	48
Mens rea	48
Conscious possession	48
Stand-alone offence	49
Relevant date	49
Burden of Proof	50
If the property derived from the scheduled offence is not available	50
Insertion of Explanation below section 3 of the Act	50
Case Laws	52
Section 4. Punishment for money-laundering	54
Case Laws	55
Frequently Asked Questions (FAQs)	57
CHAPTER 3 : Attachment, Adjudication and Confiscation	73
Section 5. Attachment of property involved in money-laundering	73
Insolvency Proceedings	82
Section 6. Adjudicating Authority, composition, powers, etc	90
Section 7. Staff of Adjudicating Authorities	96
Section 8. Adjudication	96
Adjudication vis-à-vis appeal	104
Time period of 365 days	104
Taking possession under Section 8(4) of the Act	104
Attachment of a property purchased by a bonafide purchaser	105
Impact of action under PMLA on other penal laws-	105
Role of Adjudicating Authority in confiscation of (tainted) properties	105
Whether the properties purchased prior to the commission of scheduled offence can be attached?	106
Mens rea	106
Opportunity of being heard	106
Reason to Believe	113
Section 9. Vesting of property in Central Government	116
Section 10 Management of properties confiscated under this chapter	117
Section 11. Powers regarding summons, production of documents, evidence, etc	118
Section 11A—Verification of Identity by Reporting Entity	120
Explanation	121
The Circular	121
Frequently Asked Questions (FAQs)	122
CHAPTER 4 : Obligations of Banking Companies, Financial Institutions and Intermediaries	133
Section–12. Reporting Entity to maintain records	133
Section 12A. Access to Information	137
Section 12AA. Enhanced due diligence	138
Explanation	138
Section 13. Powers of Director to impose fine	139
Explanation	140
Section 14. No civil or criminal proceedings against reporting entity, its directors and employees in certain cases	141
Section 15—Procedure and manner of furnishing information by reporting entities	142
Procedure and manner of furnishing information	143
Manner of furnishing information to the Director	143
Frequently Asked Questions(FAQs)	144
CHAPTER 5 : Summons, Searches and Seizures, Etc.	146
Section–16. Power of Survey	146
Section 17–Search and Seizure	149
Deletion of proviso under section 17(1) of the Act	153
Section 18. Search of Persons	158
Deletion of proviso under section 18(1) of the Act	161
Section 19. Power to Arrest	166
Difference between Detention and Arrest	167
Section 20. Retention of Property	173
Section 21–Retention of records	175
Section 22. Presumption as to records or property in certain cases	178
Section 23. Presumption in interconnected transaction	180
Section 24. Burden of Proof	182
Frequently Asked Questions(FAQs)	184
CHAPTER 6 : Appellate Tribunal	199
Section 25—Appellate Tribunal	199
Section 26. Appeals to Appellate Tribunal—	200
Sections 27 to 34—[***]	204
Section 35. Procedure and powers of Appellate Tribunal	206
Meaning of principles of natural justice	207
Section 36. Distribution of business amongst Benches	212
Section 37—Power of [Chairman] to transfer cases	212
Section 38. Decision to be by majority	212
Section 39. Right of the appellant to take assistance of authorised representative and of Government to appoint presenting officers	213
Explanation	213
Section 40. Members, etc., to be public servants	214
Public Servant	215
Section 41. Civil Court not to have jurisdiction	215
Section 42. Appeal to High Court	215
Explanation	216
Frequently Asked Questions (FAQs)	219
CHAPTER 7 : Special Courts	226
Section 43. Special Courts	226
Explanation	226
Section 44. Offences triable by Special Courts—	228
Explanation.	229
Section 45—Offences to be cognizable and non-bailable	238
Explanation	238
The amendment made in section 45 in 2018 (w.e.f. 19-4-2018) and its effect	252
Section 46. Application of the Code of Criminal Procedure, 1973 to proceedings before Special Court	261
Section 47. Appeal and revision	263
Frequently Asked Questions (FAQs)	264
Amendment made in section 44(1)(d) of the Act w.e.f. 1-8-2019	267
CHAPTER 8 : Authorities	277
Section 48. Authorities under the Act	277
Section 49. Appointment and powers of authorities and other officers	278
Section 50. Powers of authorities regarding summons, production of documents and to give evidence, etc	279
Section 51. Jurisdiction of authorities	286
Section 52. Power of Central Government to issue directions, etc	287
Section 53. Empowerment of certain officers	288
Section 54. Certain officers to assist in inquiry, etc	288
Frequently Asked Questions (FAQs)	289
CHAPTER 9 : Reciprocal Arrangement for Assistance in Certain Matters And Procedure for Attachment and Confiscation of Property	296
Section 55. Definitions	296
Section 56. Agreements with foreign countries	298
Section 57. Letter of request to a Contracting State in certain cases	299
Section 58. Assistance to a Contracting State in certain cases	301
Section 58A. Special Court to release the property	303
Section 58B. Letter of request of a Contracting State or authority for confiscation or release the property	304
Section 59. Reciprocal arrangements for processes and assistance for transfer of accused persons	304
Section 60. Attachment, seizure, confiscation, etc., of property in a Contracting State or India	307
Section 61. Procedure in respect of letter of request	310
Frequently Asked Questions (FAQs)	310
CHAPTER 10 : Miscellaneous	314
Section 62. Punishment for vexatious search	314
Section 63. Punishment for false information or failure to give information, etc	315
Section 64. Cognizance of offences	317
Section 65. Code of Criminal Procedure, 1973, to apply	317
Section 66. Disclosure of information	319
Section 67. Bar of suits in civil courts	322
Section 68. Notice, etc., not to be invalid on certain grounds	323
Section 69. Recovery of fine or penalty	324
Section 70. Offences by companies	325
Section 71. Act to have overriding effect	329
Section 72. Continuation of proceedings in the event of death or insolvency	330
[Section 72A. Inter-ministerial co-ordination committee	333
Section 73. Power to make rules	333
Section 74. Rules to be laid before Parliament	337
Section 75. Power to remove difficulties	338
Crypto Transaction brought under Anti-Money Laundering Laws	338
Client due Diligence-The Beneficial Ownership in an Account	340
ED Report Card	340
Frequently Asked Questions (FAQs)	341
CHAPTER 11 : Suggestions	347
The Schedule [See Section 2(Y)] [Part A]	352
APPENDICES
The Prevention of Money-Laundering Act, 2002	363-418
The Prevention of Money-Laundering (Manner of Receiving the Records authenticated Outside India) Rules, 2005	419
The Prevention of Money-Laundering (The Manner of Forwarding A Copy of the Order of Provisional Attachment of Property along with the Material, and Copy of the Reasons along with the Material in Respect of Survey, to the Adjudicating Authority and Its Period of Retention) Rules, 2005	420-429
The Prevention of Money-Laundering (Receipt and Management of Confiscated Properties) Rules, 2005	425
The Prevention of Money-Laundering (Maintenance of Records)Rules, 2005	427-450
The Prevention of Money-Laundering (Forms, Search and Seizure or Freezing and the Manner of Forwarding the Reasons and Material to the Adjudicating Authority, Impounding and Custody of Records and the Period of Retention) Rules, 2005	451-461
The Prevention of Money-Laundering (the Forms and the Manner of Forwarding a Copy of order of Arrest of A Person along with the Material to the Adjudicating Authority and Its Period of Retention) Rules, 2005	462-465
The Prevention of Money-Laundering (the Manner of Forwarding A Copy of the Order of Retention of Seized Property along with the Material to the Adjudicating Authority and the Period of its Retention) Rules, 2005	466-469
The Prevention of Money-Laundering (Issuance of provisional Attachment Order) Rules, 2013	470-471
The Prevention of Money-Laundering (Taking possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013	472-477
The Prevention of Money-Laundering (Restoration of Confiscated Property) Rules, 2016	478-479
The Adjudicating Authority (Procedure) Regulations, 2013	480-493
Recent Notification dated 3-05-2023	510