The practice of converting huge amount of money attained through illegal techniques is money laundering. The methods of money laundering may fluctuate according to sophistication and difficulty. The Convention against Transnational Organized Crime and Convention against Illicit Traffic in Narcotic and Psychotropic Substances formulated under the auspices of United Nations stipulates the components of money laundering as a crime.
The Prevention of Money Laundering Act is a Central legislation enacted in 2002 for the purpose of avoiding money laundering and to provide for exclusion of property obtained from money laundering. The Act includes provision for freezing, capture and exclusion for proceeds of crime. The Act contains seventy five sections and one Schedule. The present legislation aims to execute the Political Declaration and Global Programme of Action passed by the United Nations. The Act describes money laundering as an effort to intrude or support any other individual or engage in an activity related with the activities of such crime and exposing it as a fresh property. Such a person is responsible for the offense of money laundering and liable to be punished.
An order shall be established by the Director or Deputy Director to append property temporarily which is alleged to be the earnings of the crime of money laundering, by appropriate Government. The appropriate authority in the Act is a body appointed by the Union Government. The banking institutions, financial bodies or intermediary shall keep a record containing the details of the business deal and such record shall be verified and managed in the prescribed manner. Where it comes to the notice of the Director that the institutions have acted contrary to the provisions of the Act, the officer shall take necessary steps and impose fine on such institution. But civil procedures cannot be instituted against such institutions or intermediaries.
The Burden of proof lies on the accused to prove that he has not committed the offense of money laundering. Any person aggrieved by the order of the appropriate authority can prefer an appeal to the Appellate Tribunal and to the High Court thereafter. The final decision with regard to a dispute shall be of the Supreme Court. The appellate tribunal shall consist of a Chairperson who is or has been a Supreme Court or High Court Judge and other two members who is or has been a Supreme Court or High Court Judge and other conditions as prescribed.
The Appellate Tribunal is not complied to follow the Code of Criminal Procedure, 1908 but directed by the doctrines of natural justice. The powers conferred on the Appellate Tribunal shall be same as that of a civil court. The Civil Court is exempted from exercising powers exclusively conferred on the Appellate body. The Act provides for the constitution of a Special Court in discussion with the Chief Justice of High Court. Moreover, the Sessions Court is nominated as the Special Court with the powers stipulated under the Criminal Procedure Code. The offenses prescribed under the Act shall be cognizable and non bailable.
The Act provides for the appointment of authorities which shall have the powers and functions stipulated under the Act and as directed by the Central Government. For the purpose of giving effect to the provisions of the Act, the Central Government is empowered to frame rules by notification.
In 2005, the present Act has been amended by the Prevention of Money Laundering (Amendment) Act. The Act has proved to be the central legal structure to prevent money laundering and preserve security of the country. Therefore, the Act is a protective legislation which indirectly confers duty on the financial bodies and other entities to recognize and inform the dealings which are suspected to be money laundering.