The Prevention of Money Laundering Act, 2002 (PMLA) applies to practising chartered accountants (CA), company secretaries (CS), and cost and works accountants (CWAs), whenever financial transactions are carried out on behalf of a client.
Additional News
- The Central Government notified a small number of activities where they are carried out for or on behalf of another natural or legal person in conformity with Section 2(1)(sa)(vi) of the PMLA.
- The first is the purchase and sale of any real estate.
- managing client funds, securities, or other assets is the second.
- Management of bank, savings, or stocks accounts comes in third.
- Fourth, the organisation of donations for the founding, running, or management of businesses.
- Finally, the founding, running, or managing of corporations, limited liability companies, or trusts, as well as the acquisition and disposal of commercial entities.
Regarding the 2002 Prevention of Money Laundering Act (PMLA)
- Making money that has been obtained unlawfully (sometimes known as “dirty money”) appear to have come from a legitimate source is a practise called money laundering.
- In India, it is a crime, and the allegations in this case pertain to the Prevention of Money Laundering Act of 2002’s legal guidelines.
- In response to India’s international commitment (Vienna Convention) to address the problem of economic crimes including money laundering, the PMLA was passed. United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances of 1988 is one of the other conventions.
- 1989 Basle Declaration of Principles.
- The Financial Action Task Force on Money Laundering issued forty recommendations in 1990.
- The United Nations General Assembly endorsed the Political Declaration and Global Programme of Action in 1990.
- All persons, including individuals, businesses, partnerships, associations of persons, corporations, and any agency, office, or branch owned or managed by any of the aforementioned parties, are subject to the PMLA.
The 2002 Prevention of Money Laundering Act’s key provisions
- Money laundering is defined by the PMLA as any procedure or action that uses the proceeds of crime and conceals or distorts their true identity, source, destination, disposition, movement, rights with regard to, or ownership of, property while knowing or having a reasonable basis for knowing the nature of such proceeds.
- Money laundering is prohibited by the PMLA, which also imposes a fine and a maximum sentence of seven years in jail on individuals found guilty of the crime.
- The PMLA creates the Directorate of Enforcement (ED) as a specialised body tasked with investigating and prosecuting cases of money laundering.
- Reporting requirements: The Financial Intelligence Unit-India (FIU-IND) must be notified of any suspicious transactions by specific entities, such as banks, financial institutions, and intermediaries, in accordance with the PMLA’s reporting requirements. Penalties and fines may apply if certain reporting obligations are not followed.
- Offences committed by businesses: The PMLA also calls for the enforcement of fines and penalties on businesses that are discovered engaging in money laundering activities.