money laundering in india

What is Money Laundering ?

The visualisation of the Lay man will not be far different than the one shown in this picture. The general guesses from most people would be that it must be something related to drying, washing or may be dry cleaning of the currency notes. This is rather the human tendency about the world's very big crime.

To some extent correct but layman don't know much of this world's third largest industry. As per IMF reports the turnover of this industry could be somewhere around $1.5 trillion. However common man does not pay attention because primarily it seems to be a victimless crime. It has none of the issues associated with a vanishing of the money from economy or performance of the government or organisations involved in the same and yet, money laundering can only take place after a predicate crime (such as a Drug trafficking or the stock market frauds) has taken place.If the person on the street is the banker he might throw the three letters "KYC" to express his knowledge.

Money laundering is the process by which large amounts of illegally obtained money (from drug trafficking, terrorist activity or other serious crimes) is given the appearance of having originated from a legitimate source.

But in simple terms it is the Conversion of Black money into white money. This takes you back to cleaning the huge piles of cash. Indian newspapers frequently report the money laundering scams perpetrated by the Political leaders and some of the prominent stars are the chief ministers of UP, Punjab and Kerala. UP chief minister ms. Mayawati as per the Indian Express reports used some innovative techniques to launder the money by avoiding the tax in legitimate manner. She accepted the donations from persons who were road side heroes. When CBI raided these guys were found in no position to donate huge sums for political motives.

Other Indian star in the laundering Business is Ketan Parekh.It is believed that he shifted the proceeds of money received from the BoI pay order scam to various tax heavens and ultimately in the Swiss Banks.These transactions are believd to be just the tip of the iceberg.

If done successfully, it allows the criminals to maintain control over their proceeds and ultimately to provide a legitimate cover for their source of income. Money laundering plays a fundamental role in facilitating the ambitions of the drug trafficker, the terrorist, the organised criminal, the insider dealer, the tax evader as well as the many others who need to avoid the kind of attention from the authorities that sudden wealth brings from illegal activities. By engaging in this type of activity it is hoped to place the proceeds beyond the reach of any asset forfeiture laws

Prevention of Money Laundering Act, 2002

The Prevention of Money Laundering Act, 2002 (PMLA 2002) forms the core of the legal framework put in place by India to combat money laundering. PMLA 2002 and the Rules notified there under came into force with effect from July 1, 2005 . Director, FIU-IND and Director (Enforcement) have been conferred with exclusive and concurrent powers under relevant sections of the Act to implement the provisions of the Act.

The PMLA 2002 and rules notified thereunder impose obligation on banking companies, financial institutions and intermediaries to verify identity of clients, maintain records and furnish information to FIU-IND. PMLA 2002 defines money laundering offence and provides for the freezing, seizure and confiscation of the proceeds of crime.

Anti Money Laundering Regime in India

The Reserve Bank of India's extensive Anti-Money Laundering (AML) guidelines have become effective from March 2006. The AML norms such as "Know Your Customer" emphasize that banks must keep a record of their customers' backgrounds in order to reduce and control the risk of money laundering. Dr. Krishnan's talk will deal upon some issues that arise from KYC and other norms under the Prevention of Money Laundering Act 2002 which is the legal regime for AML in India. Though primarily descriptive the talk will also deal with the possible consequences of such norms on India's financial system and the economy in general.

Indian readers need no introduction to the term "money laundering". The concept of coloured cash and cleaning procedures are familiar, but the perception of our lawmakers and citizens have been restricted to tax evasion — with various laws dedicated to eradicate this phenomenon.

No serious efforts were made to identify the genesis of the problem, the sources of tainted money, accumulation, modes of channelisation into a nation's financial system - yet India is perceived to be a major centre for "hawala" transactions, and needs to assess the threat not just to its economy, but its political system and sovereignty.

The amendments to the Prevention of Money Laundering Act (PMLA), 2002, should be aimed at detecting and identifying money laundering and cross- border proceeds, with appropriate tools for deterrent and detection.

The international community has recognised the adverse consequences of cross-border money laundering movements as early as the 1980s and taken several initiatives such as the Vienna Convention (1988), dealing with drug trafficking money, and the Palermo Convention (2000) focusing on transnational crimes, none of which has been ratified by India. India is yet to become a member of the Financial Action Task Force on Money Laundering (FATF), which seeks to improve national legal systems by introduction of international standards.

Currently, India has three separate laws dealing with money laundering. The Narcotics and Psychotropic Substances (NDPS) Act, 1985, applies to proceeds of drug offences in certain limited situations, the Unlawful Activities Act (UAPA), which under a 2004 amendment, provides for raising funds for terrorism being a predicated offence and PLMA, which came into effect only when the Rules were in place in 2005, and is intended to deal with all types of money laundering.

The NDPS Act, which applies only to drug offences, does not require a conviction for the predicate offence. PMLA requires a predicate offence conviction in order to take cognisance, and the schedules to the Act include corruption, prosecution of wildlife, drug and human trafficking, but virtually ignore capital and financial markets.

India has, however, taken initiatives in the accountability and supervisory roles of regulator in financial and capital markets, which are dealt by the Reserve Bank of India (RBI), the Securities and Exchange Board of India (Sebi) and Insurance Regulatory and Development Authority (Irda). The roles are well defined, and the RBI was the first to establish the customer due diligence guidelines while Sebi's vigilance in protecting capital markets does not need elaboration. Sebi promulgated its own guidelines on anti-money laundering measures even before the RBI.

Section 12 of PMLA requires all banks and intermediaries to maintain records of all transactions, according to nature and value and report to the director - currently under the rules this includes cash transactions involving more than one million rupees, or even less if connected integrally, involving forgery or counterfeit notes or instruments or any suspicious debits, credits, payments, loans etc. In all fairness the PMLA rules pertaining to the maintenance of and verification of records for all the sectors have been in place since 2005. But the existing regimes encompassing PMLA, UAPA and NDPS have been virtually ineffective, with investigations far and few, and even lesser prosecutions and convictions till date.

Powers of confiscation, freezing and forfeiture are also largely dependant on the law providing for the predicated offence. In fact the PMLA provides for confiscation of proceeds of crime, but not of the instrumentalities used in an offence. International cooperation depends on bilateral arrangements and treaties where they exist, and letters of request in others. This is where FATF membership would provide a single window.

The proposed amendments seek to incorporate existing key provisions of the PMLA rules in recording and maintaining information and making reporting mandatory for all intermediaries, particularly for all foreign transactions. Casinos, money changers and transfer service providers, international credit card gateways are to be subjected to regulatory and reporting requirements. As of now, the latter are governed by the RBI regulations that mainly deal with their customer-related operations.

All offences pertaining to insider trading and market manipulation will also be brought into PMLA as well as smuggling of antiques, terrorism funding, human trafficking other than prostitution, and a wider range of environmental crimes.

To effectively combat cross-border money laundering, India has to make its financial systems FATF compliant, provide for better tracking measures, and incorporate proper mechanisms for investigation, prosecution, easier extradition processes, cross border applicability in foreign jurisdictions, even when the predicated offence is committed in India

The prevention of money laundering in India

Money Laundering Methods and Trends

Send Print The annual FATF typologies exercise brings together experts from the law enforcement and regulatory authorities of FATF member countries to exchange information on significant money laundering cases and operations. It also provides a vital opportunity for operational experts to identify and describe current money laundering trends and effective counter-measures. Building on the analysis and lessons learned from earlier typologies work, the yearly exercise also attempts to examine a series of particular concerns in the money laundering area from the operational perspective. Although the FATF has conducted typologies exercises since its beginning, reports of this work have only been made public since the 1995 exercise (released in June 1996).

FATF-XVI (10 Juin 2005)

The FATF-XVI meeting of experts on typologies took place in December 2004 in Moscow and was chaired by Mr. Viktor ZUBKOV, Director of the Federal Service for Financial Monitoring of the Russian Federation (Rosfinmonitoring, the Russian financial intelligence unit). Major topics covered by the report include:

Alternative remittance system

Money laundering vulnerabilities in the insurance sector

Proceeds from trafficking in human beings and illegal immigration

ML/TF trends and indicators: initial perspectives

FATF-XV (27 February 2004)

The FATF-XV meeting of experts on money laundering and terrorist financing typologies took place in Oaxaca, Mexico, on 17 and 18 November 2003 chaired by Mrs. María de la Concepción Patiño Cestafe, Head of the Dirección General Adjunta de Investigación de Operaciones (DGAIO), the Mexican FIU. FATF members, FATF-style regional bodies, members and international organisations attended. Major topics covered by the report include:

Wire transfers and terrorist financing

Non-profit organisations and links to terrorist financing

The vulnerabilities of the insurance sector to money laundering

Politically exposed persons (PEPs)

The role of “gatekeepers” or non financial professions in money laundering

FATF-XIV (14 February 2003)

The meeting of experts on typologies for FATF-XIV was held in Rome from 19-21 November 2002 under the chairmanship of Dr. Carlo Santini, Director General of the Ufficio Italiano dei Cambi. The major topics of the report are:

Terrorist financing

Money Laundering through the securities sector

The gold and diamond markets

Insurance and money laundering

Credit and debit cards and money laundering

FATF-XIII (1 February 2002)

The FATF-XIII meeting of experts, chaired by Detective Superintendent Bill Bishop, Police National Crime Manager, New Zealand, took place in Wellington, New Zealand, from 19 to 20 November 2001. Major topics covered by the report include:

Terrorist financing

Correspondent banking

Corruption and private banking

Bearer securities and other negotiable instruments

Co-ordinated money laundering among organised crime groups

Introduction of euro banknotes

Suspicious transaction reporting and money laundering cases

FATF-XII (1 February 2001)

The FATF-XII meeting of experts was chaired by Mr. Lars Oftedal Broch, Supreme Court Judge, and took place in Oslo, Norway, from 6 to 7 December 2000. Participation from FATF-style regional bodies was continued and included representatives from twelve jurisdictions. The major topics of the report are:

On-line banking and Internet casinos

Trust, other non-corporate vehicles and money laundering

Lawyers/notaries, accountants and other professionals

The role of cash vs other payment methods in money laundering schemes

Terrorist related money laundering

FATF-XI (3 February 2000)

The FATF-XI meeting of experts took place in Washington, DC, from 18 to 19 November 1999, under the chairmanship of Mr. James Sloan, Director, US Treasury Financial Crimes Enforcement Network (FinCEN) [United States]. For the first time, experts from the member jurisdictions of FATF-style regional bodies were invited to participate in the FATF meeting. The primary topics of the report include:

On-line Banking: Distinguishing legitimate banking from money laundering services offered through the Internet.

Alternate Remittance Systems: A world-wide view of their role in money laundering.

Company formation agents and their services.

Trade related activities and money laundering.

Selected case studies.

FATF-X (11 February 1999)

The group of experts for FATF-X met on 17-18 November 1998 in London under the chairmanship of Mr. Simon Goddard, Head of Intelligence, Strategic and Specialist Intelligence Branch, National Criminal Intelligence Service (NCIS) [United Kingdom]. The topics covered by the exercise include:

The single European currency and large denomination banknotes.

Offshore financial centres of non-cooperative countries or territories.

The role of the "foreign legal entity" in money laundering.

New payment technologies.

Potential use of the gold market in money laundering operations.

Selected case studies.

FATF-IX (12 February 1998)

The meeting of experts on typologies for FATF-IX was held in Paris on 19-20 November 1997 under the chairmanship of Mr. Pierre Fond, Deputy Secretary General of TRACFIN [France]. The primary subject areas dealt with in the report include:

New payment technologies: Present status and potential vulnerabilities to money laundering.

Money remittance businesses and activities (both formal and informal).

Other observed trends (insurance, money exchange, cross-border movements, the gold market).

Money laundering and non-financial professions (lawyers, notaries, accountants, company formation agents, real estate, sellers of high-value items).

Selected case studies.

FATF-VIII (6 February 1997)

The FATF-VIII meeting of experts on typologies took place in Paris on 19-20 November 1996 under the chairmanship of Mr. Stanley Morris, Director, US Treasury Financial Crimes Enforcement Network (FinCEN) [United States]. Topics covered during the meeting were:

Attempts to estimate the size of the money laundering problem.

Principal sources of illegal proceeds laundered.

Main money laundering methods detected in the banking, non-bank financial institution and non-financial business sectors.

Electronic funds transfers and their vulnerability to money laundering.

New money laundering counter-measures (legislative, regulatory, etc.).

Key money laundering trends in non-FATF members.

FATF-VII (28 June 1996)

The meeting of experts on typologies for FATF-VII was held in Paris on 29-29 November 1995 under the chairmanship of Mr. Jean Spreutels, President, Cellule de Traitement des Informations Financières (CTIF-CFI) [Belgium]. In addition to the primary topics mentioned above for FATF-VIII, the group of experts also examined money laundering trends involving the insurance and securities industries.

Money laundering is the practice of disguising illegally obtained funds so that they seem legal. It is a crime in many jurisdictions with varying definitions. It is a key operation of the underground economy.

In US law it is the practice of engaging in financial transactions to conceal the identity, source, or destination of illegally gained money.

In UK law the common law definition is wider. The act is defined as taking any action with property of any form which is either wholly or in part the proceeds of a crime that will disguise the fact that that property is the proceeds of a crime or obscure the beneficial ownership of said property.

In the past, the term "money laundering" was applied only to financial transactions related to organized crime. Today its definition is often expanded by government and international regulators such as the US Office of the Comptroller of the Currency to mean any financial transaction which generates an asset or a value as the result of an illegal act, which may involve actions such as tax evasion or false accounting. In the UK, it does not even need to involve money, but any economic good.

As a result, courts may see money laundering committed by private individuals, drug dealers, businesses, corrupt officials, members of criminal organizations such as the Mafia, and even states.

As financial crime has become more complex, and "financial intelligence information gathering intelligence" (FININT) has become more recognized in combating international crime and terrorism, money laundering has become more prominent in political, economic, and legal debate. Money laundering is ipso facto illegal; the acts generating the money almost always are themselves criminal in some way (for if not, the money would not need to be laundered).

Definitions

To save repetition, in this article we use the term "clean" to mean money legally obtained, and "dirty" to mean money illegally obtained.

[edit] History

[edit] Modern development

Money laundering was not invented during the Prohibition era in the United States, but techniques were developed and refined then. Many methods were devised to disguise the origins of money generated by the sale of illegal alcohol. After Al Capone's 19 a Swiss bank into which he could transfer his illegal funds through a complex system of shell companies, holding companies, and offshore bank accounts.

In the post-World War II era, legislators found themselves in a quandary as they were confronted with a growing list of commercial, fiscal, and environmental offences that did not actually cause direct harm to any one identifiable victim; there was no stinking corpse. What legal instrument could these legislators use then to punish these criminals and discourage similar crimes in the future? Since human greed and the profit motive fuel organized crime, they decided that confiscating the proceeds of crime would adequately deter potential criminals. Anxious to avoid confiscation, organized criminals now needed to give these huge sums of money---not easily consumed or invested in the legal economy without raising eyebrows--a patina of legitimacy: they needed to “launder” it. Money laundering has been dubbed the “Achilles’ heel of organized crime,” for it compels mobsters to seek out and co-opt established businessmen and women with highly technical know-how and access to legal institutions like banks to launder their plunder. [1]

The term "money laundering" does not derive, as is often said, from Al Capone having used laundromats to hide ill-gotten gains. It is more likely to mean that dirty money is made clean. At some point in the process there must be a switch between the two; necessarily the art is to keep that switch hidden.

Meyer Lansky perfected a predecessor of money laundering, "capital flight," transferring his funds to Switzerland and other offshore places. The first reference to the term "money laundering" itself actually appears during the Watergate scandal. US President Richard Nixon's "Committee to Re-elect the President" moved dirty campaign contributions to Mexico, then brought the money back through a company in Miami. It was Britain's The Guardian newspaper that coined the term, referring to the process as "laundering." (See Jeffrey Robinson's three books on money laundering, The Laundrymen, The Merger and The Sink.)

Money may be laundered through a complex business network of shell companies and trusts based in tax havens. "Smurfing" is an example of a money laundering technique.

[edit] Examples

[edit] Cashing up

A business taking large amounts of small change each week (e.g. a convenience store) needs to deposit that money in a bank. If its deposits vary greatly for no obvious reason this can draw suspicion; but if the transactions are regular and roughly the same the suspicion is easily

discounted. This is the basis of all money laundering, a track record of depositing clean money before slipping through dirty money.

In the United States, for example, cash transactions and deposits of more than $10,000 must be reported by the cashier (the bank etc) as "significant cash transactions" to the Financial Crimes Enforcement Network FinCEN, with any other suspicious financial activity identified as "suspicious activity reports" (SARs).

In other jurisdictions suspicion-based requirements may be placed on financial services employees and firms to report suspicious activity to the authorities.

[edit] Irregular funding

One way to keep cash anonymous is to give it to another who is already legitimately taking in large amounts of cash. The intermediary then deposits the money in an account, takes a premium, and writes a cheque. Little attention is drawn because, for the intermediary, it is a relatively small amount of the usual takings, but for the originator it is all of his takings. This works well for one-off transactions, but if it happens regularly then the cheques themselves form a paper trail that can raise suspicion.

[edit] Captive business

Another method is to start a business whose cash inflow cannot be monitored, and funnel the small change into it and pay taxes on it. But all bank employees are trained to be constantly on the lookout for transactions that seem to be trying to get around reporting requirements. To avoid suspicion, shell companies should deal directly with the public, perform some service (not provide physical goods), and have a business that reasonably would accept cash as a matter of course. Dealing directly with the public in cash gives a plausible reason for not having a record of customers.

For example, it is quite reasonable to think that a hairstylist is paid in cash and, even if she knows her customer's names, does not know their bank details. A record of a haircut must ostensibly be accepted as prima facie evidence. Service businesses have the advantage of the anonymity of resources— but the disadvantage that they must deal in cash. A business that sells computers has to account for the computers, whereas the hairstylist does not have to produce the cut hair, but the receipt for the computer, even if inflated, exists— that for the haircut probably does not. It is of course also possible to invent customers, purely for the purpose of accepting money from them.

[edit] Legislation

Many jurisdictions adopt a list of specific predicate crimes for money laundering prosecutions as a "self launderer".

[edit] Bangladesh

In Bangladesh, this issue has been dealt with by the Prevention of Money Laundering Act, 2002 (Act No. VII of 2002). In terms of section 2 (tha), “Money Laundering means (a) Properties acquired or earned directly or indirectly through illegal means; (b) Illegal transfer, conversion, concealment of location or assistance in the above act of the properties acquired or earned directly of indirectly through legal or illegal means.” In this Act, “Properties means movable or immovable properties of any nature and description”.

[edit] India

The Prevention of Money-Laundering Act, 2002 came into effect on 1 July 2005. Section 3 of the Act makes the offense of money-laundering cover those persons or entities who directly or indirectly attempt to indulge or knowingly assist or knowingly are party or are actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property, such person or entity shall be guilty of offense of money-laundering.

Section 4 of the Act prescribes punishment for money-laundering with rigorous imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine which may extend to five lakh rupees and for the offences mentioned [elsewhere] the punishment shall be up to ten years.

Section 12 (1) prescribes the obligations on banks, financial institutions and intermediaries (a) to maintain records detailing the nature and value of transactions which may be prescribed, whether such transactions comprise of a single transaction or a series of transactions integrally connected to each other, and where such series of transactions take place within a month; (b) to furnish information of transactions referred to in clause (a) to the Director within such time as may be prescribed and to (c) verify and maintain the records of the identity of all its clients, As per Section 12 (2), the records referred to in sub-section (1) as mentioned above, must be maintained for ten years after the transactions finished.

The provisions of the Act are frequently reviewed and various amendments have been passed from time to time.

[edit] United Kingdom

The United Kingdom has an "all-crimes" regime[clarification needed].

Money laundering legislation in the UK is governed by three Acts of primary legislation:-

The Terrorism Act 2000[2] The Anti-Terrorist Crime & Security Act 2001[3] The Proceeds of Crime Act 2002[4]

Secondary regulation is provided by the Money Laundering Regulations 2003[5] and 2007[6].

Professional guidance (which is submitted to and approved by the UK Treasury) is provided by industry groups including the Joint Money Laundering Steering Group[7] and the Law Society[8].

In the UK "money laundering" need not involve money (it relates to assets of any kind, both tangible and intangible, and to the avoidance of a liability) and need not mean passing on the assets: a thief's possession himself is included. There is no lower limit to what has to be reported— a suspicious transaction involving a single £5 note must be reported. Technically, everyone, not just financial services employees or firms, is required to report, and get consent for, his own involvement in crime or suspicious activities involving money or assets of any kind. So in the UK a thief who steals a vest from a clothes store commits, as well as common theft, a money laundering offence: because he has possession of an asset derived from crime. He is technically required to seek consent from law enforcement for his continued possession of the vest if he is to avoid risk of prosecution for money laundering.

The UK law makes it a money laundering offence when a person enters into, or becomes concerned in, an arrangement which facilitates by whatever mean the acquisition, retention, use, or control of criminal property by another person. This has concerned lawyers and other professional advisers who act for clients charged with these offences, since they are brought under the same law themselves.

Because the UK legislation is wide-ranging, the Serious Organised Crime Agency receives many SARs; in 2005 nearly 200,000. The number of SARs appears to be growing by almost 50% each year.[verification needed]

The UK legislation was relaxed slightly in 2005 to allow banks and financial institutions to proceed with low value transactions involving suspected criminal property without requiring specific consent for every transaction, but the reporting of all transactions is still required.

[edit] Bureaux de change

In the UK, a common way to launder money is to open a bureau de change. Unlike some other countries, there are no government controls on these facilities— people are free to exchange currency whenever and wherever they like. The aim is to exchange the dirty money for clean money— the legitimate business of currency exchange is secondary.

[edit] United States

In US Law[citation needed], "reasonably accepting cash" means the business must regularly perform services that on average are less than $500 each. It is assumed that above that amount most people pay with a check, a credit card, or other another (traceable) payment method. The company should actually function on a legitimate level. In the hairstyler example, it is perfectly reasonable for a lot of the business to involve mostly labour (dyes and machine oil and so forth being relatively small concerns), and for most transactions to be settled in cash. But it is unreasonable for all of the business to work without parts and just on cash. So the legitimate business will generate a legitimate (if low) level of parts use, and enough traceable transactions to mask the illegitimate ones.

Anti-money laundering (AML/CFT)[clarification needed] laws typically have other offences such as "tipping off (warning)", "willful blindness", "not reporting suspicious activity", "conscious

facilitation of a money launderer", "assisting a terrorist financier with moving terrorist financing".

The Bank Secrecy Act of 1970 requires banks to report cash transactions of $10,000.01 or more. The Money Laundering Control Act of 1986 further defined money laundering as a federal crime. The USA PATRIOT Act of 2001 expanded the scope of prior laws to more types of financial institutions, and added a focus on terrorist financing, specifying that financial institutions take specific actions to "know your customer" (KYC).

In the United States, Federal law provides: "Whoever ... knowing[ly] ... conducts or attempts to conduct ... a financial transaction which in fact involves the proceeds of specified unlawful activity ... with the intent to promote the carrying on of specified unlawful activity ... shall be sentenced to a fine of not more than $500,000 or twice the value of the property involved in the transaction, whichever is greater, or imprisonment for not more than twenty years, or both.

While money laundering typically involves the flow of "dirty money" (criminal proceeds) into a clean bank account or negotiable instrument, terrorist financing frequently involves the reverse flow: apparently clean funds converted to "dirty" purposes. A hawala may launder drug proceeds and help fund a terrorist, netting the incoming and outgoing funds with only occasional small net settlement transactions.

[edit] NASA case

From 1992 to 1996 a nine-agency Federal Task Force investigation led by NASA's Office of Inspector General investigated Omniplan Corporation of Houston and California. It became the largest count indictment and conviction in NASA history, with the owner of Omniplan, Ralph Montijo, being convicted of 179 felonies in his multi-million dollar embezzlement scheme. Five of his companies were also convicted of felonies, they were, Omniplan, Papa Primo's of Texas, Papa Primo's of Arizona, Omnipoint Production Services and Mercury Trust. These companies, together with two unincorporated companies, Space Industries Leasing and Space Industries Properties were liquidated. Each embezzlement count was associated with a corresponding money laundering count which resulted in dozens of convictions for money laundering. In a New York Times story, NASA Office of Inspector General Senior Special Agent Joseph Gutheinz, who led the Omniplan investigation, said "We didn't get any pizzas, but we got the bills", referring to the fact that some of the alleged mischarging to the NASA contract also involved costs associated with two of Ralph Montijo's pizza companies, Papa Primo's of Texas, and Papa Primo's of Arizona.

[edit] Laundered or not?

Money obtained by an illegal action is not, of itself, laundered money. The laundering offense comes from the attempt to conceal its source, not because the transaction was itself illegal (which is a separate offense).

The Supreme Court of the United States on June 2, 2008, rendered 2 judgments in favor of defendants, narrowing the application of the federal money-laundering statute.

In a 9-0 decision, Justice Clarence Thomas reversed Acuna, Mexico's Humberto Cuellar's conviction and ruled that "hiding $81,000 in cash under the floorboard of a car and driving toward Mexico is not enough to prove the driver was guilty of money laundering; instead, prosecutors must also prove the driver was traveling to Mexico for the purpose of hiding the true source of the funds." That is, the prosecution had not made its prima facie case. The Court further ruled "that federal prosecutors have gone too far in their use of money laundering charges to combat drug traffickers and organized crime; that money laundering charges under the Money Laundering Control Act of 198, Sec. 18 U.S.C. §1956(a)(2)(B)(i) apply only to profits of an illegal gambling ring and cannot be used when the only evidence of a possible crime is when a courier headed to the Texas-Mexico border with $81,000 in cash proceeds of a marijuana transaction; it cannot be proven merely by showing that the funds were concealed in a secret compartment of a Volkswagen Beetle; instead, prosecutors must show that the purpose of transporting funds in a money laundering case was to conceal their ownership, source or control; the secrecy must be part of a larger design to disguise the source or nature of the money."

Later, in a 5-4 decision, Justice Antonin Scalia reversed Efrain Santos of Indiana and Benedicto Diaz's convictions for money laundering based on cash from an illegal lottery. Scalia ruled that the law referred to the "proceeds of some form of unlawful activity; paying off gambling winners and compensating employees who collect the bets don't qualify as money laundering; the word “proceeds” in the federal money-laundering statute, 18 U.S.C. §1956, and §1956(a)(1)(A)(i) and§1956(h), applies only to transactions involving criminal profits, not criminal receipts; those are expenses, and prosecutors must show that profits were used to promote the illegal activity." Congress enacted the 1986 statute after the President's Commission on Organized Crime stressed the problem of "washing" criminal proceeds through overseas bank accounts and legitimate businesses. It imposes a 20-year maximum prison term.

[edit] Fighting money laundering

Main article: KYC

The first defence against money laundering is the requirement on financial intermediaries to know their customers— often termed KYC know your customer requirements. Knowing one's customers, financial intermediaries will often be able to identify unusual or suspicious behavior, including false identities, unusual transactions, changing behaviour, or other indicators of laundering. But for institutions with millions of customers and thousands of customer-contact employees, traditional ways of knowing their customers must be supplemented by technology. Companies such as Lexis Nexis and WorldCompliance provide software and databases to help perform these processes. Bank and corporate security directors can also play an important role in fighting money laundering. expand

[edit] Using information technology

Information technology can never be a replacement for a well-trained investigator, but as money laundering techniques become more sophisticated, so too does the technology used to fight it. Before anti-money laundering programs became commonplace, in the U.S. the Bank Secrecy Act required financial institutions to file Currency Transaction Reports for cash transactions of more

than $10,000. These CTRs prove invaluable for investigators, but money launderers began to structure their transactions to avoid the reporting requirements. As a result, the U.S. passed laws against structuring transactions to avoid the reporting requirements, and most structuring would trigger a Suspicious Activity Report by the financial institution.

The various software packages are capable of name analysis, rule-based systems, statistical and profiling engines, neural networks, link analysis, peer group analysis, and time sequence matching. Also, there are specific KYC solutions that offer case-based account documentation acceptance and rectification, as well as automatic risk scoring of the customer taking account of country, business, entity, product, transaction risks that can be reviewed intelligently. Other elements of AML technology include portals to share knowledge and e-learning for training and awareness.

This software is not used exclusively to track money laundering, but more often the common theft of credit cards or bank details. Unusal activity on an account may trigger a call from the card issuer to make sure it has not been misused.

Financial Crimes Enforcement Network FinCEN is an organization created by the United States Department of the Treasury. FinCEN receives Suspicious Activity Reports from financial institutions, analyses them, and shares their data with U.S. law enforcement agencies and Financial Intelligence Units FIUs of other countries. One of its strategic goals is to improve information-sharing through eGovernment. It offers training and advice to organizations of foreign governments to help improve the efficacy of their own anti-money laundering programs.

[edit] 9/11 and the international response to the underground economy

After September 11, 2001, money laundering became a major concern of the United States' war on terror, although critics argue that it has become less and less important for the White House.

Clearstream International, based in Luxembourg, was a central securities depository and clearing house, a "bank of banks" which practiced financial clearing and centralized debit and credit operations for hundreds of banks. It was accused of being a major operator of the underground economy via a system of unpublished accounts. Bahrain International Bank, owned by Osama bin Laden, would have profited from these transfer facilities.[9] The scandal prompted André Lussi, Clearstream's CEO, to resign on 31 December 2001; several judicial investigations were opened and the European Commission was interpelled by Members of the European Parliament (MEPs) Harlem Désir, Glyn Ford, and Francis Wurtz, who asked the Commission to investigate the accusations and to ensure that the 10 June 1990 directive (91/308 CE) on control of financial establishment was applied in all member states, including Luxembourg, effectively.[10]

The international response to the underground economy has been coordinated by the [11] ("FATF," also known by its French acronym of "GAFI"), whose original 40 principles form the basis of most international responses to money laundering. A further 8 principles, designed to counteract funding to terrorist organisations, were added on 30 June 2003, in response to the 9/11, with another added 22 October 2004, to form what are now known as the [12] (AML/CFT).

Compliance with these principles, or at least a move towards them, is now seen as a requirement of an internationally active bank or other financial service entity.[by whom?]

[edit] Amounts

Many regulatory and governmental authorities quote estimates each year for the amount of money laundered, either worldwide or within their national economy. A frequently cited figure is 2-5% of the worldwide global economy, stated by the IMF. But some academics note that such figures are usually simply "best guesses". In 1997 the FATF, an arm of the OECD set up to combat money laundering, frankly admitted "the vast majority of FATF members lack sufficient data to support any credible estimate."[13] Although admissions of that nature are no longer maintained, there is still a dearth of data on the actual amounts of money laundered worldwide. Some academic commentators have expressed real concerns about the reliability and basis of figures used by governmental and multinational organizations. It is always hard to find out real figures about illegal acts.

“ We are faced with the problem that there has been little work to develop an objective academic analysis of the true extent of laundering, which means that we do not have a framework within which the appropriateness of legislative measures can be evaluated. Without this, it is difficult to challenge the 'alarmist' position of the authorities whereby such estimates have been put forward, quoted and repeated, becoming, through such reptition, seemingly established truths. It can be argued ... that global estimates are little more than informed guesses: "large numbers are frequently thrown around without serious support" (Reuter and Truman, 2005, p.56), re-produced to the point at which they gain, through mere repetition, [they are perceived to have] some form of reliable accuracy.[14]

Page 1

PREVENTION OF MONEYLAUNDERINGACT, 2002Arrangement of SectionsSECTION*CHAPTER IPRELIMINARY1. Short title, extent and commencement2. DefinitionsCHAPTER IIOFFENCE OF MONEY-LAUNDERING3. Offence of money-laundering4. Punishment for money-launderingCHAPTER IIIATTACHMENT, ADJUDICATION AND CONFISCATION5. Attachment of property involved in money-laundering6. Adjudicating Authorities, composition, powers, etc.

7. Staff of Adjudicating Authorities8. Adjudication9. Vesting of property in Central Government10. Management of properties confiscated under this Chapter11. Power regarding summons, production of documents andevidence, etc.CHAPTER IVOBLIGATIONS OF BANKING COMPANIES, FINANCIALINSTITUTIONS AND INTERMEDIARIES12. Banking companies, financial institutions and inter-mediaries to maintain recordsPAGE2.72.72.102.102.102.122.142.142.152.162.162.172.3

Page 2PREVENTION OF MONEY-LAUNDERING ACT, 2002 2.4SECTION PAGE13. Powers of director to impose fine 2.1714. No civil proceedings against banking companies, finan-cial institutions, etc., in certain cases 2.1815. Procedure and manner of furnishing information bybanking company, financial institution and intermediary 2. ISCHAPTER VSUMMONS, SEARCHES AND SEIZURES, ETC.16. Power of survey 2.7817. Search and seizure 2.1918. Search of persons 2.2019. Power to arrest 2.2220. Retention of property 2.2221. Retention of records 2.2322. Presumption as to records or property in certain cases 2.2423. Presumption in inter-connected transactions 2.2424. Burden of proof 2.25CHAPTER VIAPPELLATE TRIBUNAL25. Establishment of Appellate Tribunal 2.2526. Appeals to Appellate Tribunal 2.25

27. Composition, etc., of Appellate Tribunal 2.2628. Qualifications for appointment 2.2629. Term of office 2.2730. Conditions of service 2.2731. Vacancies 2.2732. Resignation and removal 2.2833. Member to act as Chairperson in certain circumstances 2.2834. Staff of Appellate Tribunal 2.2835. Procedure and powers of Appellate Tribunal 2.2836. Distribution of business amongst Benches 2.2937. Power of Chairperson to transfer cases 2.30

Page 32.5 - - ARRANGEMENT OF SECTIONSSECTION PAGE38. Decision to be by majority 2.3039. Right of appellant to take assistance of authorisedrepresentative and of Government to appointpresenting officers 2.3040. Members, etc., to be public servants 2.3041. Civil Court not to have jurisdiction 2.3042. Appeal to High Court 2.31CHAPTER VIISPECIAL COURTS43. Special Courts 2.3144. Offences triable by Special Courts 2.3145. Offences to be cognizable and non-bailable 2.3246. Application of Code of Criminal Procedure, 1973 toproceedings before Special Court 2.3347. Appeal and revision 2.33CHAPTER VIIIAUTHORITIES48. Authorities under Act 2.3349. Appointment and powers of authorities and other officers 2.3450. Powers of authorities regarding summons, productionof documents and to give evidence, etc. 2.3451. Jurisdiction of authorities 2.3552. Power of Central Government to issue directions, etc. 2.3553. Empowerment of certain officers 2.3654. Certain officers to assist in inquiry, etc. 2.36CHAPTER IXRECIPROCAL ARRANGEMENT FOR ASSISTANCE INCERTAIN MATTERS AND PROCEDURE FOR ATTACHMENTAND CONFISCATION OF PROPERTY55. Definitions 2.3656. Agreements with foreign countries 2.3757. Letters of request to a contracting State in certain cases 2.37

Page 4PREVENTION OF MONEY-LAUNDERING ACT, 2002 2.6SECTION PAGE58. Assistance to a contracting State in certain cases 2.3859. Reciprocal arrangements for processes and assistancefor transfer of accused persons 2.3860. Attachment, seizure and confiscation, etc., of propertyin a contracting State or India 2.3961. Procedure in respect of letter of request 2.40CHAPTER XMISCELLANEOUS62. Punishment for vexatious search 2.4063. Punishment for false information or failure to giveinformation, etc. 2.4064. Cognizance of offences 2.4165. Code of Criminal Procedure, 1973 to apply 2.4166. Disclosure of information 2.4167. Bar of suits in civil courts 2.4268. Notice, etc., not to be invalid on certain grounds 2.4269. Recovery of fines 2.4270. Offences by companies 2.4271. Act to have overriding effect 2.4372. Continuation of proceedings in the event of deathor insolvency 2.4373. Power to make rules 2.4474. Rules to be laid before Parliament 2.4675. Power to remove difficulties 2.46SCHEDULE 2.46

Page 5

PREVENTION OF MONEYLAUNDERING ACT, 2002An Act to prevent money-laundering and to provide for confiscation ofproperty derived from, or involved in, money-laundering and for mattersconnected therewith or incidental thereto.whereas the Political Declaration and Global Programme of Action, an-nexed to the resolution S-17/2 was adopted by the General Assembly of theUnited Nations at its seventeenth special session on the twenty-third day ofFebruary, 1990;AXU whereas the Political Declaration adopted by the Special Session of theUnited Nations General Assembly held on 8th to 10th June, 1998 calls uponthe Member States to adopt national money-laundering legislation andprogranime;a.mj WHEREAS it is considered necessary to implement the aforesaid resolu-tion and the Declaration.Be i; enacted by Parliament in the Fifty-third Year of the Republic of India

as follows :—CHAPTER IPRELIMINARYShort title, extent and commencement.1.(1) This Act may be called the Prevention of Money Laundering Act,2002.(2) It extends to the whole of India.(3) It shall come into force on such date as the Central Government may,by notification in the Official Gazette, appoint, and different dates may beappointed for different provisions of this Act and any reference in anysuch provision to the commencement of this Act shall be construed as areference to the coming into force of that provision.Definitions.2. (1) In this Act, unless the context otherwise requires,—

Page 6S-2 PREVENTIONOFMO\EY-LAL'NDERINGACT,2002 2.8(a) "Adjudicating Authority" means an Adjudicating Authorityappointed under sub-section (1) of section 6;(b) "Appellate Tribunal" means the Appellate Tribunal establishedunder section 25;(c) "Assistant Director" means an Assistant Director appointed undersub-section (1) of section 49;(d) "attachment" means prohibition of transfer, conversion disposi-tion or movement of property by an order issued under Chapter(e) "banking company" means a banking company or a co-operativebank to which the Banking Regulation Act, 1949 (10 of 1949)applies and includes any bank or banking institution referred to insection 51 ofthat Act;(/) "Bench" means a Bench of the Appellate Tribunal;(8) "Chairperson" means the Chairperson of the Appellate Tribunal;(/*) "chit fund company" means a company managing, conducting orsupervising, as foreman, agent or in any other capacity, chits asdefined in section 2 of the Chit Funds Act, 1982 (40 of 1932);(0 "co-operative bank" shall have the same meaning as assigned to itin clause {del) of section 2 of the Deposit Insurance and Credit Guar-antee Corporation Act, 1961 (47 of 1961);0) "Deputy Director" means a Deputy Director appointed under sub-section (1) of section 49;(k) "Director" or "Additional Director" or "Joint Director" means a 'Director or Additional Director or Joint Director as the case maybe, appointed under sub-section (1) of section 49;(0 "financial institution" means a financial institution as defined inclause (c) of section 45-1 of the Reserve Bank of India Act, 1934(2 of 1934) and includes a chit fund company, a co-operative banka housing finance institution and a non-banking financial company!(>n) "housing finance institution" shall have the meaning as assigned to

;Un MofJ"0 °f SeCtÌOn 2 °f the National Housing Bank Act, 1987(jó or 17o/jj(») "intermediary" means a stock-broker, sub-broker, share transferagent, banker to an issue, trustee to a trust deed, registrar to anissue, merchant banker, underwriter, portfolio manager, investmentadviser and any other intermediary associated with securitiesmarket and registered under section 12 of the Securities andexchange Board of India Act, 1992 (15 of 1992);

Page 7••9 CH. I - PRELIMINARY S. 2(o) "Member" means a Member of the Appellate Tribunal and includesthè Chairperson;O) "Money-laundering" has the meaning assigned to it in section 3;(q) "non-banking financial company" shall have the same meaning asassigned to it in clause (f) of section 45-1 of the Reserve Bank ofIndia Act, 1934 (2 of 1934);( r) "notification" means a notification published in the Official Gazette;(s) "person" includes—(0 an individual,(/'/) a Hindu undivided family,(Hi) a company,(iv) a firm,(v) an association of persons or a body of individuals, whetherincorporated or not,(vi) every artificial juridical person, not falling within any of thepreceding sub-clauses, and(vii) any agency, office or branch owned or controlled by any ofthe above persons mentioned in the preceding sub-clauses;( 0 "prescribed" means prescribed by rules made under this Act;(") "proceeds of crime" means any property derived or obtained,directly or indirectly, by any person as a result of criminal activityrelating to a scheduled offence or thevalue of any such property;(v) "property" means any property or assets of every description,whether corporeal or incorporeal, movable or immovable, tangibleor intangible and includes deeds andlnstruments evidencing titleto, or interest in, such property or assets, wherever located;(u) "records" include the records maintained in the form of books orstored in a computer or such other form as may be prescribed;(a) "Schedule" means the Schedule to this Act;(y) "scheduled offenee_ü means—(0 the offences specified under Part A of the Schedule; or(;;) the offences specified under Part B of the Schedule if thetotal value involved in such offence is thirty lakh rupees ormore.(z) "Special Court" means a Court of Session designated as Special

Court under sub-section (1) of section 43;

Page 8S_5 PREVENTION OF MONEY-LAUNDERING ACT, 2002 2.10(-a) "transfer" includes sale, purchase, mortgage, pledge, gift, loan orany other form of transfer of right, title, possession or hen;i-b) "value" means the fair market value of any property on the date ofits acquisition by any person, or if such date cannot be determined,the date on which such property is possessed by such person.P) Anv reference, in this Act or the Schedule, to any enactment or anyprovision thereof shall, in relation to an area in which such enactment orsuch provision is not in force, be construed as a reference to the corres-ponding law or the relevant provisions of the corresponding law, if any, inforce in that area.CHAPTER IIOFFENCE OF MONEY-LAUNDERINGOffence of money-laundering.3 Whosoever directly or indirectly attempts to indulge or knowinglyassists or knowingly is a party or is actually involved in any process oractivity conncctccfwith the proceeds of crime and projecting it asuntainted property shall be guilty of offence of money-laundering.Punishment for money-laundering.4 Whoever commits the offence of money-laundering shall be punish-' able with rigorous imprisonment for a term which shall not be less thanthree years but which may extend to seven years and shall also be liableto fine which may extend to five lakh rupees :Provided that where the proceeds of crime involved in money-launderingrelate to any offence specified under paragraph 2 of Part A of the Sche-dule the provisions of this section shall have effect as if for the words"which may extend to seven years", the words "which may extend to tenyears" had been substituted.CHAPTER IIIATTACHMENT, ADJUDICATION AND CONFISCATIONAttachment of property involved in money-laundering.5 (1) Where the Director, or any other officer not below the rank of DeputyDirector authorised by him for the purposes of this section, has reason tobelieve (the reason for such belief to be recorded in writing), on the basisof material in his possession, that—(a) any person is in possession of any proceeds of crime;(b) such person has been charged of having committed a scheduledoffence; and

Page 92- CH. m - ATTACHMENT, ADJUDICATION & CONFISCATION S. 5(c) such proceeds of crime are likely to be concealed, transferred ordealt with in any manner which may result in frustrating any pro-ceedings relating to confiscation of such proceeds of crime under

this Chapter,he may, by order in writing, provisionally attach such property for a pe-riod not exceeding ninety days from the date of the order, in the mannerprovided in the Second Schedule to the Income-tax Act, 1961 (43 of 1961)and the Director or the other officer so authorised by him, as the casemay be, shall be deemed to be an officer under sub-rule (e) of rule 1 ofthat Schedule:Provided that no such order of attachment shall be made unless, in rela-tion to an offence under—(0 Paragraph 1 of Part A and Part B of the Schedule, a report hasbeen forwarded to a Magistrate under section 173 of the Code ofCriminal Procedure, 1973 (2 of 1974); or(//) Paragraph 2 of Part A of the Schedule, a police report or a com-plaint has been filed for taking cognizance of an offence by theSpecial Court constituted under sub-section ( 1) of section 36 of theNarcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985).(2) The Director, or any other officer not below the rank of Deputy Direc-tor, shall, immediately after attachment under sub-section (1), forward acopy of the order, along with the material in his possession, referred to inthat sub-section, to the Adjudicating Authority, in a sealed envelope, in themanner as may be prescribed and such Adjudicating Authority shall keepsuch order and material for such period as may be prescribed.(3) Every order of attachment made under sub-section (1) shall cease tohave effect after the expiry of the period specified in that sub-section oron the date of an order made under sub-section (2) of section 8, which-ever is earlier.(4) Nothing in this section shall prevent the person interested in the enjoy-ment of the immovable property attached under sub-section ( 1) from suchenjoyment.Explanation.—For the purposes of this sub-section,"person interested" inrelation to any immovable property, includes all persons claiming orentitled to claim any interest in the property.(5) The Director or any other officer who provisionally attaches any pro-perty under sub-section (1) shall, within a period of thirty davs from suchattachment, file a complaint stating the facts of such attachment beforethe Adjudicating Authority.

Page 105. 6 PREVENTION OF MONEY-LAUNDERING ACT, 2002 2.12Adjudicating authorities, composition, powers, etc.6. (1) The Central Government shall, by notification, appoint one or moreAdjudicating Authorities to exercise jurisdiction, power and authority con-ferred by or under this Act.(2) An Adjudicating Authority shall consist of a Chairperson and two otherMembers:Provided that one Member each shall be a person having experience inthe field of law, administration, finance or accountancy.

(3) A person shall, however, not be qualified for appointment as Memberof an Adjudicating Authority:—(a) in the field of law, unless he—(i) is qualified for appointment as District Judge; or(ii) has been a Member of the Indian Legal Service and has helda post in Grade I of that service;(b) in the field of finance, accountancy or administration unless hepossesses such qualifications, as may be prescribed.(4) The Central Government shall appoint a Member to be the Chairpersonof the Adjudicating Authority.(5) Subject to the provisions .of this Act,—(a) the jurisdiction of the Adjudicating Authority may be exercised by-Benches thereof;(/?) a Bench may be constituted by the Chairperson of the Adjudicat-ing Authority with one or two Members as the Chairperson of theAdjudicating Authority may deem fit;(c) the Benches of the Adjudicating Authority shall ordinarily sit atNew Delhi and at such other places as the Central Governmentmay, in consultation with the Chairperson, by notification, specify;(d) the Central Government shall, by notification, specify the areas inrelation to which each Bench of the Adjudicating Authority mayexercise jurisdiction.(6) Notwithstanding anything contained in sub-section (5), the Chair-person may transfer a Member from one Bench to another Bench.(7) If at any stage of the hearing of any case or matter it appears to theChairperson or a Member that the case or matter is of such a nature thatit ought to be heard by a Bench consisting of two Members, the case ormatter may be transferred by the Chairperson or, as the case may be,referred to him for transfer, to such Bench as the Chairperson may deemfit.

Page 112.1._ CH. HI -ATTACHMENT, ADJUDICATION & CONFISCATION S. 6(8) The Chairperson and every Member shall hold office as such for aterm of five years from the date on which he enters upon his office:Provided that no Chairperson or other Member shall hold office as suchafter he has attained the age of sixty-two years.(9) The salary and allowances payable to and the other terms and condi-tions of service of the Member shall be such as may be prescribed:Provided that neither the salary and allowances nor the other terms andconditions of service of the Members shall be varied to his disadvantageafter appointment.(10) If for reasons other than temporary absence, any vacancy occurs inthe office of the Chairperson or any other Member, then, the Central Gov-ernment shall appoint another person in accordance with the provisionsof this Act to fill the vacancy and the proceedings may be continued

before the Adjudicating Authority from the stage at which the vacancy isrilled. J(H) The Chairperson or any other Member may, by notice in writingunder his hand addressed to the Central Government, resign his office: &Provided that the Chairperson or any other Member shall unless he ispermitted by the Central Government to relinquish his office sooner con-tinue to hold office until the expiry of three months from the date of re-ceipt of such notice or until a person duly appointed as his successorenters upon his office or until the expiry of his term of office, whichever isthe earliest.(12) The Chairperson or any other Member shall not be removed from hisoffice except by an order made by the Central Government after givin^necessary opportunity of hearing. °(13) In the event of the occurrence of any vacancy in the office of theChairperson by reason of his death, resignation or otherwise the senior-most Member shall act as the Chairperson of the Adjudicating Authorityuntil the date on which a new Chairperson, appointed in accordance withthe provisions of this Act to fill such vacancy, enters upon his office.(14) When the Chairperson of the Adjudicating Authority is unable to dis-charge his functions owing to absence, illness or any other cause thesenior-most Member shall discharge the functions of the Chairperson ofthe Adjudicating Authority until the date on which the Chairperson of theAdjudicating Authority resumes his duties.(15) The Adjudicating Authority shall not be bound by the procedure laiddown by the Code of Civil Procedure, 1908 (5 of 1908), but shall be guidedby the principles of natural justice and, subject to the other provisions ofthis Act, the Adjudicating Authority shall have powers to regulate its ownprocedure.

Page 12S- 8 PREVENTION OF MONEY-LAUNDERING ACT, 2002 2.14Staff of Adjudicating Authorities.7. (1) The Central Government shall provide each Adjudicating Authoritywith such officers and employees as that Government may think fit.(2) The officers and employees of the Adjudicating Authority shall dis-charge their functions under the general superintendence of the Chair-person of the Adjudicating Authority.(3) The salaries and allowances and other conditions of service of theofficers and employees of the Adjudicating Authority shall be such as maybe prescribed.Adjudication.8. (1) On receipt of a complaint under sub-section (5) of section 5, or appli-cations made under sub-section (4) of section 17 or under sub-section (10)of section 18 if the Adjudicating Authority has reason to believe that anyperson has committed an offence under section 3, he may serve a noticeof not less than thirty days on such person calling upon him to indicatethe sources of his income, earning or assets, out of which or by means of

which he has acquired the property attached under sub-section (1) of sec-tion 5, or, seized under section 17 or section 18, the evidence on which herelies and other relevant information and particulars, and to show causewhy all or any of such properties should not be declared to be the proper-ties involved in money-laundering and confiscated bv the CentralGovernment:Provided that where a notice under this sub-section specifies anv pro-perty as being held by a person on behalf of any other person, a copy ofsuch notice shall also be served upon such other person:Provided further that where such property is held jointly by more thanone person, such notice shall be served to all persons holding such pro-perty.(2) The Adjudicating Authority shall, after—(a) considering the reply, if any, to the notice issued under sub-section

0);(b) hearing the aggrieved person and the Director of any other officerauthorised by him in this behalf; and(c) taking into account all relevant materials placed on record beforehim,by an order, record a finding whether all or any of the properties referredto in the notice issued under sub-section (1) are involved in money-laun-dering:

Page 132.15 CH. m • ATTACHMENT, ADJUDICATION & CONFISCATION S. 9Provided that if the property is claimed by a person, other than a personto whom the notice had been issued, such person shall also be given anopportunity of being heard to prove that the property is not involved inmoney-laundering.(3) Where the Adjudicating Authority decides under sub-section (2) thatany property is involved in money-laundering, he shall, by an order inwriting, confirm the attachment of the property made under sub-section(1) of section 5 or retention of property or record seized under section 17or section 18 and record a finding to that effect, such attachment orretention of the seized property or record shall—(a) continue during the pendency of the proceedings relating to anyscheduled offence before a court; and(/;) become final after the guilt of the person is proved in the trial courtand order of such trial court becomes final.(4) Where the provisional order of attachment made under sub-section(1) of section 5 has been confirmed under sub-section (3), the Director orany other officer authorised by him in this behalf shall forthwith take thepossession of the attached property.(5) Where on conclusion of a trial for any scheduled offence, the personconcerned is acquitted, the attachment of the property or retention of theseized property or record under sub-section (3) and net income, if any,

shall cease to have effect.(6) Where the attachment of any property or retention of the seized pro-perty or record becomes final under clause (b) of sub-section (3), the Ad-judicating Authority shall, after giving an opportunity of being heard tothe person concerned, make an order confiscating such property.Vesting of property in Central Government.9. Where an order of confiscation has been made under sub-section (6) ofsection 8 in respect of any property of a person, all the rights and title insuch property shall vest absolutely in the Central Government free fromall encumbrances:Provided that where the Adjudicating Authority, after giving an opportu-nity of being heard to any other person interested in the property attachedunder this Chapter, or seized under Chapter V, is of the opinion that anyencumbrance on the property or lease-hold interest has been created witha view to defeat the provisions of this Chapter, it may, by order, declaresuch encumbrances or lease-hold interest to be void and thereupon theaforesaid property shall vest in the Central Government free from suchencumbrances or lease-hold interest:

Page 14S- 11 PREVENTION OF MONEY-LAUNDERING ACT, 2002 2.16Provided further that nothing in this section shall operate to dischargeany person from any liability in respect of such encumbrances which maybe enforced against such person by a suit for damages.Management of properties confiscated under this Chapter.10. (1) The Central Government may, by order published in the OfficialGazette, appoint as many of its officers (not below the rank of a JointSecretary to the Government of India) as it thinks fit, to perform the func-tions of an Administrator.(2) The Administrator appointed under sub-section (1) shall receive andmanage the property in relation to which an order has been made undersub-section (6) of section 8 in such manner and subject to such conditionsas may be prescribed.(3) The Administrator shall also take such measures, as the Central Gov-ernment may direct, to dispose of the property which is vested in the Cen-tral Government under section 9.Power regarding summons, production of documents and evidence, etc.11. (1) The Adjudicating Authority shall, for the purposes of this Act havethe same powers as are vested in a civil court under the Code of CivilProcedure, 1908 (5 of 1908) while trying a suit in respect of the followingmatters, namely:— °(a) discovery and inspection;(b) enforcing the attendance of any person, including any officer of abanking company or a financial institution or a companv, and ex-amining him on oath;(c) compelling the production of records;(<r/) receiving evidence on affidavits;

(e) issuing commissions for examination of witnesses and documents-and(/) any other matter which may be prescribed.(2) All the persons so summoned shall be bound to attend in person or™r°ugh auth°rised agents, as the Adjudicating Authority may direct, andshall be bound to state the truth upon any subject respecting which theyare examined or make statements, and produce such documents as mavbe required.(3) Every proceeding under this section shall be deemed to be a judicialproceeding within the meaning of section 193 and section 228 of theIndian Penal Code (45 of 1860).

Page 152.17 CH. IV - OBLIGATIONS OF BANKING COMPANIES, ETC. S.' 13CHAPTER IVOBLIGATIONS OF BANKING COMPANIES, FINANCIALINSTITUTIONS AND INTERMEDIARIESBanking companies, financial institutions and intermediaries to main-tain records.12. (1) Every banking company, financial institution and intermediaryshall—(a) maintain a record of all transactions, the nature and value of whichmay be prescribed, whether such transactions comprise of a singletransaction or a series of transactions integrally connected to eachother, and where such series of transactions take place within amonth;(¿>) furnish information of transactions referred to in clause (a) to theDirector within such time as may be prescribed;(c) verify and maintain the records of the identity of all its clients, insuch manner as may be prescribed:Provided that where the principal officer of a banking company or finan-cial institution or intermediary, as the case may be, has reason to believethat a single transaction or series of transactions integrally connected toeach other have been valued below the prescribed value so as to defeatthe provisions of this section, such officer shall furnish information inrespect of such transactions to the Director within the prescribed time.(2) The records referred to in sub-section (1) shall be maintained for aperiod of ten years from the date of cessation of the transactions betweenthe clients and the banking company or financial institution or intermedi-ary, as the case may be.Powers of director to impose fine.13. (1) The Director may, cither of his own motion or on an applicationmade by any authority, officer or person, call for records referred toin sub-section (1) of section 12 and may make such inquiry or cause suchinquiry to be made, as he thinks fit.(2) If the Director, in the course of any inquiry, finds that a banking com-

pany, financial institution or an intermediary or any of its officers hasfailed to comply with the provisions contained in section 12, then, withoutprejudice to any other action that may be taken under any other provi-sions of this Act, he may, by an order, levy a fine on such banking com-pany or financial institution or intermediary which shall not be less thanten thousand rupees but may extend to one lakh rupees for each failure.

Page 16S. 16 PREVENTION OF MONEY-LAUNDERING ACT, 2002 2.18(3) The Director shall forward a copy of the order passed under sub-sec-tion (2) to every banking company, financial institution or intermediary orperson who is a party to the proceedings under that sub-section.No civil proceedings against banking companies, financial institutions,etc., in certain cases.14. Save as otherwise provided in section 13, the banking companies,financial institutions, intermediaries and their officers shall not be liableto any civil proceedings against them for furnishing information underclause (b) of sub-section (1) of section 12.Procedure and manner of furnishing information by banking company,financial institution and intermediary.15. The Central Government may, in consultation with the Reserve Bankof India, prescribe the procedure and the manner of maintaining and fur-nishing information under sub-section (1) of section 12 for the purpose ofimplementing the provisions of this Act.CHAPTER VSUMMONS, SEARCHES AND SEIZURES, ETC.Power of survey.16. (1) Notwithstanding anything contained in any other provisions of thisAct, where an authority, on the basis of material in his possession, hasreason to believe (the reasons for such belief to be recorded in writing)that an offence under section 3 has been committed, he may enter anyplace—(;) within the limits of the area assigned to him; or( ii) in respect of which he is authorised for the purposes of this sectionby such other authority, who is assigned the area within whichsuch place is situated,at which any act constituting the commission of such offence is carriedon, and may require any proprietor, employee or any other person whomay at that time and place be attending in any manner to, or helping in,such act so as to,—(z) afford him the necessary facility to inspect such records as he mayrequire and which may be available at such place;(ii) afford him the necessary facility to check or verify the proceeds ofcrime or any transaction related to proceeds of crime which maybe found therein; and

Page 17

2.19^ CU. V - SUMMONS, SEARCHES & SEIZURES S. 17(in) furnish such information as he may require as to any matter whichmay be useful for, or relevant to, any proceedings under this Act.Explanation.—For the purposes of this sub-section, a place, where an actwhich constitutes the commission of the offence is carried on, shall alsoinclude any other place, whether any activity is carried on therein or not,in which the person carrying on such activity states that any of his recordsor any part of his property relating to such act are or is kept.(2) The authority referred to in sub-section (1) shall, after entering anyplace referred to in that sub-section immediately after completion of sur-vey, forward a copy of the reasons so recorded along with material in hispossession, referred to in that sub-section, to the Adjudicating Authorityin a scaled envelope in the manner as may be prescribed and such Adjudi-cating Authority shall keep such reasons and material for such period asmay be prescribed.(3) An authority acting under this section may—(i) place marks of identification on the records inspected by him andmake or cause to be made extracts or copies therefrom,(ii) make an inventory of any property checked or verified by him,and(Hi) record the statement of any person present in the place which maybe useful for, or relevant to, any proceeding under this Act.Search and seizure.17. (1) Where the Director, on the basis of information in his possession,has i cason to believe (the reason for such belief to be recorded in writing)that any person—(i) has committed any act which constitutes money-laundering, or(ii) is in possession of any. proceeds of crime involved in money-laun-dering, or(Hi) is in possession of any records relating to money-laundering,then, subject to the rules made in this behalf, he may authorise any officersubordinate to him to—(a) enter and search any building, place, vessel, vehicle or aircraft wherehe has reason to suspect that such records or proceeds of crimearc kept;(b) break open the lock of any door, locker, safe, almirah or other re-ceptacle for exercising the powers conferred by clause (a) wherethe keys thereof are not available;(c) seize any record or property found as a result of such search;

Page 18S. 18 PREVENTION'OF MONEY-LAUNDERING ACT, 2002 2.20(d) place marks of identification on such record or make or cause tobe made extracts or copies therefrom;(e) make a note or an inventory of such record or property;(/) examine on oath any person, who is found to be in possession orcontrol of any record or property, in respect of all matters relevant

for the purposes of any investigation under this Act:Provided that no search shall be conducted unless, in relation to an of-fence under—(a) Paragraph 1 of Part A and Part B of the Schedule, a report hasbeen forwarded to a Magistrate under section 173 of the Code ofCriminal Procedure, 1973 (2 of 1974); or(/;) Paragraph 2 of Part A of the Schedule, a police report or a com-plaint has been filed for taking cognizance of an offence by theSpecial Court constituted under sub-section (1) of section 36 of theNarcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985).(2) The authority, who has been authorised under sub-section (1) shall,immediately after search and seizure, forward a copy of the reasons sorecorded along with material in his possession, referred to in that sub-section, to the Adjudicating Authority in a sealed envelope, in the manner,as may be prescribed and such Adjudicating Authority shall keep suchreasons and material for such period, as may be prescribed.(3) Where an authority, upon information obtained during survey undersection 16, is satisfied that any evidence shall be or is likely to be con-cealed or tampered with, he may, for reasons to be recorded in writing,enter and search the building or place where such evidence is located andseize that evidence :Provided that no authorisation referred to in sub-section (1) shall be re-quired for search under this sub-section.(4) The authority, seizing any record or property under this section, shall,within a period of thirty days from such seizure, file an application,requesting for retention of such record or property, before the Adjudicat-ing Authority.Search of persons.18. (1) If an authority, authorised in this behalf by the Central Govern-ment by general or special order, has reason to believe (the reason forsuch belief to be recorded in writing) that any person has secreted abouthis person or in anything under his possession, ownership or control, anyrecord or proceeds of crime which may be useful for or relevant to any

Page 19ZZ1 CH- V-SUMMpNS, SEARCHES & SEIZURES • S, 18proceedings under this Act, he may search that person and seize suchrecord or property which may be useful for or relevant to any proceed-ings under this Act.(2) The authority, who has been authorised under sub-section (1) shallimmediately after search and seizure, forward a copy of the reasons sorecorded along with material in his possession, referred to in that sub-section, to the Adjudicating Authority in a sealed envelope, in the manneras may be prescribed, and such Adjudicating Authority shall keep suchreasons and material for such period, as may be prescribed.(3) Where an authority is about to search any person, he shall if such

person so requires, take such person within twenty-four hours to the near-est Gazetted Officer, superior in rank to him, or a Magistrate:Provided that the period of twenty-four hours shall exclude the time nec-essary for the journey undertaken to take such person to the nearestGazetted Officer, superior in rank to him, or Magistrate's Court.(4) If the requisition under sub-section (3) is made, the authority shall notdetain the person for more than twenty-four hours prior to taking himbetöre the Gazetted Officer, superior in rank to him, or the Magistratereferred to in that sub-section:Provided that the period of twenty-four hours shall exclude the time nec-essary for the journey from the place of detention to the office of theGazetted Officer, superior in rank to him, or the Magistrate's Court.(5) The Gazetted Officer or the Magistrate before whom any such personin brought shall, if he sees no reasonable ground for search, forthwithdischarge such person but otherwise shall direct that search be made.(6) Before making the search under sub-section (1) or sub-section (5) theauthority shall call upon two or more persons to attend and witness thesearch, and the search shall be made in the presence of such persons.(7) The authority shall prepare a list of record or property seized in thecourse of the search and obtain the signatures of the witnesses on the list.(3) Xo female shall be searched by any one except a female.(9) The authority shall record the statement of the person searched undersub-section (1) or sub-section (5) in respect of the records or proceeds ofcrime found or seized in the course of the search:Provided that no search of any person shall be made unless, in relation toan orrence under—(a) Paragraph 1 of Part A or Paragraph 1 or Paragraph 2 or Paragraph3 or Paragraph 4 or Paragraph 5 of Part B of the Schedule, a reporthas been forwarded to a Magistrate under section 173 of the Codeof Criminal Procedure, 1973 (2 of 1974); or

Page 20S. 20 PREVENTION OF MONEY-LAUNDERING ACT, 2002 2.22(b) Paragraph 2 of Part A of the Schedule, a police report or a com-plaint has been filed for taking cognizance of an offence by theSpecial Court constituted under sub-section ( 1) of section 36 of theNarcotic Drugs and Psychotropic Substances Act, 1985(61 of 1985).(10) The authority, seizing any record or property under sub-section (1)shall, within a period of thirty days from such seizure, file an applicationrequesting for retention of such record or property, before the Adjudicat-ing Authority.Power to arrest.19. (1) If the Director, Deputy Director, Assistant Director or any otherofficer authorised in this behalf by the Central Government by general orspecial order, has on the basis of material in his possession reason tobelieve (the reason for such belief to be recorded in writing) that any per-son has been guilty of an offence punishable under this Act, he may arrest

such person and shall, as soon as may be, inform him of the grounds forsuch arrest.(2) The Director, Deputy Director, Assistant Director or any other officershall, immediately after arrest of such person under sub-section (1), for-ward a copy of the order along with the material in his possession, re-ferred to in that sub-section, to the Adjudicating Authority in a sealedenvelope, in the manner, as may be prescribed and such AdjudicatingAuthority shall keep such order'and material for such period, as may beprescribed.(3) Every person arrested under sub-section (1) shall, within twenty-fourhours, be taken to a Judicial Magistrate or a Metropolitan Magistrate, asthe case may be, having jurisdiction:Provided that the period of twenty-four hours shall exclude the timenecessary for the journey from the place of arrest to the Magistrate's Court.Retention of property.20. ( 1) Where any property has been seized under section 17 or section 18,and the officer authorised by the Director in this behalf has, on the basisof material in his possession, reason to believe (the reason for such beliefto be recorded by him in writing) that such property is required to beretained for the purposes of adjudication under section 8, such propertymay be retained for a period not exceeding three months from the end ofthe month in which such property was seized.(2) The officer authorised by the Director immediately after he has passedan order for retention of the property for purposes of adjudication undersection 8 shall forward a copy of the order along with the material in hispossession, referred to in sub-section (1), to the Adjudicating Authority in

Page 212.2á~ CH. V-SUMMONS, SEARCHES & SEIZURES S. 21a sealed envelope, in the manner as may be prescribed and such Adjudi-cating Authority shall keep such order and material for such period as'may be prescribed.(3) On the expiry of the period specified in sub-section (1), the propertyshall be returned to the person from whom such property was seized un-less the Adjudicating Authority permits retention of such property beyondthe said period.(4) The Adjudicating Authority, before authorising the retention of suchproperty beyond the period specified in sub-section (1), shall satisfy him-self that the property is prima facie involved in money-laundering and theproperty is required for the purposes of adjudication under section 8.(5) After passing the order of confiscation under sub-section (6) of section8, the Adjudicating Authority shall direct the release of all properties otherthan the properties involved in money-laundering to the person from whomsuch properties were seized.(6) notwithstanding anything contained in sub-section (5), the Director orany officer authorised by him in this behalf may withhold the release of

any property until filing of appeal under section 26 or forty-five days fromthe date of order under sub-section (5), whichever is earlier, if he is of theopinion that such property is relevant for the proceedings before theAppellate Tribunal.Retention of records.21. (1) Where any records have been seized, under section 17, or sectionIS, and the Investigating Officer or any other officer authorised by theDirector in this behalf has reason to believe that any of such records arerequired to be retained for any inquiry under this Act, he may retain suchrecords for a period not exceeding three months from the end of the monthin which such records were seized.(2) The person, from whom records were seized, shall be entitled to obtaincopies of records retained under sub-section (1).(3) On the expiry of the period specified under sub-section (1), the recordsshall be returned to the person from whom such records were seized un-less the Adjudicating Authority permits retention of such records beyondthe said period.(4) The Adjudicating Authority, before authorising the retention of suchrecords beyond the period mentioned in sub-section (1), shall satisfy him-self that the records are required for the purposes of adjudication undersection 8.

Page 22S. 23PREVENTION OF MONEY-LAUNDERING ACT, 2002 2.24(5) After passing of an order of confiscation under sub-section (6) of sec-tion 8, the Adjudicating Authority shall direct the release of the records tothe person from whom such records were seized.(6) Notwithstanding anything contained in sub-section (5), the Director orany officer authorised by him in this behalf may withhold the release ofany records until filing of appeal under section 26 or after forty-five daysfrom the date of order under sub-section (5), whichever is earlier if hc'isof the opinion that such records are relevant for the proceedings beforethe Appellate Tribunal.Presumption as to records or property in certain cases.22. (1) Where any records or property are or is found in the possession orcontrol of any person in the course of a survey or a search, it shall bepresumed that—(0 such records or property belong or belongs to such person;(/'/) the contents of such records are true; and(Hi) the signature and every other part of such records which purportto be in the handwriting of any particular person or which mavreasonably be assumed to have been signed by, or to be in thehandwriting of, any particular person, are in that person's hand-writing, and in the case of a record, stamped, executed or attested,that it was executed or attested by the person by whom it purportsto have been so stamped, executed or attested.

(2) Where any records have been received from any place outside Indiaduly authenticated by such authority or person and in such manner asmay be prescribed, in the course of proceedings under this Act theSpecial Court, the Appellate Tribunal or the Adjudicating Authority a's thecase may be, shall—(a) presume, that the signature and every other part of such recordwhich purports to be in the handwriting of any particular personor which the court may reasonably assume to have been signedby, or to be in the handwriting of, any particular person, is in thatperson's handwriting; and in the case of a record executed orattested, that it was executed or attested by the person by whom itpurports to have been so executed or attested;(b) admit the document in evidence, notwithstanding that it is not dulystamped, if such document is otherwise admissible in evidence.Presumption in inter-connected transactions.23. Where money-laundering involves two or more inter-connected trans-actions and one or more such transactions is or are proved to be involvedin money-laundering, then for the purposes of adjudication or confisca-

Page 23S. 262/><i CH. VI - APPELLATE TRIBUNALtion under section 8, it shall, unless otherwise proved to the satisfaction ofthe Adjudicating Authority, be presumed that the remaining transactionstorm part of such inter-connected transactions.Burden of proof.24. When a person is accused of having committed the offence undersection 3 the burden of proving that proceeds of crime are untainted pro-perty shall be on the accused.CHAPTER VIAPPELLATE TRIBUNALEstablishment of Appellate Tribunal.25. The Central Government shall, by notification, establish an AppellateTribunal to hear appeals against the orders of the Adjudicating Authorityand the authorities under this Act.Appeals to Appellate Tribunal..26. (1) Save as otherwise provided in sub-section (3), the Director or anvperson aggrieved by an order made by the Adjudicating Authority underthis Act, may prefer an appeal to the Appellate Tribunal.(2) Any banking company, financial institution or intermediary a^rWedby any order of the Director made under sub-section (2) of section 13may prefer an appeal to the Appellate Tribunal.(3) Every appeal preferred under sub-section (1) or sub-section (2) shall betiled within a period of forty-five days from the date on which a copy ofthe order made by the Adjudicating Authority or Director is received andit shall be in such form and be accompanied bv such fee as may be pre-scribed:

Provided that the Appellate Tribunal may, after giving an opportunity ofbeing heard entertain an appeal after the expiry of the said period of forty-dve days if it is satisfied that there was sufficient cause for not füinc'itwithin that period. °(4) On receipt of an appeal under sub-section (1) or sub-section (2) theAppellate Tribunal may, after giving the parties to the appeal an opportu-nity of being heard, pass such orders thereon as it thinks fit, confirmingmodifying or setting aside the order appealed against. °'(5) The Appellate Tribunal shall send a copy of every order made by ü tothe parties to the appeal and to the concerned Adjudicating Authority orthe Director, as the case may be.(6) The appeal filed before the Appellate Tribunal under sub-section (1) orsub-section (2) shall be dealt with by it as expeditiously as possible and

Page 24S. 28 PREVENTION OF MONEY-LAUNDERING ACT, 2002 2.26endeavour shall be made by it to dispose of the appeal finally within sixmonths from the date of filing of the appeal.Composition, etc., of Appellate Tribunal.27. (1) The Appellate Tribunal shall consist of a Chairperson and two otherMembers.(2) Subject to the provisions of this Act —(a) the jurisdiction of the Appellate Tribunal may be exercised byBenches thereof;(b) a Bench may be constituted by the Chairperson with one or twoMembers as the Chairperson may deem fit;(c) the Benches of the Appellate Tribunal shall ordinarily sit at NewDelhi and at such other places as the Central Government may, inconsultation with the Chairperson, by notification, specify;(d) the Central Government shall, by notification, specify the areas inrelation to which each Bench of the Appellate Tribunal may exer-cise jurisdiction.(3) Notwithstanding anything contained in sub-section (2), the Chair-person may transfer a Member from one Bench to another Bench.(4) If at any stage of the hearing of any case or matter it appears to theChairperson or a Member that the case or matter is of such a nature thatit ought to be heard by a Bench consisting of two Members, the case ormatter may be transferred by the Chairperson or, as the case may be,referred to him for transfer, to such Bench as the Chairperson may deemfit.Qualifications for appointment.28. (1) A person shall not be qualified for appointment as Chairpersonunless he is or has been a Judge of the Supreme Court or of a High Court.(2) A person shall not be qualified for appointment as a Member unlesshe-ia) is or has been a Judge of a High Court; or(b) has been a Member of the Indian Legal Service and has held a post

in Grade I of that Service for at least three years; or(c) has been a member of the Indian Revenue Service and has heldthe post of Commissioner of Income-tax or equivalent post in thatService for at least three years; or(d) has been a member of the Indian Economic Service and has heldthe post of Joint Secretary or equivalent post in that Service for atleast three years; or

Page 25ve) has been a member of the Indian Customs and Central ExciseService and has held the post of a Joint Secretary or equivalentpost in that Service for as least three years; or(/) has been in the practice of accountancy as a chartered accountantunder the Chartered Accountants Act, 1949 (38 of 1949) or as aregistered accountant under any law for the time being in force orpartly as a registered accountant and partly as a chartered accoun-tant for at least ten years:Provided that one of the members of the Appellate Tribunal shallbe from category mentioned in clause (/); or(g) has been a member of the Indian Audit and Accounts Service andhas held the post of Joint Secretary or equivalent post in thatService for at least three years.(3) No sitting Judge of the Supreme Court or of a High Court shall beappointed under this section except after consultation with the ChiefJustice of India.Term of office.29. The Chairperson and every other Member shall hold office as such fora term of five years from the date on which he enters upon his office:Provided that no Chairperson or other Member shall hold office as suchat ter he has attained,—(a) in the case of the Chairperson, the age of sixty-eight years;(b) in the case of any other Member, the age of sixty-five years.Conditions of service.30. The salary and allowances payable to and the other terms and condi-tions of service of the Chairperson and other Members shall be such asmay be prescribed:Provided that neither the salary and allowances nor the other terms andconditions of service of the Chairperson or any other Member shall bevaried to his disadvantage after appointment.Vacancies.I1" V°r ?f °n °ther than temP°rar>' absence, any vacancy occurs inthe office of the Chairperson or any other Member, then the Central Gov-ernment shall appoint another person in accordance with the provisionsof this Act to fill the vacancy and the proceedings may be continued be-fore the Appellate Tribunal from the stage at which the vacancy is filled

Page 26S. 35 PREVENTION OF iMONEY-LAUNDERING ACT, 2002 2.28Resignation and removal.32. (1) The Chairperson or any other Member may, by notice in writingunder his hand addressed to the Central Government, resign his office:Provided that the Chairperson or any other Member shall, unless he ispermitted by the Central Government to relinquish his office sooner, con-tinue to hold office until the expiry of three months from the date ofreceipt of such notice or until a person duly appointed as his successorenters upon his office or until the expiry of his term of office, whichever isthe earliest.(2) The Chairperson or any other Member shall not be removed from hisoffice except by an order made by the Central Government on the groundof proved misbehaviour or incapacity, after an inquiry made by a personappointed by the President in which such Chairperson or any other Mem-ber concerned had been informed of the charges against him and given areasonable opportunity of being heard in respect of those charges.Member to act as Chairperson in certain circumstances.33. (1) In the event of the occurrence of any vacancy in the office of theChairperson by reason of his death, resignation or otherwise, the senior-most Member shall act as the Chairperson until the date on which a newChairperson, appointed in accordance with the provisions of this Act to fillsuch vacancy, enters upon his office.(2) When the Chairperson is unable to discharge his functions owing toabsence, illness or any other cause, the scniormost Member shall dischargethe functions of the Chairperson until the date on which the Chairpersonresumes his duties.Staff of Appellate Tribunal.34. (1) The Central Government shall provide the Appellate Tribunal withsuch officers and employees as that Government may think fit.(2) The officers and employees of the Appellate Tribunal shall dischargetheir functions under the general superintendence of the Chairperson.(3) The salaries and allowances and other conditions of service of theofficers and employees of the Appellate Tribunal shall be such as may beprescribed.Procedure and powers of Appellate Tribunal.35. (1) The Appellate Tribunal shall not be bound by the procedure laiddown by the Code of Civil Procedure, 1908 (5 of 1908), but shall be guidedby the principles of natural justice and, subject to the other provisions ofthis Act, the Appellate Tribunal shall have powers to regulate its own pro-cedure.

Page 27219 f'n T tu vìi-appellate tribunal'^ -> :.

(2jThe Appellate Tribunal shall have, for the purposes of discharging itsfunctions under this Act, the same powers as are vested in a civil courtunder the Code of Civil Procedure, 1908 (5 of 1908) while .trying a suit in

respect of the following matters, namely:—(a) summoning and enforcing the attendance of any person andexamining him on oath;(b) requiring the discovery and production of documents;(c) receiving evidence on affidavits;(d) subject to the provisions of sections 123 and 124 of the IndianEvidence Act, 1872 (1 of 1872), requisitioning any public record ordocument or copy of such record or document from any office;(e) issuing commissions for the examination of witnesses or docu-ments;(/) reviewing its decisions;(g) dismissing a representation for default or deciding it ex parte;(/?) setting aside any order of dismissal of any representation fordefault or any order passed by it ex parte; and(0 any other matter, which may be, prescribed by the Central Gov-ernment.(3) An order made by the Appellate Tribunal under this Act shall beexecutable by the Appellate Tribunal as a decree of civil court and for thispurpose, the Appellate Tribunal shall have all the powers of a civil court.(4) Notwithstanding anything contained in sub-section (3) the AppellateTribunal may transmit any order made by it to a civil court havin» localjurisdiction and such civil court shall execute the order as if it were adecree made by that court.(5) All proceedings before the Appellate Tribunal shall be deemed to bejudicial proceedings within the meaning of sections 193 and 228 of theIndian Penal Code (45 of 1860) and the Appellate Tribunal shall'be deemedto be a civil court for the purposes of sections 345 and 346 of the Code ofCriminal Procedure, 1973 (2 of 1974).Distribution of business amongst Benches.36. Where any Benches are constituted, the Chairperson mav, from timeto time, by notification, make provisions as to the distribution of the busi-ness of the Appellate Tribunal amongst the Benches and also provide forthe matters which may be dealt with bv each Bench.

Page 28S. 41 PREVENTION OF MONEY-LAUNDERING ACT, 2002 2.30Power of Chairperson to transfer cases.37. On the application of any of the parties and after notice to the parties,and after hearing such of them as he may desire to be heard, or on hisown motion without such notice, the Chairperson may transfer any casepending before one Bench, for disposal, to any other Bench.Decision to be by majority.38. If the Members of a Bench consisting of two Members differ in opin-ion on any point, they shall state the point or points on which they differ,and make a reference to the Chairperson who shall either hear the pointor points himself or refer the case for hearing on such point or points byone or more of the other Members of the Appellate Tribunal and such

point or points shall be decided according to the opinion of the majority ofthe Members of the Appellate Tribunal who have heard the case, includ-ing those who first heard it.Right of appellant to take assistance of authorised representative and ofGovernment to appoint presenting officers.39. (1) A person preferring an appeal to the Appellate Tribunal under thisAct may either appear in person or take the assistance of an authorisedrepresentative of his choice to present his case before the Appellate Tribu-nal.Explanation.—For the purposes of this sub-section, the expression"authorised representative" shall have the same meaning as assigned to itunder sub-section (2) of section 288 of the Income-tax Act, 1961 (43 of1961).(2) The Central Government or the Director may authorise one or moreauthorised representatives or any of its officers lo act as presenting offic-ers and every person so authorised may present the case with respect toany appeal before the Appellate Tribunal.Members, etc., to be public servants.40. The Chairperson, Members and other officers and employees of theAppellate Tribunal, the Adjudicating Authority, Director and the officerssubordinate to him shall be deemed to be public servants'within the mean-ing of section 21 of the Indian Penal Code (45 of 1860).Civil court not to have jurisdiction.41. No civil court shall have jurisdiction to entertain any suit or proceed-ing in respect of any matter which the Director, an Adjudicating Author-ity or the Appellate Tribunal is empowered by or under this Act to deter-mine and no injunction shall be granted by any court or other authority inrespect of any action taken or to be taken in pursuance of any powerconferred by or under this Act.

Page 29Appeal to High Court.42. Any person aggrieved by any decision or order of the Appellate Tribu-nal may file an appeal to the High Court within sixty days from the date ofcommunication of the decision or order of the Appellate Tribunal to himon any question of law or fact arising out of such order:Provided that the High Court may, if it is satisfied that the appellant wasprevented by sufficient cause from filing the appeal within the said pe-riod, allow it to be filed within a further period not exceeding sixty days.Explanation.—For the purposes of this section, "High Court" means—(i) the High Court within the jurisdiction of which the aggrieved partyordinarily resides or carries on business or personally works forgain; and(ii) where the Central Government is the aggrieved party, the HighCourt within the jurisdiction of which the respondent, or in a casewhere there are more than one respondent, any of the respondents,

ordinarily resides or carries on business or personally works forgain.CHAPTER VIISPECIAL COURTSSpecial Courts.43. (1) The Central Government, in consultation with the Chief Justice ofthe High Court, shall for trial of offence punishable under section < bynotification designate one or more Courts of Session as Special Court orSpecial Courts for such area or areas or for such case or class or group ofcases as may be specified in the notification.Explanatioii.—In this sub-section, "High Court" means the High Court ofthe State in which a Sessions Court designated as Special Court was func-tioning immediately before such designation.(2) While trying an offence under this Act, a Special Court shall also try anoffence other than an offence referred to in sub-section (1), with whichthe accused may, under the Code of Criminal Procedure, 1973 (2 of 1974),be charged at the same trial.Offences triable by Special Courts.44. (1) Notwithstanding anything contained in the Code of Criminal Pro-cedure, 1973 (2 of 1974),— '(a) the scheduled offence and the offence punishable under section 4shall be triable only by the Special Court constituted for the areain which the offence has been committed:

Page 30S. 45 PREVENTION OF MONEY-LAUNDERING ACT, 2002 2.32Provided that the Special Court, trying a scheduled offence beforethe commencement of this Act, shall contribute to try such sched-uled offence; or(b) a Special Court may, upon perusal of police report of the factswhich constitute an offence under this act or upon a complaintmade by an authority authorised in this behalf under this Act takecognizance of the offence for which the accused is committed to itfor trial.(2) Nothing contained in this section shall be deemed to affect the specialpowers of the High Court regarding bail under section 439 of the Code ofCriminal Procedure, 1973 (2 of 1974) and the High Court may exercisesuch powers including the power under clause (b) of sub-section (1) ofthat section as if the reference to "Magistrate" in that section includes alsoa reference to a "Special Court" designated under section 43.Offences to be cognizable and non-bailable.45. (1) Notwithstanding anything contained in the Code of Criminal Pro-cedure, 1973 (2 of 1974),—(a) every offence punishable under this Act shall be cognizable;(b) no person accused of an offence punishable for a term of impris-onment of more than three years under Part A of the Scheduleshall be released on bail or on his own bond unless—

(0 the Public Prosecutor has been given an opportunity to op-pose the application for such release; and(it) where the Public Prosecutor opposes the application, the courtis satisfied that there are reasonable grounds for believingthat he is not guilty of such offence and that he is not likely tocommit any offence while on bail :Provided that a person, who, is under the age of sixteen years,or is a woman or is sick or infirm, may be released on bail, ifthe Special Court so directs :Provided further that the Special Court shall .not take cogni-zance of any offence punishable under section 4 except upona complaint in writing made by—(0 the Director; or(n) any officer of the Central Government or State Govern-ment authorised in writing in this behalf by the CentralGovernment by a general or a special order made in thisbehalf by that Government.

Page 312 " CH.Vm- AUTHORITIES $.4$(2) The limitation on granting of bail specified in clause (b) of sub-section(1) is in addition to the limitations under the Code of Criminal Procedure,1973 (2 of 1974) or any other law for the time being in force on granting ofbail.Application of Code of Criminal Procedure, 1973 to proceedings beforeSpecial Court.46. (1) Save as otherwise provided in this Act, the provisions of the Codeof Criminal Procedure, 1973 (2 of 1974) (including the provisions as tobails or bonds), shall apply to the proceedings before a Special Court andfor the purposes of the said provisions, the Special Court shall be deemedto be a Court of Session and the persons conducting the prosecution be-fore the Special Court, shall be deemed to be a Public Prosecutor :Provided that the Central Government may also appoint for any case orclass or group of cases a Special Public Prosecutor.(2) A person shall not be qualified to be appointed as a Public Prosecutoror a Special Public Prosecutor under this section unless he has been inpractice as an Advocate for not less than seven years, under the Union ora State, requiring special knowledge of law.(3) Every person appointed as a Public Prosecutor or a Special Public Pros-ecutor under this section shall be deemed to be a Public Prosecutor withinthe meaning of clause (it) of section 2 of the Code of Criminal Procedure,1973 (2 of 1974) and the provisions of that Code shall have effect accord-ingly.Appeal and revision.47. The High Court may exercise, so far as may be applicable, all the pow-ers conferred by Chapter XXIX or Chapter XXX of the Code of Criminal

Procedure, 1973 (2 of 1974), on a High Court, as if a Special Court withinthe local limits of the jurisdiction of the High Court were a Court of Ses-sion trying cases within the local limits of the jurisdiction of the High Court.CHAPTER VIIIAUTHORITIESAuthorities under Act.48. There shall be the following classes of authorities for the purposes ofthis Act, namely :—(a) Director or Additional Director or Joint Director,(b) Deputy Director,(c) Assistant Director, and

Page 32S. 50 PREVENTION OF MONEY-LAUNDERING ACT, 2002 2.34(cl) such other class of officers as may be appointed for the purposesof this Act.Appointment and powers of authorities and other officers.49. (1) The Central Government may appoint such persons as it thinks fitto be authorities for the purposes of this Act.(2) Without prejudice to the provisions of sub-section (1), the Central Gov-ernment may authorise the Director or an Additional Director or a JointDirector or a Deputy Director or an Assistant Director appointed underthat sub-section to appoint other authorities below the rank of an Assis-tant Director.(3) Subject to such conditions and limitations as the Central Governmentmay impose, an authority may exercise the powers and discharge the du-ties conferred or imposed on it under this Act.Powers of authorities regarding summons, production of documents andto give evidence, etc.50. (1) The Director shall, for the purposes of section 13, have the samepowers as are vested in a Civil Court under the Code of Civil Procedure,1908 (5 of 1908) while trying a suit in respect of the following matters,namely :—(a) discovery and inspection;(b) enforcing the attendance of any person, including any officer of abanking company or a financial institution or a company, and ex-amining him on oath;(c) compelling the production of records;(d) receiving evidence on affidavits;(e) issuing commissions for examination of witnesses and documents;and(/) any other matter which may be prescribed.(2) The Director, Additional Director, Joint Director, Deputy Director orAssistant Director shall have power to summon any person whose atten-dance he considers necessary whether to give evidence or to produce anyrecords during the course of any investigation or proceeding under thisAct.

(3) All the persons so summoned shall be bound to attend in person orthrough authorised agents, as such officer may direct, and shall be boundto state the truth upon any subject respecting which they are examined ormake statements, and produce such documents as may be required.

Page 33(4) Every proceeding under sub-sections (2) and (3) shall be deemed to bea judicial proceeding within the meaning of section 193 and section 228 ofthe Indian Penal Code (45 of 1860).(5) Subject to any rules made in this behalf by the Central Governmentany officer referred to in sub-section (2) may impound and retain in hiscustody for such period, as he thinks fit, any records produced before himin any proceedings under this Act :Provided that an Assistant Director or a Deputy Director shall not—(a) impound any records without recording his reasons for so doing;oi-Cè) retain in his custody any such records for a period exceeding threemonths, without obtaining the previous approval of the Director.Jurisdiction of authorities.51.(1) The authorities shall exercise all or any of the powers and performall or any of the functions conferred on, or, assigned, as the case may beto such authorities by or under this act or the rules framed thereunder inaccordance with such directions as the Central Government may issuetor the exercise of powers and performance of the functions by all or anyof the authorities.(2) In issuing the directions or orders referred to in sub-section (1), theCentral Government may have regard to any one or more of the followingcriteria, namely:— °(a) territorial area;(b) classes of persons;(c) classes of cases; and(ct) any other criterion specified by the Central Government in thisbehalf.Power of Central Government to issue directions, etc.52. The Central Government may, from time to time, issue such ordersinstructions and directions to the authorities as it may deem fit for theproper administration of this Act and such authorities and all other per-sons employed in execution of this Act shall observe and follow such or-ders, instructions and directions of the Central Government :Provided that no such orders, instructions or directions shall be issued soas to—(a) require any authority to decide a particular case in a particularmanner; or(b) interfere with the discretion of the Adjudicating Authority in exer-cise of his functions.

Page 34S- 55 PREVENTION OF MONEY-LAUNDERING ACT, 2002 2.36Empowerment of certain officers.53. The Central Government may, by a special or general order, empoweran officer not below the rank of Director of the Central Government or ofa State Government to act as an authority under this Act:Provided that the Central Government may empower an officer belowthe rank of Director if the officer of the rank of the Director or above arenot available in a particular area.Certain officers to assist in inquiry, etc.54. The following officers are hereby empowered and required to assistthe authorities in the enforcement of this Act, namely:—(a) officers of the Customs and Central Excise Departments;(b) officers appointed under sub-section (1) of section 5 of the Nar-cotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985);(c) income-tax authorities under sub-section (1) of section 117 of theIncome-tax Act, 1961 (43 of 1961);(ct) officers of-the stock exchange recognised under section 4 of theSecurities Contracts (Regulation) Act, 1956 (42 of 1956);(e) officers of the Reserve Bank of India constituted under sub-sec-tion (1) of section 3 of the Reserve Bank of India Act 1934 (2 of1934); ^(/) officers of Police;(g) officers of enforcement appointed under sub-section (1) of section36 of the Foreign Exchange Management Act, 1999 (40 of 1999);(h) officers of the Securities and Exchange Board of India establishedunder section 3 of the Securities and Exchange Board of India Act1992 (15 of 1992);(0 officers of any other body corporate constituted or establishedunder a Central Act or a State Act;0) such other officers of the Central Government, State Government,; local authorities or banking companies as the Central Governmentmay, by notification, specify, in this behalf. ,.'CHAPTER IX . ••.-.-RECIPROCAL ARRANGEMENT FOR ASSISTANCE IN CERTAINMATTERS AND PROCEDURE FOR ATTACHMENT ANDCONFISCATION OF PROPERTY"'* Definitions. . - ■'.-•. ~ "'_ . ^^ tn&Chaptery unless the context otherwise requires,— 1 !

Page 35respfctbf1^6" meansany Tntrl br Place- °utside',India inrespect or which arrangements have been made, by the CentralXS ^ernment of such country through a treaty(¿) "identifying" includes establishment of a proof that the propertysTcdonT ' °r USed Ìn the COmmiss^ °f an offencTuS

{C) ment"iftleT^ ^7?^ the nature, source, disposition, move-ment, title or ownership of property.Agreements with foreign countries.56. (1) The Central Government may enter into an agreement with theGovernment of any country outside India for- -reemcnt wth the(a) enforcing the provisions of this Act;(b) exchange of information for the prevention of any offence undern 4 IT fr the COr,reSp0nding laW in forcc in t hat country orinvestigation of cases relating to any offence under this Act-and may, by notification in the Official Gazette, make such provisions ^may be necessary for implementing the agreement. Pm^°™ as(2) The Central Government may, by notification in the Official Gazettedirect hat the application of this Chapter in relation to a con ac in. S atei h which reciprocal arrangements have been made, sh^sublecttonoïLCa0Soï0nS' eXCCPtÌOnS °r «uaüficatí™ - -e specificdÄ salìLetters of request to a contracting State in certain cases.:>7 (1) Notwithstanding anything contained in this Act or the Code of Criminal Procedure, 1973 (2 of 1974) if, in the course of an investigation intoni'offence or other proceedings under this Act, an application,smade ?oaSpccal Court by the Investigating Officer or anv officer superior S Ankto the Investigating Officer that any evidence is requiredl!, connectionm h investigation into an offence or proceedings under this Act in The isof the opinion that such evidence may be available in anv place ?n a cont acting State, and the Special Court, on being satisfied ?W such rvTcence ,s required in connection with the investigai^tt an o fenCe orP oceedmgs under this Act, may issue a letter of request to the court or anauthority in the contracting State competent to ileal with such request(0 examine facts and circumstances of the case00 requeSstandePS " ^ ^^ C°Urt ^ ^ in Such '"ter of

Page 36S. 59PREVENTION OF MONEY-LAUNDERING ACT, 2002 2.38(Hi) forward all the evidence so taken or collected to the Special Courtissuing such letter of request.(2) The letter of request shall be transmitted in such manner as the Cen-tral Government may specify in this behalf.(3) Every statement recorded or document or thing received under sub-section (1) shall be deemed to be the evidence collected during the courseof investigation.Assistance to a contracting State in certain cases.58. Where a letter of request is received by the Central Government froma court or authority in a contracting State requesting for investigationinto an offence or proceedings under this Act and forwarding to suchcourt or authority any evidence connected therewith, the Central Gov-ernment may forward such letter of request to the Special Court or to any

authority under the Act as it thinks fit for execution of such request inaccordance with the provisions of this Act or as the case may be anyother law for the time being in force. 'Reciprocal arrangements for processes and assistance for transfer ofaccused persons.59. (1) Where a Special Court, in relation to an offence punishable undersection 4, desires that—(a) a summons to an accused person, or(b) a warrant for the arrest of an accused person, or(c) a summons to any person requiring him to attend and produce adocument or other thing, or to produce a document or other thingor to produce it, or(d) a search warrant,issued by it shall be served or executed at any place in any contractingbtate, it shall send such summons or warrant in duplicate in such form tosuch Court, Judge or Magistrate through such authorities, as the CentralGovernment may, by notification, specify in this behalf and that CourtJudge or Magistrate, as the case may be, shall cause the same to be exe-cuted.(2) Where a Special Court, in relation to an offence punishable under sec-tion 4 has received for service or execution—(a) a summons to an accused person, or(b) a warrant for the arrest of an accused person, or(c) a summons to any person requiring him to attend and produce adocument or other thing, or to produce it, or(d) a search-warrant,

Page 372.39 CH.IX- ARRANGEMENT & PROCEDURE,FÇRATTACHMENT. ETC. .8.00received by ,,from another^* " £ ^rìfo™^"execution within its local jurisdiction; and where-

(Ö beWdcTwSfh^St ^ been eXlCrd' the PCrSOn arrested «hall,section 19 accordance with the procedure specified under^(ii) a search warrant has been executed, the things found n this searchshall, so far as possible be dealt with in accordance with the procedure specified under sections 17 and 18: PProvided that in a case where a summon or search warrant received fromducT Zg ST Hï been eXeCUted"the documents or 1er Sngs ^duced or things found in the search shall be forwarded to the Court issumgithe summons or search warrant through such authority as the Cen-"tial Government may, by notification, specify in this behalf(3) Where a person transferred to a contracting State pursuant to subsection (2) is a prisoner in India, the Special Court or the^Cen ^Govern"mem may impose such conditions as that Court or Governmentdc™ fS"(4 Where the person transferred to India pursuant to sub-section (I) is a

St"::h„nMndir,ZUrC and COnfiSCali0n' etC- °f I™™ - • "i„g

60. (1) Where the Director has made an order for attachment of anv nronappointed under sub-section (1) of section 10, as the case iTvbe m,va2cpo^con iscation of the property in India, derived or obtained dïccdv^r indirectly by any person from the commission of an offence uñde ec ion 3committed in that contracting State the Central Govcrnmen m foruard such letter of request to the Director, as it thinks fit, forexclut ion inaccordance with the provisions of this Act. execution in

Page 38S- 63 PREVENTION OF MONEY-LAUNDERING ACT, 2002 2.40(3) The Director shall, on receipt of a letter of request under section 58 orsection 59, direct any authority under this Act to take all steps necessaryfor tracing and identifying such property.(4) The steps referred to in sub-section (3) may include any inquiry, inves-tigation or survey in respect of any person, place, property, assets,' docu-ments, books of account in any bank or public financial institutions orany other relevant matters.(5) Any inquiry, investigation or survey referred to in sub-section (4) shallbe carried out by an authority mentioned in sub-section (3) in accordancewith such directions issued in accordance with the provisions of this Act.(6) The provisions of this Act relating to attachment, adjudication, confis-cation and vesting of property in Central Government contained in Chap-ter III and survey, searches and seizures contained in Chapter V shallapply to the property in respect of which letter of request is received froma court or contracting State for attachment or confiscation of property.Procedure in respect of letter of request.61. Every letter of request, summons or warrant, received by the CentralGovernment from and every letter of request, summons or warrant, to betransmitted to a contracting State under this Chapter shall be transmittedto a contracting State or, as the case may be, sent to the concerned Courtin India and in such form and in such manner as the Central Governmentmay, by notification, specify in this behalf.CHAPTER XMISCELLANEOUSPunishment for vexatious search.62. Any authority or officer exercising powers under this Act or anv rulesmade thereunder, who, without reasons recorded in writing —to'(a) searches or causes to be searched any building or place; or(b) detains or searches or arrests any person,shall for every such offence be liable on conviction for imprisonment for aterm which may extend to two years or fine which may extend to fiftythousand rupees or both.Punishment for false information or failure to give information, etc.63. (1) Any person wilfully and maliciously giving false information andso causing an arrest or a search to be made under this Act shall on convic-

tion be liable for imprisonment for a term which may extend to two yearsor with fine which may extend to fifty thousand rupees or both.

Page 392.4T ' ' .'ÇH.X.MISCELLANEOUS '-, v 1-. . ' ^S. 66(2) If,ariy person,-p- \ '-. • • 't(a) being legally bound to state the truth of any matter relating tp anoffence under section 3, refuses to answer any question put to himby an authority in the exercise of its powers under this Act; of(b) refuses to sign any statement made by him in the course of anyproceedings under this Act, which an authority may legally requireto sign; or /(c) to whom a summon is issued under section 50 either to attend togive evidence or produce books of account or other documents ata certain place and time.prnits to attend or produce books of ac-count or documents at the place or time,he shall pay, by way of penalty, a sum which shall not be less than fivehundred rupees but which may extend to ten thousand rupees for eachsuch default or failure.(3) No order under this section shall be passed by an authority referred toin sub-section (2) unless the person on whom the penalty is proposed to beimposed is given an opportunity of being heard in the matter by suchauthority.Cognizance of offences.64. (1) No court shall take cognizance of any offence under section 62 orsub-section (1) of section 63 except with the previous sanction of the Cen-tral Government.(2) The Central Government shall, by an order cither give sanction or refuseto give sanction within ninetv days of the receipt of the request in thisbehalf.Code of Criminal Procedure, 1973 to apply.65. The provisions of the Code of Criminal Procedure, 1973 (2 of 1974)shall apply, in so far as they are not inconsistent with the provisions of thisAct, to arrest, search and seizure, attachment, confiscation, investigation,prosecution and all other proceedings under this Act.Disclosure of information.66. The Director or any other authority specified by him by a general orspecial order in this behalf may furnish or cause to be furnished to—(;) any officer, authority or body performing any functions underany law relating to imposition of any tax, duty or cess or to deal-ings in foreign exchange, or prevention of illicit traffic in thenarcotic drugs and psychotropic substances under the NarcoticDrugs and Psychotropic Substances Act, 1985 (61 of 1985); or(n) such other officer, authority or body performing functions underany other law as the Central Government may, if in its opinion it is

Page 40S- 70 PREVENTION OF MONEY-LAUNDERING ACT, 2002 2.42necessary so to do in the public interest, specify, by notification inthe Official Gazette, in this behalf, any information received orobtained by such Director or any other authority, specified by himin the performance of their functions under this Act, as may, in theopinion of the Director or the other authority, so specified by him,be necessary for the purpose of the officer, authority or bodyspeci-fied in clause (;) or clause (it) to perform his or its functions underthat law.Bar of suits in civil courts.67. \To suit shall be brought in any civil court to set aside or modify anyproceeding taken or order made under this Act and no prosecution, suitor other proceeding shall lie against the Government or any officer of theGovernment for anything done or intended to be done" in good faithunder this Act.Notice, etc., not to be invalid on certain grounds.68. No notice, summons, order, document or other proceeding, furnished'or made or issued or taken or purported to have been furnished or madeor issued or taken in pursuance of any of the provisions of this Act shall beinvalid, or shall be deemed to be invalid merely by reason of any mistake,defect or omission in such notice, summons, order, document or otherproceeding if such notice, summons, order, document or other proceed-ing is in substance and effect in conformity with or according to the intentand purpose of this Act.Recovery of fines.69. Where any fine imposed on any person under section 13 or section 63is not paid within six months from the day of imposition of fine, the Direc-tor or any other officer authorised by him in this behalf may proceed torecover the amount from the said person in the same manner asprescribed in Schedule II of the Income-tax Act, 1961 (43 of 1961) for therecovery of arrears and he or any officer authorised by him in this behalfshall have all the powers of the Tax Recovery Officer mentioned in thesaid Schedule for the said purpose.Offences by companies.70. (1) Where a person committing a contravention of any of the provi-sions of this Act or of any rule, direction or order made thereunder is acompany, every person who, at the time the contravention was commit-ted, was in charge of, and was responsible to the company, for the con-duct of the business of the company as well as the company, shall bedeemed to be guilty of the contravention and shall be liable to be pro-ceeded against and punished accordingly :'

Page 41Provided that nothing containing in this sub-section shall render ahy suchperson liable to punishment if he proves that the contravention took place

without his knowledge or that he exercised all due diligence.to preventsuch contravention.(2) Notwithstanding anything contained in sub-section (1), where a con-travention of any of the provisions of this Act or of any rule, direction ororder made thereunder has been committed by a company and it is provedthat the contravention has taken place with the consent or connivance of,or is attributable to any neglect on the part of any director, manager, sec-retary or other officer of any company, such director, manager, secretaryor other officer shall also be deemed to be guilty of the contravention andshall be liable to be proceeded against and punished accordingly.Explanation.—For the purposes of this section,—(i) "company" means any body corporate and includes a firm or otherassociation of individuals; and(ii) "director", in relation to a firm, means a partner in the firm.Act to have overriding effect.71. The provisions of this Act shall have effect notwithstanding anythinginconsistent therewith contained in any other law for the time being inforce.Continuation of proceedings in the event of death or insolvency.72.(1) Where-of) any property of a person has been attached under section 8 and noappeal against the order attaching such property has been pre-ferred; or(b) any appeal has been preferred to the Appellate Tribunal, and—(;) in a case referred to in clause (a), such person dies or is adju-dicated an insolvent before preferring an appeal to the Appel-late Tribunal; or(ii) in a case referred to in clause (b), such person dies or is adju-dicated an insolvent during the pendency of the appeal,thon, it shall be lawful for the legal representatives of such person or theofficial assignee or the official receiver, as the case may be, to prefer anappeal to the Appellate Tribunal or as the case may be, to continue theappeal before the Appellate Tribunal, in place of such person and the pro-visions of section 26 shall, so far as may be, apply, or continue to apply, tosuch appeal.

Page 42S- 73 PREVENTION' OF MONEY-LAUNDERING ACT, 2002 2.44(2) Where—(a) after passing of a decision or order by the Appellate Tribunal, noappeal has been preferred to the High Court under section 42; ov(b) any such appeal has been preferred to the High Court,—then—(0 in a case referred to in clause (a), the person entitled to file theappeal dies or is adjudicated an insolvent before preferringan appeal to the High Court, or(ii) in a case referred to in clause (b), the person who had filed the

appeal dies or is adjudicated an insolvent during the pendencyof the appeal before the High Court,then, it shall be lawful for the legal representatives of such person, or theofficial assignee or the official receiver, as the case may be, to prefer anappeal to the High Court or to continue the appeal before the High Courtin place of such person and the provision of section 42 shall, so far as maybe, apply, or continue to apply to such appeal.(3) The powers of the official assignee or the official receiver under sub-section (1) or sub-section (2) shall be exercised by him subject to the pro-visions of the Presidency-towns Insolvency Act, 1909 (3 of 1909) or theProvincial Insolvency Act, 1920 (5 of 1920), as the case may be.Power to make rules.73. (1) The Central Government may, by notification, make rules for car-rying out the provisions of this Act.(2) In particular, and without prejudice to the generality of the foregoingpower, such rules may provide for all or any of the following matters]namely :—(a) the form in which records referred to in this Act may be main-tained;(b) the manner in which the order and the materiafreferred to in sub-section (2) of section 5 to be maintained;(c) matters in respect of experience of Members under sub-section (3)of section 6;(d) the salaries and allowances payable to and other terms and condi-tions of service of Members of the Adjudicating Authority undersub-section (9) of section 6;(e) the salaries and allowances payable to and other terms and condi-tions of service of the officers and employees of the AdjudicatingAuthority under sub-section (3) of section 7;

Page 43•(/) the manner in whldh and the conditions* Subject tö which thViSroperties confiscated may bé received arid managed under sub-sec-tion (2) of section 10;(g) the additional matters in respect of which the Adjudicating Au-thority may exercise the powers of a civil court under clause (/) ofsub-section (1) of section 11;(h) the nature and value of transactions in respect of which recordsshall be maintained under clause (a) of sub-section (1) of section(0 the time within which the information of transactions under clause(b) of sub-section (1) of section 12 shall be furnished;(;) the manner in which records shall be verified and maintained bybanking companies, financial institutions and intermediaries un-der clause (c) of sub-section (1) of section 12;(k) the procedure and the manner of maintaining and furnishing in-formation under sub-section (1) of section 12 as required under

section 15;(t) the manner in which the reasons and the material referred to insub-section (2) of section 16 shall be maintained;(m) the rules relating to search and seizure under sub-section (1) ofsection 17;(n) the manner in which the reasons and the material referred to insub-section (2) of section 17 shall be maintained;(o) the manner in which the reasons and the material referred to insub-section (2) of section 18 shall be maintained;(p) the manner in which the order and the material referred to in sub-section (2) of section 19 shall be maintained;(q) the manner in which records authenticated outside India may bereceived under sub-.section (2) of section 22;(;■) the form of appeal and the fee for filing such appeal, under sub-section (3) of section 26;(s) the salary and allowances payable to and the other terms and con-ditions of service of the Chairperson and other Members of theAppellate Tribunal under section 30;(0 the salaries and allowances and the conditions of service of theofficers and employees of the Appellate Tribunal under sub-sec-tion (3) of section 34;

Page 44Sch. PREVENTION OF MONEY-LAUNDERING ACT, 2002 2.46(it) the additional matters in respect of which the Appellate Tribunalmay exercise the powers of a civil court under clause (i) of sub-section (2) of section 35;(v) the additional matters in respect of which the authorities may ex-ercise powers of a civil court under clause (/) of sub-section (1) ofsection 50;(u1) the rules relating to impounding and custody of records under sub-section (5) of section 50;(x) any other matter which is required to be, or may be, prescribed.Rules to be laid before Parliament.74. Every rule made under this Act shall be laid, as soon as may be after itis made, before each House of Parliament, while it is in session, for a totalperiod of thirty days which may be comprised in one session or in two ormore successive sessions, and if, before the expiry of the session immedi-ately following the session or the successive sessions aforesaid, both Housesagree in making any modification in the rule or both Houses agree thatthe rule should not be made, the rule shall thereafter have effect only insuch modified form or be of no effect, as the case may be; so, however,that any such modification or annulment shall be without prejudice to thevalidity of anything previously done under that rule.Power to remove difficulties.75. (1) If any difficulty arises in giving effect to the provisions of this Act,

the Central Government may, by order, published in the Official Gazette,make such provisions not inconsistent with the provisions of this Act asmay appear to be necessary for removing the difficulty :Provided that no order shall be made under this section after the expiryof two years from the commencement of this Act.(2) Every order made under this section shall be laid, as soon as may beafter it is made, before each House of Parliament.SCHEDULE[See section 2(j)]PARTAPARAGRAPH 1OFFENCES UNDER THE INDIAN PENAL CODESection Description of offence121 Waging, or attempting to wage war or abetting waging ofwar, against the Government of India.

Page 45Section Description of offence121A Conspiracy to commit offences punishable by section 121against the State.PARAGRAPH 2OFFENCES UNDER THE NARCOTIC DRUGS AND PSYCHOTROPICSUBSTANCES ACT, 1985Section Description of offence15 Contravention in relation to poppy straw.18 Contravention in relation to opium poppy and opium.20 Contravention in relation to cannabis plant and cannabis.22 Contravention in relation to psychotropic substances.23 Illegal import into India, export from India or transhipmentof narcotic drugs and psychotropic substances.24 External dealings in narcotic drugs and psychotropic sub-stances in contravention of section 12 of the NarcoticDrugs and Psychotropic Substances Act, 1985.25A Contravention of orders made under section 9A of *heNarcotic Drugs and Psychotropic Substances Act, 1985.27A Financing illicit traffic and harbouring offenders.29 Abetment and criminal conspiracy.PARTBPARAGRAPH 1OFFENCES UNDER THE INDIAN PENAL CODEScciion Description of offence302 Murder.304 Culpable homicide not amounting to murder, if act bywhich the death is caused is done with the intention ofcausing death.307 Attempt to murder.308 Attempt to commit culpable homicide.

327 Voluntary causing hurt to extort property, or a valuablesecurity, or to constrain to do anything which is illegal orwhich may facilitate the commission of the offence.329 Voluntary causing grievous hurt to extort property, or avaluable security, or to constrain to do anything which is

Page 46Sch. PREVENTION OF MONEY-LAUNDERING ACT, 2002 2.48Section Description of offenceillegal or which may facilitate the commission of the of-fence.364A Kidnapping for ransom, etc.384 to 389 Offences relating to extortion.392 to 402 Offences relating to robbery and dacoity.467 Forgery of a valuable security, will or authority to makeor transfer any valuable security, or to receive any moncv,etc.489A Counterfeiting currency notes or bank notes.4S9B Using as genuine, forged or counterfeit currency notes orbank notes.PARAGRAPH 2OFFEXCES U.XDER THE ARMS ACT, 1959Section Description of offence25 To manufacture, sell, transfer, convert, repair or test orprove or expose or offer for sale or transfer or have in hispossession for sale, transfer, conversion, repair, test orproof, any arms or ammunition in contravention of sec-tion 5 of the Arms Act, 1959.To acquire, have in possession or carry any prohibited armsor prohibited ammunition in contravention of section 7 ofthe Arms Act, 1959.Contravention of section 24A of the Arms Act, 1959 relat-ing to prohibition as to possession of notified arms in dis-turbed areas, etc.Contravention of section 24B of the Arms Act, 1959 relat-ing to prohibition as to carrying of notified arms in orthrough public places in disturbed areas.Other offences specified in section 25.26 To do any act in contravention of any provisions of sec-, tion 3, 4, 10 or 12 of the Arms Act, 1959 in such manner asspecified in sub-section (1) of section 26 of the said Act.To do any act in contravention of any provisions of sec-tion 5, 6, 7 or 11 of the Arms Act, 1959 in such manner as- specified in sub-section (2) of section 26 of the said Act..• -, Other offences specified in section 26.

Page 47?49 OFFENCES UNDER WILD LIFE^PROTECTION) ACT Seh/Section Description of offence ~*J \ : - : ■ ' • ■' r—_~ ~ "27 Use of ai™s or ammunition:* in contravention of section 5or use of any arms or ammunition in contravention ofsection 7 of the Arms Act, 1959. •-28 Use and possession of fire arms or imitation fire arms incertain cases.29 Knowingly purchasing arms from unlicensed person orfor delivering arms, etc., to person not entitled to possessthe same.30 Contravention of any condition of a licence or any provi- sions of the Arms Act, 1959 or any rule made thereunder.PARAGRAPH 3OFFENCES UNDER THE WILD LIFE (PROTECTION) ACT, ¡972Section Description of offence "51 Contravention of provisions of section 17Aread with section 17A relating to prohibition of picking, uprooting, etc.,of specified plants.3 ' Contravention of provisions of section 39 relat-read with section 39 ing to wild animals, etc., to be Government prop-erty. .'....:31 Contravention of provisions of section 44 relat-read with section 44 ing to dealings in trophy and animal articles with-out licence prohibited.3 ' Contravention of provisions of section 48 relat-read with section 48 ing to purchase of animal, etc., by licensee.D' Contravention of provisions of section. 49B re-read with section 49B lating to prohibition of dealings in trophies, ani-mal articles, etc., derived from scheduled ani-mals.

Page 48Sch. PREVENTION OF MONEY-LAUNDERING ACT, 2002 2.50PARAGRAPH 4OFFEXCES UNDER THE IMMORAL TRAFFIC (PREVENTION) ACT, 1956Section Description of offence5 Procuring, inducing or taking person for the sake of prosti-tution.6 Detaining a person in premises where prostitution is car-ried on.8 Seducing or Soliciting for purpose ot prostitution.9 Seduction of a person in custody.PARAGRAPHS( ;/■ / /i'.YC 'ES I XDER THE PR E1 'EXTIOX OF COR RI P TlOX ACT, I ■) > SSection Description of offence7 Public servant taking gratification other than legal remu-

neration in respect of an official Act.8 Taking gratification in order, by corrupt or illegal means,to influence public servant.9 Taking gratification for exercise of personal influence, withpublic servant.10 Abetment by public servant of offences defined in sectionS or section 9 of the Prevention of Corruption .Act, 1988.