Certain amendments have been proposed in the Prevention of Money Laundering Act, 2002 (hereinafter referred to as “Act”) through the Finance Act, 2018. These amendments seek to enhance the scope of the Act.
The Act was enacted in 2002 to combat money laundering. The Act imposes an obligation on banking companies, financial institutions and intermediaries to verify identity of clients, maintain records and furnish information in a prescribed form to the concerned authorities under the Act. In furtherance to the same, the Act is being amended to make it more effective and to reduce problems found by the concerned authorities while prosecuting cases under the Act.
i) Proceeds of crime
As per Section 2 (1) (u) of the Act, ‘proceeds of crime’ means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity. This term was amended in the Finance Act, 2015, to enable attachment and confiscation of equivalent asset in India where the asset located abroad cannot be forfeited. This time, the scope of the term has been enhanced to include property equivalent to proceeds of crime held outside the country and such property can be proceeded against.
The conditions of bail shall now be applicable to all offences under the Act as against the previous provision wherein bail conditions were applicable to offences in which the scope of imprisonment is of more than 3 years.
iii) Corporate Frauds
Section 447 of the Companies Act, 2013 deals with punishment for fraud for any act, omission, concealment of any fact or abuse of position committed by any person with respect to affairs of a company. This section is now being included as scheduled offence under the Act. Therefore, such cases may now be reported by the Registrar of Companies to the Enforcement Directorate under the Act. Therefore, concerned authorities under the Act now have power to deal with such cases.
As per Section 5 (1) of the Act, concerned authorities may issue order to attach property of a person who he has reason to believe to be in possession of proceeds of crime. Such order shall cease to have effect within 180 days from the date of its issuance unless confirmed by the Adjudicating Authority under the Act. The Act is now being amended to further extend this period by 30 days to take care of delays if any in communication of judicial orders.
v) Disclosure of information
A sub-new clause has been added to the existing clause 66 on disclosure of information wherein the Director appointed under the Act may furnish to any officer performing functions under Government or under any law relating to tax or prevention of illicit traffic any information received or obtained by such Director.
The new clause provides clear guidelines to share information relating to contraventions of other laws noticed during investigation with concerned authorities under applicable Acts. This will facilitate exchange of information among agencies.
This shall enable exchange of information among agencies and enhance effectiveness
vi) Restoration of property
As per section 8(8), any property confiscated by the government may be restored to claimant with legitimate interest in such property only after the trial is complete. This section is now amended to consider the claims of the claimants to restore property even during trial in the prescribed manner.