• Introduced
    Rajya Sabha
    Oct 17, 2008
    Gray
  • Referred
    Standing Committee
    Oct 31, 2008
    Gray
  • Report
    Standing Committee
    Dec 19, 2008
    Gray
  • Passed
    Lok Sabha
    Feb 24, 2009
    Gray
  • Passed
    Rajya Sabha
    Feb 19, 2009
    Gray

Money laundering and its links with drug trafficking and terrorism have been a matter of concern for governments around the world. Given the cross-border implication of money laundering, the international community has attempted to put in place mechanisms to minimise the effects of the crime. India has been a signatory to a number of international conventions related to money laundering.

Highlights of the Bill

  • The Prevention of Money Laundering (Amendment) Bill, 2008 seeks to amend the Prevention of Money Laundering Act, 2002.

  • India is working towards membership to the Financial Action Task Force (FATF), an inter-governmental body. This Bill conforms to several requirements of this body.

  • Money laundering applies only to offences listed in the schedule. The Bill adds several offences to this list. It also includes a new category of offences with cross border implications.

  • The Bill amends the provisions related to attaching a property or searching a person. These actions may now be performed only after completion of investigation.

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    The Act requires banks and other specified institutions to maintain record of clients and transactions and furnish them to the prescribed authority. The Bill includes full fledged money changers, money transfer service providers, and casinos under its reporting regime.

Key Issues and Analysis

  • India does not adhere to certain key recommendations of FATF such as rendering mutual legal assistance to countries and requiring real estate agents, dealers in gems and metals, lawyers, etc. to report transactions.
  • Money laundering is an offence only if it is related to any activity connected with the proceeds of crime specified in the scheduled offences. The Second Administrative Reforms Commission points out that the list excludes offences related to fraud and organised crime. It also does not include certain offences under the Immoral Traffic (Prevention) Act, 1956.
  • The Bill does not include the Foreign Exchange Management Act, 1999 in its list of scheduled offences under which over and under invoicing and hawala transactions are an offence.
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    The Parliamentary Standing Committee on Finance recommended that international guidelines on money laundering should be taken into account, certain definitions should be made more comprehensive and India should take necessary steps to become a member of FATF.

Read the complete analysis here