What is Prevention of Money Laundering Act, 2002

Prevention of Money Laundering Act, 2002 is an anti-money laundering law introduced by the NDA Government. It was enacted in 2003 and entered into force in 2005. It has been changed three times in total, in 2005, 2009, and 2012. This law is aimed at banking companies, financial institutions, and intermediaries. It obliges relevant institutions to be transparent about client’s information.  

The Anti-Money Laundering Act, 2002 mainly has three purposes:

  • Keeping money laundering operations under control,
  • Confiscation of proceeds from money laundering and the right to confiscate property,
  • Combat also other transactions and crimes involving money laundering (in India).

Punishments in Prevention of Money Laundering Act,2002

  • The law states that a person found to be involved in money laundering will be sentenced to 3 to 7 years in prison (rigorous imprisonment). The rigorous imprisonment can be up to 7-10 years if the strain being committed is included in the Offences under the Narcotic Drugs and Psychotropic Substances Act.
  • According to the act, a person sentenced to prison for this crime cannot be released on bail. If the prosecutor objects, this may change.
  • Directors may temporarily seize property obtained for money laundering offenses for up to 180 days. The judicial authority appointed by the government decides whether the confiscated goods were obtained through money laundering.
  • Criminals prosecuted for money laundering must prove that they did not commit this crime.
  • If money laundering has been committed through more than one transaction, or if more than one money laundering has been committed, the remaining transactions will be included in this process, and judgment will be made.

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