Prevention of money laundering class room notes for ca icma

50 %
50 %
Information about Prevention of money laundering class room notes for ca icma
Education

Published on February 16, 2014

Author: indupavan

Source: slideshare.net

Description

Prevention of Money Laundering - explanation for ICMA & CA final students

PREVENTION OF MONEY LAUNDERING ACT, 2002 Dr. K.I.PAVAN KUMAR VEDHA INSTITUTE OF PROFESSIONAL STUDIESVIJAYAWADA, HYDERABAD- 8008999595, 9440442585 VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 1

How to earn bad money • • • • • • • Smuggling Abducting /kidnapping Gambling Fraud Prostitution drug trafficking Committing any other crime VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 BAD MONEY 2

Converting bad into Good the applicant within a short time period surrenders the policy, requests the return of the cash value VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 3

Converting bad into Good Launderer deposits bad money into the bank and bank in turn provides the same money as loan. LOAN-BACK Scheme First Money Laundering technique VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 4

INTRODUCTION • Came into force w.e.f. 1st July 2005 • It extends to whole of india • Intends to fight against all sorts of economic crimes/ white collar offences • It aims at combating canalization of money into illegal activities, provides for attachment and seizure of property and records. Stringent punishments (rigorous imprisonment up to 10 years and fine up to 5 lakh) VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 5

PUNISHMENT ATTACHMENT OF TAINTED PROPERTY ADJUDICATING AUTHORITY (AA) APPELLATE AUTHORITY SPECIAL COURTS VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 6

Key WORDS Money-laundering (Sec 3): Attempting to indulge or assist other person or actually involved in any activity connected with the proceeds of crime and projecting it as untainted property. • INDULGER/ Laundromats • PLACING LEVERAGING AND INTEGRATING /Laundromates • s ASSISTING/ Laundromats COMMITTING/Laundroar VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 7

Key WORDS The subject matter of our study is this process. That which is forbidden under the Act. • LAUNDERING - To disguise the source/nature - by channeling through an intermediate agent. “Dirty Money” into “Clean Money”. Method of Laundering is vary complex and sophisticated. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 8

Key WORDS Sec 2(1)(l) – FINANCIAL INSTITUTION • "Financial Institution" means a financial institution as defined in clause (c) of section 45-I of the Reserve Bank of India Act, 1934 and includes a chit fund company, a co-operative bank, a housing finance institution, an authorized person, a payment system operator and a non-banking financial company; • As per Section 45-I (c) of the Reserve Bank of India Act, 1934, the functions of Financial Institution includes: • (i) The financing: • (ii) The acquisition of shares, stock, bonds, debentures or securities issued by a Government or local authority or other marketable securities of a like nature: VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 9

Key WORDS • • • • Sec 2(1)(l) – Financial Institution.... continued (iii) Letting or delivering of any goods to a hirer under a hire-purchase agreement as defined in clause (c) of section 2 of the Hire-Purchase Act, 1972: a male who supervises & directs other. (iv) The carrying on of any class of insurance business; (v) Managing, conducting or supervising, as foreman, agent or in any other capacity, of chits, hundies as defined in any law which is for the time being in force in any State, or any business, which is similar thereto; (vi) Collecting, s – – – – – – – – for any purpose or under any scheme or arrangement by whatever name called, monies in lump sum or otherwise, by way of subscriptions or by sale of units, or other instruments or in any other manner and s036222222222 awarding prizes or gifts, whether in cash or kind, or disbursing monies in any other way, to persons from whom monies are collected or to any other person. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 10

Key WORDS • • Sec 2 [ra]: Offence of Cross Border Implications (i) any conduct by a person at a place outside India which constitutes an offence at that place and which would have constituted an offence specified in Part A, Part B or Part C of the Schedule, had it been committed in India and if such person remits the proceeds of such conduct or part thereof to India; or (ii) any offence specified in Part A , Part B or Part C of the Schedule which has been committed in India and the proceeds of crime, or part thereof have been transferred to a place outside India or any attempt has been made to transfer the proceeds of crime, or part thereof from India to a place outside India. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 11

Key WORDS Sec 2(1)(n) – Intermediary • "Intermediary" means a stock-broker, sub-broker, share transfer agent, banker to an issue, trustee to a trust deed, registrar to an issue, merchant banker, underwriter, portfolio manager, investment adviser and any other intermediary associated with securities market and registered under section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992); • Intermediary thus includes following persons registered under Section 12 of SEBI Act:• Stock brokers, Sub-brokers, Share transfer agents, Bankers to an issue, Trustees to trust deed, Registrars to issue, Merchant bankers, Underwriters, Portfolio Managers, Investment advisers, Depositories and Depository Participants, Custodian of securities, Foreign institutional investors, Credit rating agencies, Venture capital funds, Collective investment schemes including mutual funds. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 12

Key WORDS Sec 2(1)(s) – PERSON • "person" includes-– – – – – (i) an individual, (ii) a Hindu undivided family, (iii) a company, (iv) a firm, (v) an association of persons or a body of individuals, whether incorporated or not, – (vi) every artificial judicial person not falling within any of the preceding sub clauses, and – (vii) any agency, office or branch owned or controlled by any of the above persons mentioned in the preceding subclauses; VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 13

STRUCTURING DEPOSITS METHODS of LAUNDERING ……1 • Also known as SMURFING. • breaking up large amounts into smaller& less-suspicious amounts, like below $10,000(in US), 10,00,00/-(In India) above which, report the single or integrally connected transactions, to the govt. (through PAN/bank shall maintain records 2005 amend Act Rule 3(b) etc). • then is deposited in bank accounts by multiple people (SMURFS) or by one person in an extended period of time. INDIAN CONTEXT: • Detailed instructions are in Know Your Customer (KYC) norms , Anti-Money Laundering (AML) standards, Combating the Financing of Terrorism (CFT), for foreign Transactions Money Transfer Service Scheme etc VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 14

BANKS AND LAUNDERING ……2 Role of OVERSEAS BANKS Launderers send money through various "offshore accounts" in countries that allow anonymous banking ex: Bahamas, Bahrain, the Cayman Islands, Hong Kong, Antilles, Panama and Singapore. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 15

Alternative to banking system & LAUNDERING ……3 • alternative banking systems that allow for undocumented deposits, withdrawals and transfers. These are trust-based systems, that leave no paper trail. This includes the hawala system In hawala system, money is transferred via a network of hawala brokers. (1) A customer (A, left-hand side) approaches a hawala broker (X) in one city and gives a sum of money (red arrow) that is to be transferred to a recipient (B, righthand side) in another, usually foreign, city. Along with the money, he usually specifies something like a password that will lead to the money being paid out to the intended party. (2b) The hawala broker X calls another hawala broker M in the recipient's city, and informs M about the agreed password. Then, the intended recipient (B), who also has been informed by A about the password, now approaches M and tells him the agreed password. If the password is correct, then M releases the transferred sum to B, usually minus a small commission. X now basically owes M the money that M had paid out to B; thus M has to trust X's promise to settle the debt at a later date. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 16

METHODS of LAUNDERING ….4 SHELL COMPANIES • These are fake companies that exist for no other reason than to launder money. They take in dirty money as "payment" for supposed goods or services but actually provide no goods or services; they simply create the appearance of legitimate transactions through fake invoices and balance sheets. INVESTING in LEGITIMATE BUSINESSES • This method typically works in one of two ways: – The launderer can combine his dirty money with the company's clean revenues -- in this case, the company reports higher revenues from its legitimate business than it's really earning; or – the launderer can simply hide his dirty money in the company's legitimate bank accounts in the hopes that authorities won't compare the bank balance to the company's financial statements. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 17

OTHER PARAMETERS OF LAUNDERING NON-COOPERATIVE COUNTRIES & TERRITORIES. (NCCT) • ‘Non-Cooperative Countries & Territories’ implies to countries or territories that may not be willing or accommodating to the recommendations drawn up by different agencies to combat money laundering. As of June 2013 there 14 countries placed on the NCCT list. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 18

PROCESS/STAGES of MONEY LAUNDERING VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 19

PROCESS/STAGES of MONEY LAUNDERING STEP 1: PLACEMENT • The first and initial stage of money laundering is Placement. The launderer, legitimize his illegal or ‘black money’ tries to get the funds into a bank or a financial institution. This is usually and preferably carried out in a country or territory where there are weak or ineffective anti-money laundering laws. What are the most common ways for Placement? – Deposit cash into one or more bank accounts in broken up amounts in several branches in one financial institution or different financial institutions. – Purchase money orders, bank drafts and other financial instruments. – Exchange the funds into foreign currencies through a private foreign exchange dealer. – Exchange large denominations for smaller ones. – Cash purchase of a security or a form of an insurance contract. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 20

PROCESS/STAGES of MONEY LAUNDERING STEP 2: LAYERING • At this point the funds are converted to other institutions, thus further segregating the funds from the criminal activities. Generally launderer chooses an offshore financial or business center. • How does the launderer further segregate his funds from its illegal origin? – Purchase other securities, insurance contracts or other easily transferable – investment instruments and then sold yet through another institution. – Transfer through cheque, money order or bearer bond. – Wire or remit the funds to various accounts and jurisdictions and disguise the transfer as a payment for goods or services. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 21

PROCESS/STAGES of MONEY LAUNDERING STEP 3: INTEGRATION • In this final stage of money laundering, money gets integrated with the legitimate economy. This involves: – Purchase of assets, properties and luxury goods. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 22

Suspicious transactions & Banks Role • The Prevention of Money laundering Act, 2002 and the Rules there under require every banking company to furnish details of suspicious transactions whether or not made in cash. Suspicious transaction means a transaction whether or not made in cash which, to a person acting in good faith– (a) Gives rise to a reasonable ground of suspicion that it may involve the proceeds or crime; or – (b) Appears to be made in circumstances of unusual or unjustified complexity; or – (c) Appears to have no economic rationale or bonafide purpose. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 23

Obligations of Banking Companies, Financial Institutions and Intermediaries Section 12(1) • Every banking company, financial institution and intermediary shall– (a) maintain a record of all transactions, the nature and value of 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) furnish information of transactions referred to in clause (a) to the Director within such time as may be prescribed; – (c) verify and maintain the records of the identity of all its clients, in such manner as may be prescribed: – Provided that where the principal officer of a banking company has reason to believe that a single transaction or series of transactions integrally connected to each other have been valued below the prescribed value so as to defeat the provisions of this section, such officer shall furnish information in respect of such transactions to the Director within the prescribed time. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 24

Illustration of Integrally connected cash transaction DATE MODE Dr. (in Rs.) Cr. (in Rs.) Balance (in Rs.) BF-8,00,000.00 02/04/2013 Cash 5,00,000.00 3,00,000.00 6,00,000.00 07/04/2013 Cash 40,000.00 2,00,000.00 7,60,000.00 08/04/2013 Cash Monthly Summation 4,70,000.00 1,00,000.00 10,10,000.00 3,90,000.00 6,00,000.00 the debit transactions are integrally connected cash transactions because total cash debits during the calendar month exceeds Rs.10 lakhs. However, the debit transaction taken place on 02/04 & 08/04/2008 should be reported. But, the debit transaction dated 07/04/2008 should not be reported by the non banking financial company, as transaction is less than Rs.50,000/-. ii) All the credit transactions in the above example would not be treated as integrally connected, as the sum total of the credit transactions during the month does not exceed Rs.20 lakh and hence no credit transaction should not be reported by NBFC. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 25

Obligations of Banking Companies, Financial Institutions and Intermediaries Section 12(1) • all Banking Companies, Financial Institutions And Intermediaries are required to maintain such record of all transactions, for a period of 10 years, in such manner as to enable it to reconstruct individual transactions, and furnish to the concerned Authorities under the Act, all information relating to such transactions, – – – – – whether attempted or executed; the nature and value of such transactions; verify the identity of its clients and the beneficial owner, if any; and maintain record of documents evidencing identity of its clients and beneficial owners as well as account files and business correspondence relating to its clients. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 26

Obligations of Banking Companies, Financial Institutions and Intermediaries Section 13(2) • If the Director, after such inquiry [U/s 13(1)]as he deems fit, finds that a banking company, financial institution or an intermediary or any of its officers has failed to comply with the provisions, then he may by an order, levy a fine which shall not be less than 10,000/- but may extend to Rs. 1,00,000/- for each failure. • The Director shall forward a copy of the order passed under subsection(2) to every banking company, financial institution or intermediary or person who is a party to the proceeding under [section 13(3)] • The banking companies, financial institutions, intermediaries and their officers shall not be liable to any civil proceedings against them for furnishing information under the Act. [Sect 14] VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 27

Know your customer …1 • 1. What is KYC? • KYC is an acronym for “Know your Customer”, a term used for customer identification process. • It involves making reasonable efforts to determine true identity and beneficial ownership of accounts, source of funds, the nature of customer’s business, reasonableness of operations in the account in relation to the customer’s business, etc which in turn helps the banks to manage their risks prudently. • The objective of the KYC guidelines is to prevent banks being used, intentionally or unintentionally by criminal elements for money laundering. • KYC has two components - Identity and Address. While identity remains the same, the address may change and hence the banks are required to periodically update their records. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 28

Know your customer …2 2. Is there any legal backing for verifying identity of clients? • Yes. Reserve Bank of India has issued guidelines to banks under Section 35A of the Banking Regulation Act, 1949 and Rule 7 of Prevention of Money-Laundering Rules, 2005. Any contravention thereof or noncompliance shall attract penalties under Banking Regulation Act. 3. Is there any procedure specified for Customer Identification? • Customer identification means identifying the customer and verifying his/her identity by using reliable, independent source documents, data or information. Banks have been advised to lay down Customer Identification Procedure to be carried out at different stages i.e. while establishing a banking relationship; carrying out a financial transaction or when the bank has a doubt about the authenticity/veracity or the adequacy of the previously obtained customer identification data. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 29

Schedule of offences • • • • • • The offences listed in the Schedule to the Prevention of Money Laundering Act, 2002 are scheduled offences in terms of Section 2(1)(y) of the Act. The scheduled offences are divided into two parts - Part A & Part C. In part A, offences to the Schedule have been listed in 28 paragraphs and it comprises of offences under Indian Penal Code, offences under Narcotic Drugs and Psychotropic Substances, offences under Explosive Substances Act, offences under Unlawful Activities (Prevention) Act, offences under Arms Act, offences under Wild Life (Protection) Act, offences under the Immoral Traffic (Prevention) Act, offences under the Prevention of Corruption Act, offences under the Explosives Act, offences under Antiquities & Arts Treasures Act etc. Part ‘C’ deals with trans-border crimes, and is a vital step in tackling Money Laundering across International Boundaries. Prior to 15th February, 2013, i.e., the date of notification of the amendments carried out in PMLA, the Schedule also had Part B for scheduled offences where the monetary threshold of rupees thirty lakhs was relevant for initiating investigations for the offence of money laundering. However, all these scheduled offences, hitherto in Part B of the Schedule, have now been included in Part A of Schedule w.e.f 15.02.2013. Consequently, there is no monetary threshold to initiate investigations under PMLA. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 30

PUNISHMENTS UNDER THE ACT Section 4 of the Act provide punishing of rigorous imprisonment ranging from 3 years to seven years and fine which may extend to`5 lakh for indulging in money laundering activity or process. (special courts has jurisdiction) Where the proceeds of crime involved in money laundering relates to any offence specified under paragraph 2 of Part A of the schedule the maximum imprisonment can extend to 10 years instead of 7 years. Under paragraph 2 of Part A of the Schedule to the Act certain offences under various sections of the Narcotic Drugs Psychotropic Substances Act (NDPS), 1985 have been included for which maximum imprisonment extend to 10 years. In order to prevent the process of money laundering activities Director or any other officer not below the rank of Deputy Director appointed under section 49 of the Act has power to order in writing to attach property provisionally for a period not exceeding 150 days from the date of order where he has reasons to believe that on the basis of material in his possession, that – VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 31

Section 19 ARRESTS • the Appropriate Authority under the Act (Director) has the power to arrest any person provided that such authority on the basis of the material in his possession has reason to believe that such person has been guilty of any offence punishable under PMLA. • After the arrest, the person arrested has to be informed about the grounds for his arrest. • It is also required that the person so arrested shall, within 24 hours, be produced before the Judicial Magistrate or a Metropolitan Magistrate, as the case may be, having jurisdiction. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 32

Attachment Section 5 • if the authority [Where the Director, or any other officer not below the rank of Deputy Director] as specified under the Section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of material in their possession, that• Any person is in possession of any Proceeds of Crime; and • such Proceeds of crime are likely to be – Concealed, – Transferred, or – dealt with in any manner – which may result in frustrating any proceedings relating to confiscation of such Proceeds of Crime, • may, by order in writing, provisionally attach such property for a period not exceeding 90 days from the date of the order, in such manner as may be prescribed. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 33

Attachment Section 5 • However, Provided that no such order of attachment shall be made unless, in relation to an offence under: • (i) Paragraph 1 of Part A and Part B of the Schedule, a report has been forwarded to a Magistrate under section 173 of the Code of Criminal Procedure, 1973 or • (ii) Paragraph 2 of Part A of the Schedule, a police report or a complaint has been filed for taking cognizance of an offence by the Special Court constituted under sub-section (1) of section 36 of the Narcotic Drugs and Psychotropic Substances Act, 1985. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 34

Section 5 Attachment • (2) after attachment under sub-section (1), forward a copy of the order, along with the 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 such order and material for such period as may be prescribed. • (3) However, nothing in Section shall prevent the person interested (3rd party)in the enjoyment of the immovable property attached from such enjoymen.t VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 35

Adjudicating Authorities Section 6 • (1) The Central Government shall, appoint one or more Adjudicating Authorities to exercise jurisdiction, powers and authority conferred by or under this Act. • (2) An Adjudicating Authority shall consist of a Chairperson and two other Members: – Provided that one Member each shall be a person having experience in the field of law, administration, finance or accountancy. • (3) A person shall, however, not be qualified for appointment as Member of 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 held a post in Grade I of that service; (b) in the field of finance, accountancy or administration unless he possesses such qualifications, as may be prescribed. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 36

Section 6 (5) • • • • Adjudicating Authorities (a) the jurisdiction of the Adjudicating Authority may be exercised by Benches thereof; (b) a Bench may be constituted by the Chairperson of the Adjudicating Authority with one or two Members as the Chairperson of the Adjudicating Authority may deem fit; (c) the Benches of the Adjudicating Authority shall ordinarily sit at New Delhi and at such other places as the Central Government may, in consultation with the Chairperson, by notification, specify; (d) the Central Government shall, by notification, specify the areas in relation to which each Bench of the Adjudicating Authority may exercise jurisdiction. Section 6 (7) If at any stage of the hearing of any case or matter it appears to the Chairperson or a Member that the case or matter is of such a nature that it ought to be heard by a Bench consisting of two Members, the case or matter may be transferred by the Chairperson or, as the case may be, referred to him for transfer, to such Bench as the Chairperson may deem fit. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 37

Section 6 (7) Adjudication Authorities • The Chairperson and every Member shall hold office as such for a term of five years from the date on which he enters upon his office. • Chairperson or member – may resign- in writing to Central Government. • CentralGovt may remove any person with a notice VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 38

Section 8 Adjudication Process • On receipt of a complaint, if the Adjudicating Authority has reason to believe that any person has committed an offence under section 3, it may serve a notice of not less than thirty days on such person calling upon him to indicate the 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 section 5, or, seized under section 17 or section 18, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties should not be declared to be the properties involved in moneylaundering and confiscated by the Central Government. • If property is held by more than one person then notice shall be on all persons. • The parties shall be heard and relevant material to be sought. Un till such time he shall enjoy possession of the goods ceased. • If the accused is acquitted the property and documents ceased shall be returned. • If proved guilty, order of confiscation order shall be passed in favor of Central Government. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 39

Section 9 Adjudication Process Vesting of property in Central Government • Where an order of confiscation has been made, all the rights and title in such property shall vest absolutely in the Central Government free from all encumbrances. • where the Adjudicating Authority, after giving an opportunity of being heard to any other person interested in the property attached or seized, it may, by order, declare all encumbrance or lease-hold interest to be void. • Central government may pass necessary orders in management of such confiscated property. In this pursuit may appoint any number of managers it deem fit [Section 10] VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 40

Power regarding summons, production of documents and evidence, Section 11 • • • • • • • • • • (1) The Adjudicating Authority shall, for the purposes of this Act, have the same powers as are vested in a civil court under the Code of Civil Procedure, 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 a banking company or a financial institution or a company, and examining him on oath; (c) compelling the production of records; (d) receiving evidence on affidavits; (e) issuing commissions for examination of witnesses and documents; and (f) any other matter which may be prescribed. (2) All the persons so summoned shall be bound to attend in person or through authorised agents, as the Adjudicating Authority may direct, and shall be bound to state the truth upon any subject respecting which they are examined or make statements, and produce such documents as may be required. (3) Every proceeding under this section shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code (45 of 1860). VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 41

Section 24 Burden of Proof When a person is accused of having committed the offence under section 3, the burden of proving that proceeds of crime are untainted property shall be on the accused. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 42

Section 26 APPELLETE TRIBUNAL Appeal to Appellate Tribunal • the Director or any person aggrieved by an order made by the Adjudicating Authority under this Act, may prefer an appeal to the Appellate Tribunal. • Any banking company, financial institution or intermediary aggrieved by any order of the Director may prefer an appeal to the Appellate Tribunal. • Every appeal preferred shall be filed within a period of forty-five days from the date on which a copy of the order made by the Adjudicating Authority or Director is received and it shall be in such form and be accompanied by such fee as may be prescribed. • On receipt of an appeal, the Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or setting aside the order appealed against. • Appeal shall be disposed off as expeditiously as possible. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 43

Section 35 • • • • • • • • • • • PROCEDURE APPELLETE TRIBUNAL (1) The Appellate Tribunal shall not be bound by CPC but shall be guided by the PRINCIPLES of NATURAL JUSTICE and has powers to regulate its own procedure. However, it has powers namely:(a) summoning and enforcing the attendance of any person and examining him on oath; (b) requiring the discovery and production of documents; (c) receiving evidence on affidavits; (d) requisitioning any public record or document or copy of such record or document from any office; (e) issuing commissions for the examination of witnesses or documents; (f) reviewing its decisions; (g) dismissing a representation for default or deciding it ex parte; (h) setting aside any order of dismissal of any representation for default or any order passed by it ex parte; and (i) any other matter, which may be, prescribed by the Central Government. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 44

Section 41 No civil court shall have jurisdiction • No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Director, an Adjudicating Authority or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 45

Section 42 APPEAL to HIGH COURT • Any person aggrieved by any decision or order of the Appellate Tribunal may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal to him on any question of law or fact arising out of such order: Provided that the High Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days. Section 43 SPECIAL COURTS The Central Government, in consultation with the Chief Justice of the High Court, shall, for trial of offence punishable under section 4 (more than 3 years but less than 7 years), by notification, designate one or more Courts of Session as Special Court or Special Courts or such area or areas or for such case or class or group of cases as may be specified in the notification. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 46

Section 45 OFFENCES TO BE COGNIZABLE AND NON-BAILABLE • Conditions for release of accused on bail: • Notwithstanding anything contained in the Code of Criminal Procedure, 1973, no person accused of an offence punishable for a term of imprisonment of more than 3years under Part A of the Schedule shall be released on bail or on his own bond unless • (i) The Public Prosecutor has been given an opportunity to oppose the application for such release; and • (ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail. • However, if the accused is of less than 16 years age or is woman or sick he may be granted bail subject to conditions. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 47

LETS START NOW VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 48

What is Money – Laundering? Is your answer same if question is “Money Laundering” does not mean just siphoning of fund. Comment on this statement explaining the significance and aim of the Prevention of Money Laundering Act, 2002. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 49

• Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money laundering. VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 50

What are Proceeds of crime? VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 51

• Section 2(1)(u) defines "proceeds of crime" as any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 52

What is Payment System? VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 53

• In terms of clause (rb) of section 2 "payment system" means a system that enables payment to be effected between a payer and a beneficiary, involving clearing, payment or settlement service or all of them. It includes the systems enabling credit card operations, debit card operations, smart card operations, money transfer operations or similar operations VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 54

What is the punishment for the offence of money laundering? VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 55

• Chapter II comprises of Sections 3 and 4. • Section 3 deals with the offence of money laundering. Section 4 provides for the punishment for Money-Laundering. • Whoever commits the offence of money-laundering shall be punishable 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. • But where the proceeds of crime involved in money-laundering relate to any offence specified under paragraph 2 of Part A of the Schedule, the maximum punishment may extend to ten years instead of seven years VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 56

Enumerate the obligations of banking companies under the Prevention of Money Laundering Act, 2002 VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 57

• Section 12 of Prevention of Money Laundering Act, 2002 provides for the obligations of Banking Companies, Financial Institutions and Intermediaries of securities market. Every banking company, financial institution and intermediary shall: • (a) Maintain a record of all transactions, the nature and value of 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. Such records shall be maintained for a period of ten years from the date of cessation of the transactions between the clients and the banking company or financial institution or intermediary, as the case may be: • (b) Furnish information of the above transactions to the Director appointed for the purpose of this Act within the prescribed time; • (c) Verify and maintain the records of the identity of all its clients, in the prescribed manner. If the principal officer of a banking company or financial institution or intermediary has reason to believe that a single transaction or series of transactions integrally connected to each other have been valued below the prescribed value so as to defeat the provisions of this section, such officer shall furnish information in respect of such transactions to the Director within the prescribed time VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 58

How the trials under PMLA are conducted in special courts? Is the offence under PMLA are bailable? VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 59

• Sections 43 – 47 deals with provision relating to Special Courts. Section 43 empowers the Central Government (in consultation with the Chief Justice of the High Court) for trial of offence of money laundering, to notify one or more Courts of Sessions as Special Court or Special Courts for such area or areas or for such cases or class or group of cases as may be specified in the notification to this effect. Section 44 clearly provides for the offences triable by Special Courts. It overrides the provisions of the Code of Criminal Procedure, 1973 and provides that – • 1. the scheduled offence and the offence punishable under section 4 shall be triable only by the Special Court constituted for the area in which the offence has been committed; • 2. a Special Court may, upon a complaint made by an authority authorised in this behalf under this Act take cognizance of the offence for which the accused is committed to it fortrial. The requirement of police report of the facts which constitute an offence under this Act is no more applicable VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 60

Explain the term "Offence of Money Laundering" within the meaning of the Prevention of Money Laundering Act, 2002. State the punishment for the offence of money laundering? VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 61

• Offence of Money Laundering: Section 2 of the Prevention of Money Laundering Act, 2002 defines the term “scheduled offence", which accordingly means – • (i) the offences specified under Part A of the Schedule; or • (ii) the offences specified under Part B of the Schedule if the total value involved in such offences is thirty lakh rupees or more. • (iii) The offences specified under Part C of the Schedule (Amendment Act, 2009) • These Schedule to the Act gives a list of all the above offences. Punishment for the Offence of Money Laundering Section 4 of the said act provides for the punishment for Money-Laundering. Whoever commits the offence of money-laundering shall be punishable with: • (i) Rigorous imprisonment for a term which shall not be less than three years, but may be extended to seven years, and • (ii) Shall also be liable to fine which may extend to five lakh rupees. • But, where the proceeds of crime involved in money-laundering relates to any offence specified under paragraph 2 of Part A of the Schedule, the maximum punishment may extend to ten years instead of seven years VEDHA INSTITUTE OF PROFESSIONAL STUDIES 8008999595 62

Add a comment

Related presentations

Related pages

Money laundering - Wikipedia, the free encyclopedia

Other jurisdictions define money laundering to include money from activity that ... the Money Laundering Prevention ... classes of customers, such as ...
Read more

Association of Certified Anti-Money Laundering Specialists ...

Association of Certified Anti-Money Laundering Specialists. ... What is the biggest non-money laundering issue facing your institution? ... CA. Apply at ...
Read more

Anti Money Laundering Certified Associate Online Certification

College News Room; Publications; ... FIU Anti Money Laundering Certified Associate (AMLCA) Online Certification ... Note: Florida ...
Read more

Financial Action Task Force on Money Laundering

Malaysia is an observer to FATF ... The FATF has identified jurisdictions with strategic deficiencies in their frameworks to combat money laundering ...
Read more

SAS ® Anti-Money Laundering - Business Analytics and ...

SAS ® Anti-Money Laundering Better detection and a lower cost of compliance. ... Code & Sample Notes; Documentation; SAS Books; Training; Users Groups ...
Read more

Anti-Money Laundering (AML) Source Tool - U.S. Securities ...

Anti-Money Laundering ... to establish risk-based AML compliance programs. Please note, ... iv) a money transmitter or currency exchange ...
Read more

Economic Labour and Industrial Laws :: CS Group - II ...

Money Laundering Genesis, ... Background paper on Seminar on Prevention on Money Laundering Bill. ... Company News and Notes;
Read more

Building a world-class compliance program : best practices ...

... enhancing compliance -- CA's compliance ... Compliance programs and anti-money laundering ... Designing robust fraud prevention ...
Read more