Provisions of Prevention of Money Laundering Act, 2002

Prevention of Money Laundering Act, 2002 (PMLA) forms the core of legal framework put in place by India to combat money laundering and related crimes. PMLA and the Rules notified thereunder came into force from 1st July, 2005. Under PMLA, all the entities registered with SEBI are required to furnish information of all the suspicious transactions whether or not made in cash to FIU-IND. Under Section 3 of PMLA, projecting of crime as untainted property is an offence of money laundering liable to be punishment under section 4 of the PMLA.

Money laundering involves disguising financial assets so that they can be used without detection of the illegal activity that produced them. Through money laundering, the launderer transforms the monetary proceeds derived from criminal activity into funds with an apparently legal source.

Financial Intelligence Unit-India (FIU-IND) is the central national agency of India responsible for receiving, processing, analyzing and disseminating information of suspect financial transactions. FIU-IND is also responsible for coordinating and strengthening efforts of national and international intelligence, investigation and enforcement agencies in combating money laundering and related crimes.

Section 2 (1) (g) of PMLA Rules defines a suspicious transaction whether or not made in cash which:

To a person acting in good faith:

Gives rise to a reasonable ground of suspicion that it may involve the proceeds of crime; or
Appears to be made in circumstances of unusual or unjustified complexity; or
Appears to have no economic rationale or bonafide purpose; or
Gives rise to a reasonable ground of suspicion that it may involve financing of the activities relating to terrorism.

Some examples of suspicious transactions reported to FIU-IND are as under:

Category	Example of Suspicious transactions
Identity of clients	Identification documents were found to be forged. Address details given by the account holder were found to be false. Doubt over the real beneficiary of the account.
Suspicious Background	Positive match of name and date of birth with person on various lists. Account of publicly known criminals.
Multiple Accounts	Large number of accounts having a common account holder, introducer or authorized signatory with no rationale or bonafide purpose. Unexplained transfers between multiple accounts with no rationale.
Activity in Accounts	Unexplained activity in dormant accounts. Unexplained activity in account inconsistent with what would be expected from declared business.
Nature of Transaction	Doubtful sources of funds. Doubtful owners and transferor. Doubtful foreign remittance to non-resident. Doubtful cash deposit in a bank account at multiple locations. Suspicious use of ATM / credit card. Doubtful foreclosure of loan account in cash. Suspicious off-market transaction in demat account.
Value of transactions	Multiple transactions of value just under the reporting threshold amount in an apparent attempt to avoid reporting. Unexplained large value transaction inconsistent with the client's apparent financial standing.

Some examples of suspicious transactions reported to FIU-IND are as under:

Category	Example of Suspicious transactions
Identity of clients	Identification documents were found to be forged. Address details given by the account holder were found to be false. Doubt over the real beneficiary of the account.
Suspicious Background	Positive match of name and date of birth with person on various lists. Account of publicly known criminals.
Multiple Accounts	Large number of accounts having a common account holder, introducer or authorized signatory with no rationale or bonafide purpose. Unexplained transfers between multiple accounts with no rationale.
Activity in Accounts	Unexplained activity in dormant accounts. Unexplained activity in account inconsistent with what would be expected from declared business.
Nature of Transaction	Doubtful sources of funds. Doubtful owners and transferor. Doubtful foreign remittance to non-resident. Doubtful cash deposit in a bank account at multiple locations. Suspicious use of ATM / credit card. Doubtful foreclosure of loan account in cash. Suspicious off-market transaction in demat account.
Value of transactions	Multiple transactions of value just under the reporting threshold amount in an apparent attempt to avoid reporting. Unexplained large value transaction inconsistent with the client's apparent financial standing.

Anti Money Laundering Policy

Provisions of Prevention of Money Laundering Act, 2002

Some examples of suspicious transactions reported to FIU-IND are as under:

Anti Money Laundering Policy

Provisions of Prevention of Money Laundering Act, 2002

Some examples of suspicious transactions reported to FIU-IND are as under: