Wednesday, October 28, 2020

India: Govt Makes Anti-Money Laundering Law Stricter, Widens Definition Of ‘Proceeds Of Crime’

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Tightening the anti money-laundering law, the government Thursday widened the definition of ‘proceeds of crime’ stating that a property will be considered as tainted if it relates to any offence on the basis of which a PMLA case has been slapped.

The definitions were brought in the form of amendments to the Finance Bill, 2019, in the Lok Sabha, which was later approved by the House by a voice vote.

According to the amendments brought by Finance Minister Nirmala Sitharaman, “a person shall be guilty of offence of money-laundering if such person is found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved” in “concealment, or possession, or acquisition, or use, or projecting as untainted property or claiming as untainted property.”

The government brought eight amendments to the Prevention of Money Laundering Act (PMLA), 2002, of which six are explanations to the existing clauses. The minister said explanations are being brought to certain existing clauses to remove the “confusion, grey area or ambiguity which might exist” in the vintage Act.

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Read MoreIndia: Mehul Choksi’s properties are money laundering assets, says PMLA Authority

The Finance Bill said that the “proceeds of crime” under PMLA would not only include property obtained from the PMLA offence but also any property which may “directly or indirectly” be obtained as a result of any criminal activity related to the scheduled offence on the basis of which a money laundering case is filed.

Further, entities would be accused of money laundering when they conceal, possess, acquire, use, and project or claim a property as untainted.

Speaking in the Lok Sabha, Sitharaman said of the eight amendments, one relates to deletion of a proviso. “A new proviso is being added to only make sure that where a case exists in one court and the hearings are going on there, and where in a different court there could be proceedings happening, this two cannot be clubbed together and treated as one”.

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Meanwhile, EY Partner and Financial Services Lead (Forensic & Integrity services) Vikram Babbar said: “Reporting entities will have to do a detailed authentication with regard to transactions which looks suspicious or carry a high risk of money laundering or terror financing”.

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