PMLA amendment will lead to coordinated investigation by agencies.
In a recent change of law, the police of every state have been empowered to question anyone on suspicion of money laundering or having income that is illegal or disproportionate to his income sources.
This is after the amendment to the Prevention of Money Laundering Act (PMLA), 2002, notified on September 15. Section 66 of PMLA so empowers local police, who will then have to report to the Financial Intelligence Unit (FIU), the central government agency responsible for monitoring possible money laundering transactions.
“Earlier, there was no obligation on state police departments to report or keep a tab on suspicious fund flows. The amendment will lead to coordinated investigation by several agencies,” said a senior Mumbai-based advocate Hitesh Jain, who specialises in money laundering cases.
Another lawyer says the provisions are vague and will take time to get implemented in the absence of specific directions. Adding: “The police do not have the skilled manpower to keep a tab on cases related to money laundering. It will have to make more specific provisions for regular reports.”
The legal change is part of the effort for the government of India to become part of the Financial Action Task Force (FATF), an inter-government body to combat money laundering and financing of terrorism. For India to become a member, FATF had suggested 49 action points.
The government this year brought money changers, money transfer service providers, trusts and non-government organisations under PMLA and imposed mandatory disclosures on them.
Vigil on ‘politically exposed persons’, mainly in prominent public functions and important political party officials, is also to be increased.
Insider trading and market manipulation, human trafficking, smuggling of migrants, piracy and environmental crimes, over-invoicing and under-invoicing have all come under the ambit of PMLA, inviting stricter punishment.
