Prevention of Money Laundering Act 2002 | SBI PO Prelims & Mains Preparation - Bank Exams PDF Download

Introduction

• The purpose of a large number of criminal minds is to make profit or money for themselves or for any criminal organisation. Money laundering is the simplest way for these criminal to hide their illegal origin.Selling illegal arms, smuggling, drug trafficking, and other illegal activities can generate large amounts of money. Stealing Money through Fraud Way, accepting a bribe and doing computer fraud for some benefits can also produce huge profits and so this all fraud individual use Money
• Laundering to make their activities authorised. Because the Money which is generated by the illegal way is dangerous and can not be used directly so to make it happen Money Laundering is the process of conversation of such illegal activities to make it appear like authorised or legal.
• Simply it is the process of engaging in specific Financial transactions to hide the identity, Process source and destination of money.

Money Laundering 

• Placement: The person who has the Money which is generated by illegal or fraud activities introduces such unauthorised funds into the Financial System by depositing smaller number of amounts in the Bank by using cheques or another instrument. In this stage the main work of the money launderer is the entry of his fund.
• Layering: Now the second stage of Money Laundering is the layering. In this stage, the Money Launderer finds the unique way for transaction by creation of complex network In which he uses lots of different account so as to hide his true origin. He uses another person's account to place his money safe.
• Integration: After successful placing of his criminal money through first two stages then money launderer uses such funds in the business, real estate, and in some other assets. Also then authorized money transferred or returned to the source where it has been originated.

The above stages always not work line by line sometimes illegal money gets mixed with authorized money like in the business of gambling nobody knows the source of money but after the gambling it becomes authorized for that individual.

Anti Money Laundering Act

Indian Government's Steps To Fight Against Money Laundering

• Financial Action Task Force (FATF) is a government body which is established and introduced in 1989 by the initiative of G7 group.
• The main objectives of FATF are to regulate the effective implementation for fighting against money laundering, terrorist Financial activities and other problems related to the international financial system.
• Freezing terrorist assets , establishing Financial intelligence unit for collection , evaluation and find suspicious transactions reports from Financial institution are the functions of FATF.
• Indian is one of the active member of this FATF group.

Offence of Money Laundering

• Offence of money laundering has been defined in the section 3 of the Prevention Of Money laundering Act.
• Any person who is directly or indirectly attempts to become the part of the such illigal activity shall be guilty according to the offence of money laundering.

Actions taken against persons involved in Money Laundering

• Under the section 17 and section 18 of Money laundering Act freezing of all unauthorised property and records takes place.
• Persons who committed this crime and found responsible according to offence of money are punishable to put in the prison for three years which may be extended upto seven years and also that person have to pay fine under the section 4 of money laundering act. 
• If the offence committed is under the Narcotics and Psychotropic Substance Act 1985 then in that case the guilty person gets three years of prison which can be extended upto ten years and also that person have to pay fine.

Conclusion