The Prevention of Money Laundering Act, 2002[1], together with the rules issued thereunder and the rules and regulations prescribed by regulators such as the Reserve Bank of India and the Securities and Exchange Board of India, set out the broad framework for the anti-money laundering laws in India. Some of the primary rules and guidelines regulating money laundering activities in India include:
  • The Prevention of Money Laundering (Maintenance of Records of the Nature and Value of Transactions, the Procedure and Manner of Maintaining and Time for Furnishing Information and Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Rules 2005, as amended from time to time, issued under the PML Act.
  • The Master Circular on Anti-Money Laundering Standards or Combating Financing of Terrorism or Obligations of Intermediaries under the Prevention of Money Laundering Act 2002 and the rules framed thereunder, issued by SEBI on 4 July 2018.
  • The Master Direction – Know Your Customer Direction 2016, issued by the RBI on 25 February 2016, as updated on 12 July 2018, which is the most up-to-date consolidation of the KYC guidelines and norms for all entities regulated by the RBI.
CONSTITUTIONAL VALIDITY OF CERTAIN PROVISIONS OF THE PMLA,2002 In the case of B. Rama Raju v. UOI & Ors. constitutional validity of Section 2(1)(u),5,8 and 23 were challenged. The court looked into the object of the act. The property in possession of any person other than the one who has been charged with for committing the offence can also be attached and confiscated. With respect to the retrospective penalization the court held that the Parliament has the power to allow confiscation of property acquired by illegal means prior to the enactment of this act. With respect to the presumption enjoined by section 23 of the Prevention of Money Laundering Act, 2002 the court held that Section 23 enjoins a rule of evidence and rebuttable presumption considered essential and integral to effectuation of purposes of Act in legislative wisdom. It’s a rebuttable and an irrebuttable presumption. Hence validity of the provisions was upheld.
Case Studies

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