The Prevention of Money-Laundering Act, 2002

(1) This Act may be called the Prevention of MoneylaunderingAct, 2002. (2) It extends to the whole of India. (3) It shall come into force on such date1 as the Central Government may, by notification in theOfficial Gazette, appoint, and different dates may be appointed for different provisions of this Act andany reference in any such provision to the commencement of this Act shall be construed as a reference tothe coming into force of that provision.

(1) In this Act, unless the context otherwise requires,-- (a) "Adjudicating Authority" means an Adjudicating Authority appointed under sub-section (1)of section 6; (b) "Appellate Tribunal" means the Appellate Tribunal 1[referred to in] section 25; (c) "Assistant Director" means an Assistant Director appointed under sub-section (1) of section49; (d) "attachment" means prohibition of transfer, conversion, disposition or movement of propertyby an order issued under Chapter III; 2[(da) "authorised person" means an authorised person as defined in clause (c) of section 2 of theForeign Exchange Management Act, 1999 (42 of 1999);] (e) "banking company" means a banking company or a co-operative bank to which the BankingRegulation Act, 1949 (10 of 1949) applies and includes any bank or banking institution referred to insection 51 of that Act; (f) "Bench" means a Bench of the Appellate Tribunal; 3[(fa) "beneficial owner" means an individual who ultimately owns or controls a client of areporting entity or the person on whose behalf a transaction is being conducted and includes a personwho exercises ultimate effective control over a juridical person;] (g) "Chairperson" means the Chairperson of the Appellate Tribunal; (h) "chit fund company" means a company managing, conducting or supervising, as foreman,agent or in any other capacity, chits as defined in section 2 of the Chit Funds Act, 1982 (40 of 1982); 4[(ha) "client" means a person who is engaged in a financial transaction or activity with a reportingentity and includes a person on whose behalf the person who engaged in the transaction or activity, isacting;] (i) "co-operative bank" shall have the same meaning as assigned to it in clause (dd) of section 2of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 (47 of 1961); 4[(ia)corresponding law means any law of any foreign country corresponding to any of theprovisions of this Act or dealing with offences in that country corresponding to any of the scheduledoffences; (ib) "dealer" has the same meaning as assigned to it in clause (b) of section 2 of the CentralSales Tax Act, 1956 (74 of 1956);] (j) "Deputy Director" means a Deputy Director appointed under sub-section (1) of section 49; 5** * * * (k) "Director" or "Additional Director" or "Joint Director" means a Director or AdditionalDirector or Joint Director, as the case may be, appointed under sub-section (1) of section 49; 6[(l) "financial institution" means a financial institution as defined in clause (c) of section 45-1 ofthe Reserve Bank of India Act, 1934 (2 of 1934) and includes a chit fund company, a housing financeinstitution, an authorised person, a payment system operator, a non-banking financial company andthe Department of Posts in the Government of India;] (m) "housing finance institution" shall have the meaning as assigned to it in clause (d) of section2 of the National Housing Bank Act, 1987 (53 of 1987); 7[(n) "intermediary" means,-- (i) a stock-broker, 8*** share transfer agent, banker to an issue, trustee to a trust deed,registrar to an issue, merchant banker, underwriter, portfolio manager, investment adviser or anyother intermediary associated with securities market and registered under section 12 of theSecurities and Exchange Board of India Act, 1992 (15 of 1992); or (ii) an association recognised or registered under the Forward Contracts (Regulation) Act,1952 (74 of 1952) or any member of such association; or (iii) intermediary registered by the Pension Fund Regulatory and Development Authority; or (iv) a recognised stock exchange referred to in clause (f) of section 2 of the SecuritiesContracts (Regulation) Act, 1956 (42 of 1956);] 9[(na) "investigation" includes all the proceedings under this Act conducted by the Director or byan authority authorised by the Central Government under this Act for the collection of evidence;] (o) "Member" means a Member of the Appellate Tribunal and includes the Chairperson; (p) "money-laundering" has the meaning assigned to it in section 3; (q) "non-banking financial company" shall have the same meaning as assigned to it in clause (f)of section 45-I of the Reserve Bank of India Act, 1934 (2 of 1934)10***; (r) "notification" means a notification published in the Official Gazette; 11[(ra) "offence of cross border implications", means-- (i) any conduct by a person at a place outside India which constitutes an offence at that placeand which would have constituted an offence specified in Part A, Part B or Part C of theSchedule, had it been committed in India and if such person 12[transfers in any manner] theproceeds of such conduct or part thereof to India; or (ii) any offence specified in Part A, Part B or Part C of the Schedule which has beencommitted in India and the proceeds of crime, or part thereof have been transferred to a placeoutside India or any attempt has been made to transfer the proceeds of crime, or part thereof fromIndia to a place outside India. Explanation.--Nothing contained in this clause shall adversely affect any investigation,enquiry, trial or proceeding before any authority in respect of the offences specified in Part A orPart B of the Schedule to the Act before the commencement of the Prevention of Moneylaundering(Amendment) Act, 2009 (21 of 2009); (rb) "payment system" means a system that enables payment to be effected between a payer and abeneficiary, involving clearing, payment or settlement service or all of them. Explanation.--For the purposes of this clause, "payment system" includes the systemsenabling credit card operations, debit card operations, smart card operations, money transferoperations or similar operations; (rc) "payment system operator" means a person who operates a payment system and such personincludes his overseas principal. Explanation.--For the purposes of this clause, "overseas principal" means,-- (A) in the case of a person, being an individual, such individual residing outside India, whoowns or controls or manages, directly or indirectly, the activities or functions of payment systemin India; (B) in the case of a Hindu undivided family, Karta of such Hindu undivided family residingoutside India who owns or controls or manages, directly or indirectly, the activities or functionsof payment system in India; (C) in the case of a company, a firm, an association of persons, a body of individuals, anartificial juridical person, whether incorporated or not, such company, firm, association ofpersons, body of individuals, artificial juridical person incorporated or registered outside India orexisting as such and which owns or controls or manages, directly or indirectly, the activities orfunctions of payment system in India;] (s) "person" includes-- (i) an individual, (ii) a Hindu undivided family, (iii) a company, (iv) a firm, (v) an association of persons or a body of individuals, whether incorporated or not, (vi) every artificial juridical person not falling within any of the preceding sub-clauses, and (vii) any agency, office or branch owned or controlled by any of the above persons mentionedin the preceding sub-clauses; 13[(sa) "person carrying on designated business or profession" means,-- (i) a person carrying on activities for playing games of chance for cash or kind, and includessuch activities associated with casino; 14 [(ii) Inspector-General of Registration appointed under section 3 of the Registration Act, 1908 (16 of 1908) as may be notified by the Central Government;] (iii) real estate agent, as may be notified by the Central Government; (iv) dealer in precious metals, precious stones and other high value goods, as may be notifiedby the Central Government; (v) person engaged in safekeeping and administration of cash and liquid securities on behalfof other persons, as may be notified by the Central Government; or (vi) person carrying on such other activities as the Central Government may, by notification,so designate, from time to time; (sb) "precious metal" means gold, silver, platinum, palladium or rhodium or such other metal asmay be notified by the Central Government; (sc) "precious stone" means diamond, emerald, ruby, sapphire or any such other stone as may benotified by the Central Government;] (t) "prescribed" means prescribed by rules made under this Act; (u) "proceeds of crime" means any property derived or obtained, directly or indirectly, by anyperson as a result of criminal activity relating to a scheduled offence or the value of any such property15[or where such property is taken or held outside the country, then the property equivalent in valueheld within the country] 16[or abroad]; 17[Explanation.--For the removal of doubts, it is hereby clarified that "proceeds of crime" include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence;] (v) "property" means any property or assets of every description, whether corporeal orincorporeal, movable or immovable, tangible or intangible and includes deeds and instrumentsevidencing title to, or interest in, such property or assets, wherever located; 13Explanation.--For the removal of doubts, it is hereby clarified that the term property includesproperty of any kind used in the commission of an offence under this Act or any of the scheduledoffences; (va) "real estate agent" means a real estate agent as defined in clause (88) of section 65 of theFinance Act, 1994 (32 of 1994);] (w) "records" include the records maintained in the form of books or stored in a computer or suchother form as may be prescribed; 13[(wa) "reporting entity" means a banking company, financial institution, intermediary or aperson carrying on a designated business or profession;] (x) "Schedule" means the Schedule to this Act; (y) "scheduled offence" means-- (i) the offences specified under Part A of the Schedule; or 18[(ii) the offences specified under Part B of the Schedule if the total value involved in suchoffences is 19[one crore rupees] or more; or (iii) the offences specified under Part C of the Schedule.] (z) "Special Court" means a Court of Session designated as Special Court under sub-section (1) ofsection 43; (za) "transfer" includes sale, purchase, mortgage, pledge, gift, loan or any other form of transferof right, title, possession or lien; (zb) "value" means the fair market value of any property on the date of its acquisition by anyperson, or if such date cannot be determined, the date on which such property is possessed by suchperson. (2) Any reference, in this Act or the Schedule, to any enactment or any provision thereof shall, inrelation to an area in which such enactment or such provision is not in force, be construed as a referenceto the corresponding law or the relevant provisions of the corresponding law, if any, in force in that area.

Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the 1[proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming] it as untainted property shall be guilty of offence of money-laundering. 2[Explanation.--For the removal of doubts, it is hereby clarified that,-- (i) 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 one or more of the following processes or activities connected with proceeds of crime, namely:-- (a) concealment; or (b) possession; or (c) acquisition; or (d) use; or (e) projecting as untainted property; or (f) claiming as untainted property, in any manner whatsoever; (ii) the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever.]

Whoever commits the offence of money-laundering shallbe punishable with rigorous imprisonment for a term which shall not be less than three years but whichmay extend to seven years and shall also be liable to fine1***: Provided that where the proceeds of crime involved in money-laundering relates to any offencespecified under paragraph 2 of Part A of the Schedule, the provisions of this section shall have effect as iffor the words "which may extend to seven years", the words "which may extend to ten years" had beensubstituted.

1[(1)Where the Director or any otherofficer not below the rank of Deputy Director authorised by the Director for the purposes of thissection, has reason to believe (the reason for such belief to be recorded in writing), on the basis ofmaterial in his possession, that-- (a) any person is in possession of any proceeds of crime; and (b) such proceeds of crime are likely to be concealed, transferred or dealt with in any mannerwhich may result in frustrating any proceedings relating to confiscation of such proceeds of crimeunder this Chapter, he may, by order in writing, provisionally attach such property for a period not exceeding one hundredand eighty days from the date of the order, in such manner as may be prescribed: Provided that no such order of attachment shall be made unless, in relation to the scheduled offence, areport has been forwarded to a Magistrate under section 173 of the Code of Criminal Procedure, 1973(2 of 1974), or a complaint has been filed by a person authorised to investigate the offence mentioned inthat Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be, or a similar report or complaint has been made or filed under the corresponding law of any othercountry: Provided further that, notwithstanding anything contained in 2[first proviso], any property of anyperson may be attached under this section if the Director or any other officer not below the rank ofDeputy Director authorised by him for the purposes of this section has reason to believe (the reasons forsuch belief to be recorded in writing), on the basis of material in his possession, that if such propertyinvolved in money-laundering is not attached immediately under this Chapter, the non-attachment of theproperty is likely to frustrate any proceeding under this Act.] 3Provided also that for the purposes of computing the period of one hundred and eighty days, theperiod during which the proceedings under this section is stayed by the High Court, shall be excluded anda further period not exceeding thirty days from the date of order of vacation of such stay order shall becounted.]; (2) The Director, or any other officer not below the rank of Deputy Director, shall, immediately afterattachment under sub-section (1), forward a copy of the order, along with the material in his possession,referred to in that sub-section, to the Adjudicating Authority, in a sealed envelope, in the manner as maybe prescribed and such Adjudicating Authority shall keep such order and material for such period as maybe prescribed. (3) Every order of attachment made under sub-section (1) shall cease to have effect after the expiry ofthe period specified in that sub-section or on the date of an order made under 4[sub-section (3)] of section8, whichever is earlier. (4) Nothing in this section shall prevent the person interested in the enjoyment of the immovableproperty attached under sub-section (1) from such enjoyment. Explanation.--For the purposes of this sub-section, "person interested", in relation to any immovableproperty, includes all persons claiming or entitled to claim any interest in the property. (5) The Director or any other officer who provisionally attaches any property under sub-section (1)shall, within a period of thirty days from such attachment, file a complaint stating the facts of suchattachment before the Adjudicating Authority.