The Prevention of Money Laundering Act, 2002

By | May 6, 2025
The Prevention of Money Laundering Act, 2002

The Prevention of Money Laundering Act, 2002 (PMLA) is the backbone of India’s legal strategy to tackle money laundering. This act, along with the rules that were established under it, officially took effect on July 1, 2005. The Director of the Financial Intelligence Unit (FIU-IND) and the Director of Enforcement have been granted both exclusive and concurrent powers under specific sections of the Act to ensure its provisions are enforced. Under the PMLA and its associated rules, banking companies, financial institutions, intermediaries, and individuals engaged in designated businesses or professions are required to verify their clients’ identities, keep accurate records, and report information to FIU-IND. Essentially, the PMLA aims to prevent money laundering and allows for the confiscation of property that is derived from or involved in money laundering, along with related matters.

What is purpose of the act?

  • To prevent money laundering
  • To confiscate property linked to money laundering
  • To provide for the confiscation of property derived from criminal acts

Who it applies to Banking companies, Financial institutions, Intermediaries, and People carrying on a designated business or profession. 

What it requires Verifying the identity of clients, Maintaining records, and Furnishing information to FIU-IND. 

Category: General Awareness

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