Home » Acts & Regulations » The Prevention Of Money Laundering Bill Act

WHEREAS the Political Declaration and Global Programme of Action, annexed to the resolution S-17/2 was adopted by the General Assembly of the United Nations at its seventeenth special session on the twenty-third day of February, 1990;

AND WHEREAS the Political Declaration adopted by the Special Session of the United Nations General Assembly held on 8th to 10th June, 1998 calls upon the Member States to adopt national money-laundering legislation and programme;

AND WHEREAS it is considered necessary to implement the aforesaid resolution and the Declaration;

BE it enacted by Parliament in the Fiftieth Year of the Republic of India as follows:-

CHAPTER I : Preliminary

1. Short title, extent and commencement

1. This Act may be called the Prevention of Money-laundering Act, 1999.
2. It extends to the whole of India.
3. It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint, and different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.

2. Definitions

In this Act unless the context otherwise requires,-

1. "Adjudicating Authority" means an Adjudicating Authority appointed under sub-section (1) of section 6;
2. "Appellate Tribunal" means the Appellate Tribunal established under section 24;
3. "Assistant Director" means an Assistant Director appointed under sub-section (1) of section 48;
4. "attachment" means prohibition of transfer, conversion, disposition or movement of property by an order issued under Chapter III;
5. "banking company" shall have the same meaning as assigned to it under clause (a) of section 45A of the Reserve Bank of India Act, 1934 (2 of 1934);
6. "Bench" means a Bench of the Appellate Tribunal;
7. "Chairperson" means Chairperson of the Appellate Tribunal;
8. "Deputy Director" means a Deputy Director appointed under sub-section (1) of section 48;
9. "Director" or "Additional Director" or "Joint Director" means a Director or Additional Director or Joint Director, as the case may be, appointed under sub-section (1) of section 48;
10. "financial institution" shall have the same meaning as assigned to it under clause (c) of section 45-1 of the Reserve Bank of India Act, 1934 (2 of 1934);
11. "intermediary" means a stock-broker, sub-broker, share transfer agent, banker to an issue, trustee to a trust deed, registrar to an issue, merchant banker, underwriter, portfolio manager, investment adviser and any other intermediary associated with securities market and registered under section 12 of the Securities and Exchange Board of India Act, 1992 (15 of'1992);
12. "Member" means a Member of the Appellate Tribunal and includes the Chairperson;
13. "money-laundering" has the meaning assigned to it in section 3;
14. "notification" means a notification published in the Official Gazette;
15. "person" includes;-
    1. an individual,
    2. a Hindu undivided family,
    3. a company,
    4. a firm,
    5. an association of persons or a body of individuals,
    6. whether incorporated or not,
    7. every artificial juridical person,
    8. not falling within any of the preceding sub-clauses,
    9. and any agency,
    10. office or branch owned or controlled by any of the above persons mentioned in the preceding sub-clauses;
16. "prescribed" means prescribed by rules made under this Act;
17. "proceeds of crime" means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property;
18. "property" means any property or assets of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible and includes deeds and instruments evidencing title to, or interest in, such property or assets, wherever located;
19. "records" include the records maintained in the form of books or stored in a computer or such other form as may be prescribed;
20. "Schedule" means the Schedule to this Act;
21. "scheduled offence" means an offence specified in the Schedule;
22. "Special Court" means a Court of Session designated as Special Court under sub-section (1) of section 42;
23. "transfer" includes sale, purchase, mortgage, pledge, gift, loan or any other form of transfer of right, title, possession or lien.,
24. "value" means the fair market value of any property on the date of its acquisition by any person, or if such date cannot be determined, the date on which such property is possessed by such person.

(2) Any reference, in this Act or the Schedule, to any enactment or any provision thereof shall, in relation to an area in which such enactment or such provision is not in force, be construed as a reference to the corresponding law or the relevant provisions of the corresponding law, if any, in force in that area.

CHAPTER II: Offence of Money-Laundering

3. Offence of money-laundering

Whoever-

1. acquires, owns, possesses or transfer any proceeds of crime; or
2. knowingly enters into any transaction which is related to proceeds of crime either directly or indirectly; or
3. conceals or aids in the concealment of the proceeds of crime,

commits the offence of money-laundering.

4. Punishment for money-laundering

Whoever commits the offence of money-laundering shall be punishable with rigorous imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine which may extend to five lakh rupees:

Provided that where the proceeds of crime involved in money-laundering relates to any offence specified in Part IV of the Schedule, the provisions of this section shall have effect as if for the words "which may extend to seven years", the words "which may extend to ten years" had been substituted.

CHAPTER III: Attachment, Adjudication and Confiscation

5. Attachment of property involved in money-laundering

(1) Where the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section, has reason to believe, on the basis of material in his possession, that-

1. any person is in possession of any proceeds of crime;
2. such person has been charged of having committed a scheduled offence;
3. and such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter,

he may, by order in writing, provisionally attach such property for a period not exceeding ninety days from the date of the order, in the manner provided in the Second Schedule to the Income-tax Act, 1961 (43 of 1961) and the Director or the other officer so authorised by him, as the case may be, shall be deemed to be an officer under sub-rule (e) of rule 1 of that Schedule:

Provided that no such order of attachment shall be made unless, in relation to an offence under-

1. Part 1, Part II, Part III or Part V of the Schedule, a report has been forwarded to a Magistrate under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974);
2. or Part IV of the Schedule, a police report or a complaint has been filed for taking cognizance of an offence by the Special Court constituted under sub-section (1) of section 36 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985).

(2) Every order of attachment made under sub-section (1) shall cease to have effect after the expiry of the period specified in that sub-section or on the date of an order made under sub-section (2) of section 7, whichever is earlier.

(3) Nothing in this section shall prevent the person interested in the enjoyment of the immovable property attached under sub-section (1) from such enjoyment.

Explanation.-For the purposes of this sub-section "person interested", in relation to any immovable property, includes all persons claiming or entitled to claim any interest in the property.

(4) 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 such attachment before the Adjudicating Authority.

6. Adjudicating Authority

(1) The Central Government shall, by notification, appoint one or more persons not below the rank of Joint Secretary to the Government of India as Adjudicating Authority or Adjudicating Authorities to exercise the jurisdiction, powers and authority conferred on an Adjudicating Authority by or under this Act.

(2) The Central Government shall also specify in the notification referred to in sub-section (1) the matters and places in relation to which the Adjudicating Authority may exercise jurisdiction.

7. Adjudication

(1) On receipt of a complaint under sub-section (4) of section 5, or applications made under sub-section (3) of section 16 or under sub-section (9) of section 17, if the Adjudicating Authority has reason to believe that any person has committed an offence under section 3, he may serve a notice of not less than thirty days on such person calling upon him to indicate the sources of his income, earning or assets, out of which or by means of which he has acquired the property attached under sub-section (1) of section 5, or, seized under section 16 or section 17, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties should not be declared to be the properties involved in money-laundering and confiscated by the Central Government:

Provided that where a notice under this sub-section specifies any property as being held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person:

Provided further that where such property is held jointly by more than one person, such notice shall be served to all persons holding such property.


(2) The Adjudicating Authority shall, after-

1. considering the reply, if any, to the notice issued under sub-section (1);
2. hearing the aggrieved person and the Director or any other officer authorised by him in this behalf, and
3. taking into account all relevant materials placed on record before him,

by an order, record a finding whether all or any of the properties referred to in the notice issued under sub-section (1) are involved in money-laundering:

Provided that if the property is claimed by a person, other than a person to whom the notice had been issued, such person shall also he given an opportunity of being heard to prove that the property is not involved in money-laundering.

(3) Where the Adjudicating Authority decides under sub-section (2) that any property is involved in money-laundering, he shall, by an order in writing, confirm the attachment of the property made under sub-section (1) of section 5 or retention of property or record seized under section 16 or section 17 and record a finding to that effect such attachment or retention of the seized property or record shall-

1. continue during the pendency of the proceedings relating to any scheduled offence before a court;
2. and become final after the guilt of the person is proved in the trial court and order of such trial court becomes final.

(4) Where the provisional order of attachment made under sub-section (1) of section 5 or retention of property or record seized under section 16 or section 17 has been confirmed under sub-section (3), the Director or any other officer authorised by him in this behalf shall forthwith take the possession of the attached property.

(5) Where on conclusion of a trial for any scheduled offence, the person concerned is acquitted, the attachment of the property or retention of the seized property or record under sub-section (3) shall cease to have effect.

(6) Where the attachment or retention of the seized property or record of any property or retention of the seized property or record becomes final under clause (b) of sub-section (3), the Adjudicating Authority shall, after giving an opportunity to the person concerned, make an order confiscating such property.

8. Vesting of property in Central Government

Where an order of confiscation has been made under sub-section (6) of section 7 in respect of any property of a person, all the rights and title in such property shall vest absolutely in the Central Government free from all encumbrances:

Provided that where the Adjudicating Authority, after giving an opportunity of being heard to any other person interested in the property attached under this Chapter or seized under Chapter V, is of the opinion that any encumbrance on the property or leasehold interest has been created with a view to defeat the provisions of this Chapter, it may, by order, declare such encumbrance or leasehold interest to be void and thereupon the aforesaid property shall vest in the Central Government free from such encumbrances or leasehold interest:

Provided further that nothing in this section shall operate to discharge any person from any liability in respect of such encumbrances which may be enforced against such person by a suit for damages.

9. Management of properties confiscated under this Chapter

(1) The Central Government may, by order published in the Official Gazette, appoint as many of its officers (not below the rank of Joint Secretary to the Government of India) as it thinks fit, to perform the functions of an Administrator.

(2) The Administrator appointed under sub-section (1) shall receive and manage the property in relation to which an order has been made under sub-section (6) of section 7 in such manner and subject to such conditions as may be prescribed.

(3) The Administrator shall also take such measures, as the Central Government may direct, to dispose of the property which is vested in the Central Government under section 8.

10. Power regarding summons, production of documents and evidence, etc.

(1) The- Adjudicating Authority shall, for the purposes of this Act, have the same powers as are vested in a civil court under the Code of civil Procedure, 1908 (5 of 1908) while trying a suit in respect of the following matters, namely:-

1. discovery and inspection;
2. enforcing the attendance of any person, including any officer of a banking company or a financial institution or a company, and examining him on oath;
3. compelling the production of records;
4. receiving evidence on affidavits;
5. issuing Commissions for examination Of witnesses and documents; and
6. any other matter which may be prescribed.

(2) All the Persons so summoned shall be bound to attend in person or through authorised agents, as the Adjudicating Authority may direct, and shall be bound to state the truth upon any subject respecting which they are examined or make statements, and produce such documents as may be required.

(3) Every proceeding under this section shall be deemed to be a judicial proceeding within the meaning of section the Indian Penal Code (45 of 1860).