The Prevention of Money Laundering Act of 2002 monitors funding activities and unlawful operations. Terrorist activities require financial support. Business personalities and political personalities help unlawful activities and terrorism. Officially, twenty-five people were convicted by the officials working on the money laundering act. The act recorded four hundred convictions and 5,422 cases in India. The value of the assets ceased by the money laundering act was 1, 04,702 crores. PMLA is operating in India for the past seventeen years. The Directorate of Enforcement has seen a swift of 14,143 fraud cases between 2019 and 2022. The recorded cases between 2014 and 2017 stand at 4,913. The number is high and shows the violation cases in India.
PMLA laws form the legal framework of India. Recently, PMLA included chartered accountants, cost accountants and company secretaries under the act. The financial transactions handled by these professionals on behalf of their owners should have a clear report and backup documents. After this announcement, the ministry widened the law to formation agent, secretary and formation agent. The financial position and financial transactions declared by the professionals add responsibility to the professionals. This new PMLA law requires more focus. So, it brings finance professionals into the ambit. A blog is here to analyse the law and reporting process.
What is PMLA?
The Prevention of money laundering act, of 2002 is a law that curbs financial crimes. Business people, politicians and finance professionals are used for illegal activities. Finance professionals get involved in activities like buying property, selling a company and other cash dealings. All these transactions are the transfer of lump sum money. As per the latest amendment from PMLA, the financial transactions conducted by the finance professions are under the inspection of PMLA. The director of the financial intelligence unit checks the records of transactions. If there is non-compliance, he charges penalties. The move strengthens the administration and reduces money laundering cases.
The financial information should reach the director at the right time, and prescribed manner. Money laundering has three stages such as identification, layering and integration. In the first stage, the money is added to the financial transactions. In the second system, the illegal money is moved and layered with the balance money. The third step is the integration. In this step, the illegal money moved for the investment. Section three of the act explains money laundering as a direct or indirect attempt connected to the crime. The act of possession, concealment, and acquisition is mentioned as guilty. If there is proof, it is part of business development. If there is no proof, it is part of money laundering activity.
New activities under the provision of PMLA:
The finance professionals check the sources of funds, ownership and KYC and record the details of this information. The funds flow, cash flow and asset management form the crucial part of the business. CA, CMA and ACS manage client assets. The following activities by the relevant person in favour of his client come under the inspection of the money laundering act. Chartered accountants, cost accountants, and company secretaries are persons with a certificate of practice as per the chartered accountant Act, company secretaries act and Cost and works accountants Act. The institute issued the certificate of practice as per the following acts: section six of the chartered accountants act, 1949, section six of the company secretaries act, 1980 and section six of the Cost and works accountants act, 1980.
• Selling or buying immovable property.
• Manage securities, money or assets of the owner on behalf of the business.
• Manage savings, bank balance and securities accounts on behalf of the owner.
• Finance professionals are involved in activities related to the creation, management and operation of the company.
• Finance professionals work with operating companies, limited liability partnership firms, trusts, and business entities. Buying, selling, and management of business fall under the responsibility of the finance profession. Finance professionals should maintain records that make these transactions legal.
PMLA 2022 cases:
In 2022, the parties under the surveillance of the Enforcement directorate are as under: IAS Pooja Singhal, Bhupinder Singh Honey, Partha Chatterjee and Arpita Mukherjee, Karti Chidambaram, Satyendar Jain, Yes Bank, Sanjay Raut, Farooq Abdullah, Sonia Gandhi and Rahul Gandhi and Nawab Malik. Bhupinder Singh Honey is the nephew of Punjab chief minister Charajit Singh Channi. The directorate asked questions about the sand mining case. The ED seized ten crores of money, 21 lakh of gold and 12 lakh worth of Rolex watch from his place. Pooja Singhal was holding the position of secretary of the Mines and Geology department and MD of the state mineral development corporation limited from Jharkhand. ED seized 20 crore cash from her. She is the aide of Hemant soren, Jharkhand chief minister. Satyendar Jain is the health minister of Delhi. This was a case with a disproportionate asset on him. The case started in August 2017. The value of seized things goes as two crores of cash and 1.8 kg of gold. Kati Chidambaram is the congress MP. He is suspected as a helper to the Vedanta Group and received a bribe of fifty lakhs. He arranged 300 visas for Chinese nationals. These Chinese nationals had worked on a Punjab power project. Sanjay Chhabria and Ainash Bhosale were issued provisional orders under the PMLA Act. In the Yes Bank- DHFL case, the two parties hold illegal assets in the form of land parcels in Mumbai, Bengaluru, Delhi, Nagpur, and Pune. The asset value was around 1827 crore. The Maharashtra minister Nawab Malik has a link with D-company. The D-company has the ownership of gangster Dawood Ibrahim. He is in the custody of the ED. The former chief minister Farooq Abdullah is involved in a case related to the Jammu and Kashmir cricket association. The former BJP member Subramanian Swami filed a case against Sonia Gandhi and Rahul Gandhi in 2013. They are found guilty in the National Herald case.
Conclusion:
The finance ministry instructed 22 finance companies to conduct financial transactions with Aadhaar-based authentication. The act has suggested other verification as passport and valid documents. Amazon Pay PVT, Ltd, Tata motors finance solution, Birla housing finance, Nangia Andersen LLP partner, IIFL Finance and Mahindra rural housing finance Ltd are the intermediaries permitted to use Aadhaar identification. The act works for money transactions and illegal activities. The amendments lay a strong foundation for a healthy financial environment.
