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Prevention of Money Laundering Act comes into force
By agencies
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Friday, 01 July 2005, 19:30 IST
NEW DELHI: With the stringent Prevention of Money Laundering Act coming into force today, banks, FIs and financial intermediaries will have to mandatorily report to Government all suspicious transactions and those over Rs 1 million.
The Act, amended in the Budget session of Parliament to remove certain lacunae, also makes it compulsory to report all cash transactions integrally connected, even if they do not add up to Rs 1 million
As per the provisions of the Act, every banking company, financial institution and intermediary needs to maintain a record of all transactions, the nature and value of which is being prescribed in the rules.
FIs, including chit funds, cooperative banks, HFCs and NBFCs, and intermediaries like stock-brokers, sub-brokers, share transfer agents, bankers and registrars to an issue, merchant bankers, underwriters, portfolio managers and investment advisers have to be registered with SEBI.
The Act, aimed at combating siphoning of money to illegal activities, provides for attachment and seizure of property and records, besides stringent punishment, including rigorous imprisonment upto 10 years and fine upto Rs 500,000.
The Act, in line with India's commitment to fight all forms of economic crimes, first came into being in 2002 but could not be brought into force due to certain shortcomings, which accordingly got amended in Parliament's last session.
The Financial Intelligence Unit (FIU-IND) has been set up as a multi-disciplinary unit for establishing links between suspicious or unusual financial transactions and underlying criminal activities.