Vesting of property in Central Government [Section

Search & Seizure [Section 17]

Search of persons [Section 18] Power to arrest [Section 19]

Retention of property [Section 20]

Retention of records [Section 21]

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Director, Joint Director or Deputy Director may authorize any officer subordinate to them: (a) To enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such records or proceeds of crime are kept. (b) To break and open the lock of any door, box, locker, safe, almirah where the keys are not available. (c) To seize any record or property found as a result of such search. (d (e) To make a note or an inventory of record or property. (f) To examine on oath any person, who is found to be in possession or control of any record or property, in respect of all matters relevant to investigation. In case of scheduled offence search shall be conducted only when a report has been forwarded to a Magistrate or a complaint has been filed by a person authorized to investigate scheduled offence before a Magistrate. an order to freeze such property. Immediately after search and seizure or upon issuance of a freezing order, the authority shall forward a copy of the reasons so recorded along with material in his possession to the Adjudicating Authority in a sealed envelope in the prescribed manner. Authorized authority may search person and seize record or property which may be useful for or relevant to any proceedings under the Act.

The Director, Deputy Director, Assistant Director, or any authorized officer may arrest such person and inform him of the grounds for such arrest. Immediately after arrest of person, information will be provided to the Adjudicating Authority, in a sealed envelope. Every person arrested shall be taken before the Magistrate within 24 hours. continue to remain frozen, for a period not exceeding 180 days from date of seizure or frozen as the case may be. Immediately after passing an order for retention or continuation of freezing of the with the material in his possession to the Adjudicating Authority in a sealed envelope in the prescribed manner. On the expiry of period of 180 days, the property shall be returned to the person from whom such property was seized or whose property was ordered to be frozen. The Adjudicating Authority may retain or allow to continue to freeze property beyond prima facie involved in money laundering. direct the release of all property other than the property involved in money laundering. to seize or may allow continue to remain frozen records for period of 180 days if he has reason to believe that any of such records are required to be retained for any inquiry under the Act. However, copies of records can be obtained on request. On the expiry of 180 days, the records shall be returned to the person from whom such records were seized or whose records were ordered to be frozen. release of the records to the person from whom such records were seized.

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Offences to be cognizable and non-bailable [Section 45]

may withhold the release of records for a period of 90 days from the date of order, if he is of the opinion that such record is relevant for making appeal. Every offence punishable under the Act to be cognizable. A person accused of an offence shall not be released on bail or on bond unless the Public Prosecutor has been given an opportunity to oppose the application for such release. If the Public Prosecutor opposes the application then bail can be granted only when of offence and that he is not likely to commit any offence while in bail. A person, who, is under the age of 16 years, or is a woman or is , or is accused either on his own or along with other co-accused of money-laundering a sum of less than ` 1 Crore may be released on bail, if the Special Court so directs. The Special Court shall not take cognizance of any offence punishable u/s 4, except Government authorized by a general or special order. authorized, by the Central Government by a general or special order.

PAST EXAMINATION QUESTIONS Question 1: Is the offence committed under the Prevention of Money Laundering Act, 2002 cognizable and bailable? State the law and procedure relating to it. [Dec. 2017 (5 Marks)]

Hint: Refer to Section 45 of the Prevention of Money Laundering Act, 2002.

QUESTIONS FOR PRACTICE Question 1: State the provisions relating to summon, searches and seizures under the Prevention of Money Laundering Act, 2002?

Hint: Refer to Sections 16 to 19 of the Prevention of Money Laundering Act, 2002.

Question 2: State the provisions relating to ‘retention of property’ under the Prevention of Money Laundering Act, 2002?

Hint: Refer to Section 20 of the Prevention of Money Laundering Act, 2002.

Question 3: State whether offence punishable under the Prevention of Money Laundering Act, 2002 are bailable or non-bailable? What is role of Public Prosecutor?

Hint: Refer to Section 45 of the Prevention of Money Laundering Act, 2002.

Know Your Customer (KYC)

Objective of KYC Guidelines KNOW YOUR CUSTOMER

In terms of the guidelines issued by the RBI on 29th November, 2004 on Know Your Customer (KYC) Standards/Anti Money Laundering Measures, all banks are required to put in place a comprehensive policy framework covering KYC Standards and AML Measures. RBI introduced KYC guidelines for all banks. KYC enables banks to know/ understand their customers and their financial dealings to be able to serve them better and manage its risks prudently. The objective of KYC guidelines is to prevent banks from being used, intentionally or unintentionally, by criminal elements for money laundering activities. KYC procedures also enable banks to know/understand their customers and their financial dealings better which in turn help them manage their risks prudently. Banks should frame their KYC policies incorporating the following four key elements:

CH. 18 : PREVENTIONOF MONEY LAUNDERING ACT, 2002

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- Customer Acceptance Policy. - - Monitoring of Transactions. - Risk management.

Meaning of Customer

For the purpose of KYC policy, a ‘Customer’ may be defined as: - A person or entity that maintains an account with the bank - - Brokers, CA, Solicitors etc. and - reputational or other risks to the bank. Need for KYC KYC is done to establish the identity of the client. This means identifying the customer and verifying his/her identity by using reliable, independent source documents, data or information. For individuals, banks are required to obtain identification data to verify the identity of the customer, his address/location and also his recent photograph. This is to be done for the joint holders and mandate holders as well. For non-individuals, banks need to obtain identification data to: - Verify the legal status of the legal person/entity - Verify identity of the authorized signatories and - Thus, KYC is done to ensure that sufficient information is obtained on the nature of employment/business that the customer does/expects to undertake and the purpose of opening account

When does KYC apply?

KYC is carried out at the following stages: - Opening a new account - Opening a subsequent account where documents as per current KYC standards not been submitted while opening the initial account. - Opening a Locker Facility where these documents are not available with the bank for availing the Locker facility holders. - customers based on conduct of the account. - KYC is also carried out in respect of non-account holders approaching the bank for high value one-off transactions.

Obligation of banks on KYC policy as per the guideline issued by the RBI

The objective of Know Your Customer (KYC) Norms/Anti-Money Laundering (AML) Measures/ Combating of Financing of Terrorism (CFT) guidelines is to prevent banks from being used, intentionally or unintentionally, by criminal elements for money laundering or terrorist financing activities. KYC procedures also enable banks to know/understand their customers and their financial dealings better which in turn help them manage their risks prudently.

Obligation of Banks:

Banks should keep in mind that the information collected from the customer for the not to be divulged for cross selling or any other like purposes. Banks should, therefore, ensure that information sought from the customer is relevant to the perceived risk, is not intrusive, and is in conformity with the guidelines issued in this regard. Any other information from the customer should be sought separately with his/her consent and after opening the account.