Adjudicating Authorities [Section

18.6

Question 7: Discuss the objectives and functions of the Financial Action Task Force (FATF). [June 2008 (3 Marks)], [Dec. 2016 (5 Marks)]

Hint: Refer Topic Objectives and functions of the Financial Action Task Force (FATF).

Question 8: Write a short note on: Prevention of money laundering - Indian initiatives [Dec. 2004 (3 Marks)]

Hint: Refer TopicPrevention of money laundering - Indian initiatives.

Question 9: What do you understand by the term “Money laundering” under the Prevention of Money Laundering Act, 2002? [Dec. 2018 (3 Marks)]

Hint: Refer TopicMoney Laundering – Meaning.

Question 10: What are the effects of Money laundering on the economic development of a country? [June 2019 (3 Marks)]

Hint: Refer Topic Impact of money laundering on development.

Offence of money laundering [Section 3] Punishment for money laundering [Section 4] OFFENCE OF MONEY LAUNDERING

party or is actually involved in any process or activity connected proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money-laundering. imprisonment for 3 years which may extend to 7 years and shall also be liable to fine. However, where the proceeds of crime involved in money laundering relates to any offence specified under the Narcotic Drugs & Psychotropic Substances Act, 1985 the punishment may extend to rigorous imprisonment for 10 years instead of 7 years.

QUESTIONS FOR PRACTICE Question 1: What do you understand by ‘offence of money laundering’ under the Prevention of Money Laundering Act, 2002? Also state the punishment for money-laundering offence.

Hint: Refer to Sections 3 & 4 of the Prevention of Money Laundering Act, 2002.

Question 2: Define the term “Money Laundering”. What is the punishment for money laundering? [Dec. 2020 (3 Marks)]

Hint: Refer to Sections 3 & 4 of the Prevention of Money Laundering Act, 2002.

Attachment of property involved in money laundering [Section 5]

Adjudicating Authorities [Section 6] ATTACHMENT, ADJUDICATION & CONFISCATION

Director, Joint Director or Deputy Director can provisionally attach property up to 180 days, if he has reasons to believe that such person is in possession of proceeds of crime, he is charged with that crime and proceeds of money are likely to be concealed or transferred. Such attachment is executed in the manner provided in the Second Schedule of the Income-tax Act, 1961. The reasons to believe should be recorded in writing. The reason should be sent in sealed cover to adjudicating authority along with copy of attachment order. The Central Government has a power to appoint an Adjudicating Authority to exercise jurisdiction, powers and authority under the Act. An Adjudicating Authority shall consist of a Chairperson and two other members. Out

CH. 18 : PREVENTION OF MONEY LAUNDERING ACT, 2002

18.7

Adjudication [Section 8]

Vesting of property in Central Government [Section 9]

The Adjudicating Authority shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908, but shall be guided by the principles of natural justice. The Adjudicating Authority shall have powers to regulate its own procedure. On receipt of a complaint under section 5(5), or applications made under section 17(4) or Section 18(10), if the Adjudicating Authority has reason to believe that any person has committed an offence of money laundering or is in possession of proceeds of crime, a notice of not less than 30 days will be served calling him to indicate the sources of his income, earning or assets and to show cause why the property should the properties are involved in money-laundering or not. absolutely with Central Government. in such property shall vest absolutely in the Central Government free from all encumbrances. If the Special Court or the Adjudicating Authority finds that any encumbrance on the property or lease-hold interest has been created with a view to defeat the provisions of the Act, it may declare such encumbrances or lease-hold interest to be void. On declaration of void, all property shall vest in the Central Government free from such encumbrances or lease-hold interest.

PAST EXAMINATION QUESTIONS Question 1: How the property involved in money laundering is dealt with under the Prevention of Money Laundering Act, 2002? [Dec. 2010 (5 Marks)]

Hint: Refer to Section 5 of the Prevention of Money Laundering Act, 2002.

Question 2: How the attachment of property is executed under the Prevention of Money Laundering Act, 2002? [June 2017 (5 Marks)]

Hint: Refer to Section 5 of the Prevention of Money Laundering Act, 2002.

QUESTIONS FOR PRACTICE Question 1: Write a short note on: Adjudicating Authorities under the Prevention of Money Laundering Act, 2002

Hint: Refer to Section 6 of the Prevention of Money Laundering Act, 2002.

Question 2: Write a short note on: ‘Adjudication’ under the Prevention of Money Laundering Act, 2002

Hint: Refer to Section 8 of the Prevention of Money Laundering Act, 2002.

Question 3: Mention the provision of the Prevention of Money Laundering Act, 2002 relating to ‘Vesting of property in Central Government’.

Hint: Refer to Section 9 of the Prevention of Money Laundering Act, 2002.

OBLIGATION OF BANKING COMPANIES, FINANCIAL INSTITUTIONS & INTERMEDIARIES Reporting entity to maintain records [Section 12]

The bank, financial institutions and intermediary has obligations – - To maintain records of all transactions and value as prescribed, whether such transactions comprise of a single transactions or a series of transactions internally connected to each other when such series take place within a month. - To inform the director within prescribed time.