Contents % ' ! 0
Chapter-wise Marks Distribution
I-9
Chapter-wise Comparison with Study Material
I-13
PART A FOREIGN EXCHANGE MANAGEMENT & NBFCs Chapter 1 1.3
RESERVE BANK OF INDIA ACT, 1934
Chapter 2 FOREIGN EXCHANGE MANAGEMENT ACT, 1999
2.1
Chapter 3 FEMA - CURRENT & CAPITAL ACCOUNT TRANSACTIONS, LIBERALIZED
REMITTANCE SCHEME
3.1
Chapter 4 FEMA - FOREIGN DIRECT INVESTMENT IN INDIA
4.1
Chapter 5 FEMA - DIRECT INVESTMENT OUTSIDE INDIA
5.1
Chapter 6 EXTERNAL COMMERCIAL BORROWINGS (ECB)
I-5
6.1
3 4 . % 4 . / #
I-6
% ' ! 0
Chapter 7 FOREIGN CONTRIBUTION (REGULATION) ACT, 2010
7.1
Chapter 8 FOREIGN TRADE POLICY & PROCEDURES
8.1
Chapter 9 NON-BANKING FINANCE COMPANIES (NBFC)
9.1
Chapter 10 SPECIAL ECONOMIC ZONES ACT, 2005
10.1
PART B COMPETITION LAW Chapter 11 11.3
COMPETITION ACT, 2002
PART C COMMERCIAL LAWS Chapter 12 CONSUMER PROTECTION ACT, 2019
12.3
Chapter 13 ESSENTIAL COMMODITIES ACT, 1955
13.1
Chapter 14 14.1
LEGAL METROLOGY ACT, 2009
PART D PROPERTY LAWS Chapter 15 TRANSFER OF PROPERTY ACT, 1882
15.3
Chapter 16 REAL ESTATE (REGULATION & DEVELOPMENT) ACT, 2016
16.1
3 4 . % 4 . / #
I-7 % ' ! 0
PART E ANTI-CORRUPTION LAWS Chapter 17 BENAMI TRANSACTION (PROHIBITION) ACT, 1988
17.3
Chapter 18 PREVENTION OF MONEY LAUNDERING ACT, 2002
18.1
PART F BUSINESS LAWS Chapter 19 CONTRACT ACT, 1872
19.3
Chapter 20 SPECIFIC RELIEF ACT, 1963
20.1
Chapter 21 SALE OF GOODS ACT, 1930
21.1
Chapter 22 PARTNERSHIP ACT, 1932
22.1
Chapter 23 NEGOTIABLE INSTRUMENTS ACT, 1881
SOLVED PAPER : DECEMBER 2020 (NEW SYLLABUS)
23.1 P.1
SOLVED PAPER : JUNE 2021 (NEW SYLLABUS)
P.21
SOLVED PAPER : DECEMBER 2021 (NEW SYLLABUS)
P.41
SOLVED PAPER : JUNE 2022 (NEW SYLLABUS)
P.61
18 CHAPTER
OBJECTS & SCOPE Q1. Write a short note on: Process of money laundering [Dec 2010 (5 Marks)]
(1) Placement Stage: 0LACEMENT STAGE REPRESENTS THE INITIAL ENTRY OF THE hDIRTYv CASH OR PROCEEDS OF CRIME INTO THE FINANCIAL SYSTEM 'ENERALLY THIS STAGE SERVES TWO PURPOSES
)T RELIEVES THE CRIMINAL OF HOLDING AND GUARDING LARGE AMOUNTS OF BULKY OF CASH AND
)T PLACES THE MONEY INTO THE LEGITIMATE FINANCIAL SYSTEM
)T IS DURING THE PLACEMENT STAGE THAT MONEY LAUNDERERS ARE THE MOST VULNERABLE TO BEING CAUGHT (2) Layering Stage: ,AYERING STAGE IS THE MOST COMPLEX AND OFTEN ENTAILS THE INTERNATIONAL MOVEMENT OF THE FUNDS 4HE PRIMARY PURPOSE OF THIS STAGE IS TO SEPARATE THE ILLICIT MONEY FROM ITS SOURCE 4HIS IS DONE BY THE SOPHISTICATED LAYERING OF FINANCIAL TRANSACTIONS THAT OBSCURE THE AUDIT TRAIL AND SEVER THE LINK WITH THE ORIGINAL CRIME $URING THIS STAGE FOR EXAMPLE THE MONEY LAUNDERERS MAY BEGIN BY MOVING FUNDS ELECTRONICALLY FROM ONE COUNTRY TO ANOTHER THEN DIVIDE THEM INTO INVESTMENTS PLACED IN ADVANCED FINANCIAL OPTIONS OR OVERSEAS MARKETS CONSTANTLY MOVING THEM TO ELUDE DETECTION EACH TIME EXPLOITING LOOPHOLES OR DISCREPANCIES IN LEGISLATION AND TAKING ADVANTAGE OF DELAYS IN JUDICIAL OR POLICE CO OPERATION 18.1
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Ans.: -ONEY LAUNDERING IS COMMONLY DEFINED AS HAPPENING IN THREE STEPS THE FIRST STEP INVOLVES INTRODUCING CASH INTO THE FINANCIAL SYSTEM BY SOME MEANS (placement) 4HE SECOND INVOLVES CARRYING OUT COMPLEX FINANCIAL TRANSACTIONS TO CAMOUFLAGE THE ILLEGAL SOURCE (layering) AND THE FINAL STEP ENTAILS ACQUIRING WEALTH GENERATED FROM THE TRANSACTIONS OF THE ILLICIT FUNDS (integration).
18.2
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(3) Integration Stage: )N FINAL STAGE THE MONEY IS RETURNED TO THE CRIMINAL FROM WHAT SEEM TO BE LEGITIMATE SOURCES (AVING BEEN PLACED INITIALLY AS CASH AND LAYERED THROUGH A NUMBER OF FINANCIAL TRANSACTIONS THE CRIMINAL PROCEEDS ARE NOW FULLY INTEGRATED INTO THE FINANCIAL SYSTEM AND CAN BE USED FOR ANY PURPOSE 4HERE ARE MANY DIFFERENT WAYS IN WHICH THE LAUNDERED MONEY CAN BE INTEGRATED BACK WITH THE CRIMINAL HOWEVER THE MAJOR OBJECTIVE AT THIS STAGE IS TO REUNITE THE MONEY IN A MANNER THAT DOES NOT DRAW ATTENTION AND APPEARS TO RESULT FROM A LEGITIMATE SOURCE &OR EXAMPLE THE PURCHASES OF PROPERTY ART WORK JEWELLERY OR HIGH END AUTOMOBILES ARE COMMON WAYS FOR THE LAUNDERER TO ENJOY THEIR ILLEGAL PROFITS Q2. Write a short note on: Process of money laundering. [Dec. 2013 (5 Marks)]
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Ans.: Please refer to answer of Question No. 1. Q3. “Despite the deleterious impact of money laundering on development, it has, of late, assumed alarming proportions and its growth has been cancerous.” Discuss. [June 2011 (5 Marks)] Ans.: %CONOMIES WITH GROWING OR DEVELOPING FINANCIAL CENTERS BUT INADEQUATE CONTROLS ARE PARTICULARLY VULNERABLE TO MONEY LAUNDERING AS AGAINST THE ESTABLISHED FINANCIAL CENTER COUNTRIES WHICH IMPLEMENT COMPREHENSIVE ANTI MONEY LAUNDERING REGIMES 4HE GAPS IN A NATIONAL ANTI MONEY LAUNDERING SYSTEM ARE EXPLOITED BY LAUNDERERS WHO TEND TO MOVE THEIR NETWORKS TO COUNTRIES AND FINANCIAL SYSTEMS WITH WEAK OR INEFFECTIVE COUNTERMEASURES !S WITH THE DAMAGED INTEGRITY OF AN INDIVIDUAL FINANCIAL INSTITUTION THERE IS A DAMPING EFFECT ON FOREIGN DIRECT INVESTMENT WHEN A COUNTRY S COMMERCIAL AND FINANCIAL SECTORS ARE PERCEIVED TO BE SUBJECT TO THE CONTROL AND INFLUENCE OF ORGANIZED CRIME )N TIMES OF DECELERATING GROWTH AN INFUSION OF HARD CURRENCY CAN BOLSTER A COUNTRY S FOREIGN RESERVES EASE THE HARDSHIP ASSOCIATED WITH BUDGET TIGHTENING POLICIES AND MODERATE FOREIGN INDEBTEDNESS 7HILE THESE ARE SHORT TERM BENEFITS ASSOCIATED WITH AN INFLOW OF CRIMINAL MONIES THE LONG TERM EFFECTS ARE MOSTLY NEGATIVE /NE DIFFERENCE BETWEEN OFFICIAL BORROWING AND LAUNDERED FUNDS IS THAT THE FORMER CAN BE CONTROLLED BY 'OVERNMENT WHEREAS THE FUNDS OWNED BY CRIMINALS ESCAPE THE 'OVERNMENT S ABILITY TO CONTROL AND REGULATE THE ECONOMY 4HE POSSIBLE SOCIAL ECONOMIC AND POLITICAL EFFECTS OF MONEY LAUNDERING IF LEFT UNCHECKED OR DEALT WITH INEFFECTIVELY ARE SERIOUS 4HROUGH THE PROCESS OF MONEY LAUNDERING ORGANIZED CRIME CAN INFILTRATE FINANCIAL INSTITUTIONS ACQUIRE CONTROL OF LARGE SECTORS OF THE ECONOMY THROUGH INVESTMENT OR OFFER
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18.3
BRIBES TO PUBLIC OFFICIALS AND INDEED 'OVERNMENTS 4HUS THE ECONOMIC AND POLITICAL INFLUENCE OF CRIMINAL ORGANIZATIONS CAN WEAKEN THE SOCIAL FABRIC ETHICAL STANDARDS AND ULTIMATELY THE DEMOCRATIC INSTITUTIONS OF SOCIETY Q4. Discuss in brief the objectives and scope of the Money Laundering Act, 2002. [June 2014 (5 Marks)] Ans.: 4HE -ONEY ,AUNDERING !CT SEEKS TO COMBAT MONEY LAUNDERING IN )NDIA AND FOLLOWING MAIN OBJECTIVES 4O
PREVENT AND CONTROL MONEY LAUNDERING
4O
CONFISCATE AND SEIZE THE PROPERTY DERIVED FROM OR INVOLVED IN MONEY LAUNDERING
4O
PROVIDE PUNISHMENT FOR OFFENCE OF MONEY LAUNDERING
4O
APPOINT THE !DJUDICATING !UTHORITY AND !PPELLATE 4RIBUNAL TO DEAL THE MATTER CONNECTED WITH MONEY LAUNDERING
4O
PUT OBLIGATIONS ON BANKING COMPANIES FINANCIAL INSTITUTIONS AND INTERMEDIARIES TO MAINTAIN RECORDS
DEAL WITH ANY OTHER ISSUE CONNECTED WITH MONEY LAUNDERING IN )NDIA
Scope: 4HE -ONEY ,AUNDERING !CT EXTENDS TO THE WHOLE OF )NDIA Q5. “The problem of money laundering is no longer restricted to the geo-political boundaries of any country. It is a menace that cannot be contained by any nation alone.” Discuss this statement in the context of impact of money laundering on development, various global initiatives on the prevention of money laundering and the enactment of the Prevention of Money Laundering Act, 2002. [June 2015 (8 Marks)] Ans.: 3INCE MONEY LAUNDERING IS AN INTERNATIONAL PHENOMENON TRANSNATIONAL CO OPERATION IS OF CRITICAL IMPORTANCE IN THE FIGHT AGAINST THIS MENACE ! NUMBER OF INITIATIVES HAVE BEEN TAKEN TO DEAL WITH THE PROBLEM AT INTERNATIONAL LEVEL WHICH ARE GIVEN BELOW 4HE UN OR THE Bank for International Settlements
TOOK SOME INITIATIVES IN S TO ADDRESS THE PROBLEM OF MONEY LAUNDERING
THE CREATION OF THE Financial Action Task Force &!4& IN REGIONAL GROUPINGS SUCH AS THE %UROPEAN 5NION #OUNCIL OF %UROPE AND ORGANIZATION OF !MERICAN 3TATES ALSO ESTABLISHED ANTI MONEY LAUNDERING STANDARDS FOR THEIR MEMBER COUNTRIES
7ITH
4HE
MAJOR INTERNATIONAL AGREEMENTS ADDRESSING MONEY LAUNDERING INCLUDE THE 5. #ONVENTION AGAINST )LLICIT 4RAFFICKING IN $RUGS AND 0SYCHOTROPIC 3UBSTANCES THE Vienna Convention AND #OUNCIL OF
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%UROPE #ONVENTION ON ,AUNDERING 3EARCH 3EIZURE AND #ONFISCATION OF THE 0ROCEEDS OF #RIME 4HE
ROLE OF FINANCIAL INSTITUTIONS IN PREVENTING AND DETECTING MONEY LAUNDERING HAS ALSO BEEN THE SUBJECT OF PRONOUNCEMENTS BY THE "ASEL #OMMITTEE ON "ANKING 2EGULATION 3UPERVISORY 0RACTICES THE %UROPEAN 5NION AND THE )NTERNATIONAL /RGANIZATION OF 3ECURITIES #OMMISSIONS
UN global programme against money laundering: /FFICE OF THE $RUG #ONTROL AND #RIME 0REVENTION IMPLEMENT THIS PROGRAMME AGAINST -ONEY ,AUNDERING WITH A VIEW TO INCREASE THE EFFECTIVENESS OF INTERNATIONAL ACTION AGAINST MONEY LAUNDERING THROUGH COMPREHENSIVE TECHNICAL CO OPERATION SERVICES OFFERED TO 'OVERNMENTS 4HE PROGRAMME ENCOMPASSES FOLLOWING THREE AREAS OF ACTIVITIES PROVIDING VARIOUS MEANS TO STATES AND INSTITUTIONS IN THEIR EFFORTS TO EFFECTIVELY COMBAT MONEY LAUNDERING 4ECHNICAL
CO OPERATION IS THE MAIN TASK OF THE PROGRAMME )T ENCOMPASSES ACTIVITIES OF CREATING AWARENESS INSTITUTION BUILDING AND TRAINING
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4HE
RESEARCH AND ANALYSIS AIMS AT OFFERING 3TATES +EY )NFORMATION TO BETTER UNDERSTAND THE PHENOMENON OF MONEY LAUNDERING AND TO ENABLE THE INTERNATIONAL COMMUNITY TO DEVISE MORE EFFICIENT AND EFFECTIVE COUNTERMEASURE STRATEGIES
4HE
COMMITMENT TO SUPPORT THE ESTABLISHMENT OF FINANCIAL INVESTIGATION SERVICES FOR RAISING THE OVERALL EFFECTIVENESS OF LAW ENFORCEMENT MEASURES
4HE IMPLEMENTATION OF THE GLOBAL PROGRAMME AGAINST MONEY LAUNDERING IS CARRIED OUT IN THE SPIRIT OF CO OPERATION WITH OTHER INTERNATIONAL REGIONAL AND NATIONAL ORGANIZATIONS AND INSTITUTIONS Q6. Define the term ‘money laundering’. How does it impact the development of a growing economy? [Dec 2015 (7 Marks)] Ans.: Meaning of Money Laundering: a -ONEY AND CRIME ARE RELATED TO EACH OTHER #RIMES ARE DONE BECAUSE LOT OF MONEY INVOLVED IN IT -ONEY CREATED BY CRIMES WHEN CONVERTED INTO WHITE MONEY IT IS KNOWN AS MONEY LAUNDERING b )N SIMPLE WORDS MONEY LAUNDERING ALLOWS CRIMINALS TO TRANSFORM ILLEGALLY OBTAINED GAIN INTO SEEMINGLY LEGITIMATE FUNDS c 3ECTION OF THE !CT STATES THAT WHOSOEVER DIRECTLY OR INDIRECTLY ATTEMPTS TO INDULGE OR KNOWINGLY ASSISTS OR KNOWINGLY IS A PARTY OR ACTUALLY INVOLVED IN ANY PROCESS OR ACTIVITY CONNECTED WITH THE PROCEEDS OF CRIME INCLUDING ITS CONCEALMENT POSSESSION ACQUISITION OR USE AND PROJECTING OR CLAIMING IT IS AN UNTAINTED PROPERTY SHALL BE GUILTY OF OFFENCE OF MONEY LAUNDERING
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18.5
d #RIMINALS WANT THEIR ILLEGAL FUNDS LAUNDERED BECAUSE THEY CAN THEN MOVE THEIR MONEY THROUGH SOCIETY FREELY WITHOUT FEAR THAT THE FUNDS WILL BE TRACED TO THEIR CRIMINAL DEEDS )N ADDITION LAUNDERING PREVENTS THE FUNDS FROM BEING CONFISCATED BY THE POLICE Impact of money laundering on development is given below:̙ )NCREASED #RIME #ORRUPTION $AMAGED REPUTATION AND INTERNATIONAL CONSEQUENCES 7EAKENED &INANCIAL )NSTITUTIONS #OMPROMISED ECONOMY AND PRIVATE SECTOR $AMAGED PRIVATIZATION EFFORTS )NFILTRATE FINANCIAL INSTITUTION !CQUIRE CONTROL OVER LARGE SECTORS OF ECONOMY THROUGH INVESTMENT 7EAKEN THE SOCIAL FABRIC ETHIC STANDARDS AND ULTIMATELY DEMOCRATIC INSTITUTION OF SOCIETY [Dec 2016 (5
Ans.: Please refer to answer of Question No. 1. Q8. Discuss the objectives and functions of the Financial Action Task Force (FATF). [Dec 2016 (5 Marks)] Ans.: (a) 4HE &INANCIAL !CTION 4ASK &ORCE IS AN INTER GOVERNMENTAL ORGANIZATION FOUNDED IN 1989 ON THE INITIATIVE OF THE G7 countries TO DEVELOP POLICIES TO COMBAT MONEY LAUNDERING (b) Objective 4HE OBJECTIVES OF THE &!4& ARE TO SET STANDARDS AND PROMOTE EFFECTIVE IMPLEMENTATION OF LEGAL REGULATORY AND OPERATIONAL MEASURES FOR COMBATING MONEY LAUNDERING TERRORIST FINANCING AND OTHER RELATED THREATS TO THE INTEGRITY OF THE INTERNATIONAL FINANCIAL SYSTEM (c) Headquarters:- 4HE &!4& 3ECRETARIAT IS HOUSED AT THE HEADQUARTERS OF THE /%#$ IN 0ARIS (d) Functions 4HE MAIN TASKS OF THE &!4& ARE -ONITORING MEMBERS PROGRESS IN APPLYING MEASURES TO COUNTER MONEY
LAUNDERING 2EVIEWING
MONEY LAUNDERING TECHNIQUES AND COUNTERMEASURES
0ROMOTING THE ADOPTION AND IMPLEMENTATION OF APPROPRIATE MEASURES
BY NON MEMBER COUNTRIES (e) Recommendations:- 4HE &!4& S PRIMARY POLICIES ISSUED ARE THE RECOMMENDATIONS ON MONEY LAUNDERING FROM AND THE 3PECIAL 2ECOM-
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Q7. Write a short note on: Process of money laundering. Marks)]
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MENDATIONS ON 4ERRORISM &INANCING "OTH SETS OF &!4& 2ECOMMENDATIONS ARE INTENDED TO BE IMPLEMENTED AT THE NATIONAL LEVEL THROUGH LEGISLATION AND OTHER LEGALLY BINDING MEASURES (f) International Standard )T ALSO SET THE INTERNATIONAL STANDARD FOR ANTI MONEY LAUNDERING MEASURES AND COMBATING THE FINANCING OF TERRORISM AND TERRORIST ACTS (g) 4HEY SET OUT THE PRINCIPLES FOR ACTION AND ALLOW COUNTRIES A MEASURE OF FLEXIBILITY IN IMPLEMENTING THESE PRINCIPLES ACCORDING TO THEIR PARTICULAR CIRCUMSTANCES AND CONSTITUTIONAL FRAMEWORKS Q9. What do you understand by the term “Money laundering” under the Prevention of Money Laundering Act, 2002? [Dec. 2018 (3 Marks)] Ans.: Please refer to answer of Question No. 1. Q10. What are the effects of Money laundering on the economic development of a country? [June 2019 (3 Marks)]
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Ans.: Please refer to answer of Question No. 6.
OFFENCE OF MONEY LAUNDERING Q11. 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. Ans.: Offence of money laundering [Section 3]: 7HOSOEVER DIRECTLY OR INDIRECTLY ATTEMPTS TO INDULGE OR KNOWINGLY ASSISTS OR KNOWINGLY IS A 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 Punishment for money laundering [Section 4]: 7HOEVER COMMITS THE OFFENCE OF MONEY LAUNDERING SHALL BE PUNISHABLE WITH RIGOROUS IMPRISONMENT FOR 3 years WHICH MAY EXTEND TO 7 years AND SHALL ALSO BE LIABLE TO FINE 7HERE THE PROCEEDS OF CRIME INVOLVED IN MONEY LAUNDERING RELATE TO OFFENCE SPECIFIED UNDER 0ARAGRAPH OF 0ART ! OF THE 3CHEDULE IMPRISONMENT MAY EXTEND TO 10 years INSTEAD OF 7 years
ATTACHMENT, ADJUDICATION & CONFISCATION Q12. How the property involved in money laundering is dealt with under the Prevention of Money Laundering Act, 2002? [Dec. 2010 (5 Marks)]
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Ans.: (a) Attachment of property involved in money-laundering [Section 5]: $IRECTOR *OINT $IRECTOR OR $EPUTY $IRECTOR 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 (b) Execution of attached :- 3UCH ATTACHMENT IS EXECUTED IN THE MANNER PROVIDED IN THE Second Schedule OF THE Income-tax Act, 1961 (c) Reason in writing:- 4HE REASONS TO BELIEVE SHOULD BE RECORDED IN WRITING (d) Sealed Cover:- 4HE REASON SHOULD BE SENT IN SEALED COVER TO ADJUDICATING AUTHORITY ALONG WITH COPY OF ATTACHMENT ORDER (e) Complaint with adjudicating authority !FTER ATTACHMENT A COMPLAINT WILL BE FILED WITH ADJUDICATING AUTHORITY WITHIN DAYS Q13. How the attachment of property is executed under the Prevention of Money Laundering Act, 2002? [June 2017 (5 Marks)] Ans.: Please refer to answer of Question No. 1.
Q14. Mention the obligation of banking companies, financial institutions and intermediaries under the Prevention of Money Laundering Act, 2002? [Dec 2011 (5 Marks)] Ans.: 4HE FOLLOWING ARE THE OBLIGATION UNDER THE 0REVENTION OF -ONEY LAUNDERING !CT (a) Reporting entity to maintain records [Section 12]: 4HE BANK FINANCIAL INSTITUTIONS AND INTERMEDIARY HAS OBLIGATIONS
4O 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
4O INFORM THE DIRECTOR WITHIN PRESCRIBED TIME
4O VERIFY THE IDENTITY OF ITS CLIENTS IN PRESCRIBED MANNER
4O MAINTAIN RECORD OF DOCUMENTS EVIDENCING IDENTITY OF ITS CLIENTS AND BENEFICIAL OWNERS AS WELL AS ACCOUNT FILES AND BUSINESS CORRESPONDENCE RELATING TO ITS CLIENTS
(b) Confidentiality:- %VERY INFORMATION MAINTAINED FURNISHED OR VERIFIED AS ABOVE SHALL BE KEPT CONFIDENTIAL
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OBLIGATION OF BANKING COMPANIES, FINANCIAL INSTITUTIONS & INTERMEDIARIES
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(c) Preserve Record:- 4HE RECORDS MENTIONED ABOVE SHALL BE MAINTAINED FOR 5 years FROM THE DATE OF TRANSACTION 4HE #ENTRAL 'OVERNMENT HAS A POWER TO EXEMPT ANY REPORTING ENTITY FROM THE PROVISIONS OF THIS SECTION (d) To furnish information whenever called upon by Director to [Section 13]: $IRECTOR CAN CALL THE RECORDS FROM THE BANK FINANCIAL INSTITUTIONS AND INTERMEDIARY )F THE $IRECTOR FINDS THAT THE BANK FINANCIAL INSTITUTIONS AND INTERMEDIARY HAS NOT COMPLIED WITH THE PROVISIONS OF 3ECTION HE CAN IMPOSE FINE OF ` 10,000 TO ` 1,00,000 )F THE BANK FINANCIAL INSTITUTIONS AND INTERMEDIARY SUPPLIES THE INFORMATION NO CIVIL PROCEEDINGS CAN BE TAKEN AGAINST THEM FOR FURNISHING INFORMATION TO !UTHORITY [Section 14]
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Procedure and manner of furnishing information by reporting entities [Section 15]: 4HE #ENTRAL 'OVERNMENT IN CONSULTATION WITH THE 2") MAY PRESCRIBE THE PROCEDURE AND THE MANNER OF MAINTAINING AND FURNISHING INFORMATION BY A REPORTING ENTITY FOR THE PURPOSE OF IMPLEMENTING THE PROVISIONS OF THE !CT Q15. What is meant by ‘money laundering’? Mention the provisions of the Prevention of Money Laundering Act, 2002 regarding the obligations of banking companies, financial institutions and intermediaries. [June 2016 (5 Marks)] Ans.: Please refer to answers of Question Nos. 1 & 14. Q16. What information is required to be preserved by Banks under Prevention of Money Laundering Act, 2002? Discuss also the process of maintenance and preservation of records by Banks. [Dec 2017 (5 Marks)] Ans.: Please refer to answers of Question No. 14. Summons, Searches & Seizures Q17. Is the offence committed under Prevention of Money Laundering Act, 2002 is cognizable and bailable? State the law and procedure relating to it. [Dec 2017 (5 Marks)] Ans.: Offences to be cognizable and non-bailable [Section 45]: a Cognizable:- %VERY OFFENCE PUNISHABLE UNDER THE !CT TO BE COGNIZABLE b No Bail ! PERSON ACCUSED OF AN OFFENCE SHALL NOT BE RELEASED ON BAIL OR ON BOND
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18.9
c Public Prosecutor 4HE 0UBLIC 0ROSECUTOR HAS BEEN GIVEN AN OPPORTUNITY TO OPPOSE THE APPLICATION FOR SUCH RELEASE )F THE 0UBLIC 0ROSECUTOR OPPOSES THE APPLICATION THEN BAIL CAN BE GRANTED ONLY WHEN #OURT IS SATISFIED THAT THERE ARE REASONABLE GROUNDS FOR BELIEVING THAT HE IS NOT GUILTY OF OFFENCE AND THAT HE IS NOT LIKELY TO COMMIT ANY OFFENCE WHILE IN BAIL d Exception ! PERSON WHO IS UNDER THE AGE OF 16 years OR IS A woman OR IS sick or infirm 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 3PECIAL #OURT SO DIRECTS e Compliant is made in writing 4HE 3PECIAL #OURT SHALL NOT TAKE COGNIZANCE OF ANY OFFENCE PUNISHABLE U S EXCEPT UPON A COMPLAINT IN WRITING MADE BY THE $IRECTOR OR ANY OFFICER OF THE #ENTRAL OR 3TATE 'OVERNMENT AUTHORIZED BY A GENERAL OR SPECIAL ORDER f No authority to police officer .O POLICE OFFICER SHALL INVESTIGATE INTO AN OFFENCE UNDER THE !CT UNLESS SPECIFICALLY AUTHORIZED BY THE #ENTRAL 'OVERNMENT BY A GENERAL OR SPECIAL ORDER
Q18. What is the objective of ‘know your customer’ (KYC) guidelines? When do the KYC guidelines apply? [Dec 2009 (5 Marks)] Ans.: a 4HE OBJECTIVE OF +9# GUIDELINES IS TO PREVENT BANKS FROM BEING USED INTENTIONALLY OR UNINTENTIONALLY BY CRIMINAL ELEMENTS FOR MONEY LAUNDERING ACTIVITIES +9# PROCEDURES ALSO ENABLE BANKS TO KNOW UNDERSTAND THEIR CUSTOMERS AND THEIR FINANCIAL DEALINGS BETTER WHICH IN TURN HELP THEM MANAGE THEIR RISKS PRUDENTLY b %VERY BANK WHETHER CO OPERATIVE PRIVATE OR NATIONALIZED BANK ."&# S HOUSING FINANCIAL INSTITUTION CHIT FUND COMPANY ETC NEED TO COMPLY WITH +9# )NTERMEDIARIES ALSO NEED TO MAINTAIN +9# LIKE STOCKBROKERS SUB BROKER SHARE TRANSFER AGENT BANKER TO AN ISSUE TRUSTEE TO TRUST DEED MERCHANT BANKER UNDERWRITER PORTFOLIO MANAGER INVESTMENT ADVISOR ETC c "ANKS SHOULD FRAME THEIR +9# POLICIES INCORPORATING THE FOLLOWING FOUR KEY ELEMENTS #USTOMER
!CCEPTANCE 0OLICY
#USTOMER
)DENTIFICATION 0ROCEDURES
-ONITORING 2ISK
OF 4RANSACTIONS AND
MANAGEMENT
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KNOW YOUR CUSTOMER
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Q19. What are the essential elements of KYC guidelines? [Dec 2014 (3 Marks)] Ans.: Please refer for Answer in Q-18. Q20. State the obligation of banks on KYC policy as per guidelines issued by Reserve Bank of India. [June 2017 (5 Marks)] Ans.: )N THE OBJECTIVE OF +NOW 9OUR #USTOMER +9# .ORMS !NTI -ONEY ,AUNDERING !-, -EASURES #OMBATING OF &INANCING OF 4ERRORISM #&4 GUIDELINES IS TO PREVENT BANKS FROM BEING USED INTENTIONALLY OR UNINTENTIONALLY BY CRIMINAL ELEMENTS FOR MONEY LAUNDERING OR TERRORIST FINANCING ACTIVITIES +9# 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:
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"ANKS
SHOULD KEEP IN MIND THAT THE INFORMATION COLLECTED FROM THE CUSTOMER FOR THE PURPOSE OF OPENING OF ACCOUNT IS TO BE TREATED AS CONFIDENTIAL AND DETAILS THEREOF ARE NOT TO BE DIVULGED FOR CROSS SELLING OR ANY OTHER LIKE PURPOSES "ANKS 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 !NY OTHER INFORMATION FROM THE CUSTOMER SHOULD BE SOUGHT SEPARATELY WITH HIS HER CONSENT AND AFTER OPENING THE ACCOUNT
"ANKS SHOULD ENSURE THAT ANY REMITTANCE OF FUNDS BY WAY OF DEMAND
DRAFT MAIL TELEGRAPHIC TRANSFER OR ANY OTHER MODE AND ISSUE OF TRAVELLERS CHEQUES FOR VALUE OF ` AND ABOVE IS EFFECTED BY DEBIT TO THE CUSTOMER S ACCOUNT OR AGAINST CHEQUES AND NOT AGAINST CASH PAYMENT "ANKS SHOULD ENSURE THAT THE PROVISIONS OF &OREIGN #ONTRIBUTION 2EG-
ULATION !CT AS AMENDED FROM TIME TO TIME WHEREVER APPLICABLE ARE STRICTLY ADHERED TO "ANK
SHOULD MAINTAIN AND PRESERVE RECORDS AND INFORMATION
a 2ECORDS RELATING TO IDENTIFICATION OF CUSTOMER AND ADDRESS b .ATURE OF 4RANSACTION c !MOUNT OF TRANSACTION d $ATE OF 4RANSACTION e 0ARTIES TO TRANSACTION Q21. What do you mean by the KYC guidelines as given under the Prevention of Money-laundering Act, 2002 ? [Dec. 2019 (3 Marks each)] Ans Please refer Answer in Question 18.
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UNLAWFUL ACTIVITIES (PREVENTION) ACT, 1967 Q22. What are the provisions for freezing of assets under Section 51A of the Unlawful Activities (Prevention) Act, 1967? Briefly discuss. [June 2018 (5 Marks)] Ans.: #ENTRAL 'OVERNMENT HAS ISSUED AN /RDER DETAILING THE PROCEDURE FOR IMPLEMENTATION OF 3ECTION ! OF THE 5NLAWFUL !CTIVITIES 0REVENTION !CT RELATING TO THE PURPOSES OF PREVENTION OF AND FOR COPING WITH TERRORIST ACTIVITIES Certain powers of the Central Government [Section 51A of the Unlawful Activities (Prevention) Act, 1967]: &OR THE PREVENTION OF AND FOR COPING WITH TERRORIST ACTIVITIES THE #ENTRAL 'OVERNMENT SHALL HAVE POWER TO &REEZE
SEIZE OR ATTACH FUNDS AND OTHER FINANCIAL ASSETS OR ECONOMIC RESOURCES HELD BY ON BEHALF OF OR AT THE DIRECTION OF THE INDIVIDUALS OR ENTITIES LISTED IN THE 3CHEDULE TO THE /RDER OR ANY OTHER PERSON ENGAGED IN OR SUSPECTED TO BE ENGAGED IN TERRORISM
0ROHIBIT ANY INDIVIDUAL OR ENTITY FROM MAKING ANY FUNDS
0REVENT THE ENTRY INTO OR THE TRANSIT THROUGH )NDIA OF INDIVIDUALS LISTED
IN THE 3CHEDULE TO THE /RDER OR ANY OTHER PERSON ENGAGED IN OR SUSPECTED TO BE ENGAGED IN TERRORISM
TAXMANN®
FINANCIAL ASSETS OR ECONOMIC RESOURCES OR RELATED SERVICES AVAILABLE FOR THE BENEFIT OF THE INDIVIDUALS OR ENTITIES LISTED IN THE 3CHEDULE TO THE /RDER OR ANY OTHER PERSON ENGAGED IN OR SUSPECTED TO BE ENGAGED IN TERRORISM
Economic Business & Commercial Laws (EBCL) | CRACKER AUTHOR PUBLISHER DATE OF PUBLICATION EDITION ISBN NO NO. OF PAGES BINDING TYPE
: : : : : : :
N.S. Zad , Mayur Agarwal TAXMANN July 2022 7th Edition 9789356222748 450 PAPERBACK
Rs. : 495 | USD : 37
Description This book is prepared exclusively for the Executive Level of Company Secretary Examination requirement. It covers the questions (topic-wise) & detailed answers strictly as per the syllabus of ICSI. The Present Publication is the 7th Edition & updated till 31st May 2022 for CS-Executive | New Syllabus | Dec. 2022/June 2023 exams. This book is authored by CS N.S. Zad & Mayur Agarwal, with the following noteworthy features:
· Strictly as per the New Syllabus of ICSI · Coverage of this book includes Fully-Solved Questions of Past Exams
Solved Paper: December 2020 | New Syllabus
Solved Paper: June 2021 | New Syllabus Solved Paper: December 2021 | New Syllabus
Solved Paper: June 2022 | New Syllabus · [Arrangement of Questions] Topic-wise arrangement of past exam questions & answers
· [Most Amended & Updated] Covers the latest applicable provisions and amendments under the respective laws
· [Marks Distribution] Chapter-wise marks distribution for past exams
· [ICSI Study Material] Chapter-wise comparison for past exams
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