धन शोधन निवारण अधिनियम, 2002
India's anti-money laundering legislation — Enforcement Directorate (ED) powers, scheduled offences, provisional attachment, adjudication, ECIR, bail restrictions, Appellate Tribunal, and FATF compliance. Also covers the Benami Transactions Act and key provisions of the Black Money Act.
Section 3: Whosoever directly or indirectly attempts to indulge, knowingly assists, or is actually involved in any process or activity connected with the proceeds of crime and projects or claims it as untainted property — guilty of money laundering. Section 2(1)(u) — Proceeds of crime: Any property derived or obtained from criminal activity relating to a scheduled offence. Section 2(1)(y) — Scheduled offences: Offences listed in the Schedule — IPC/BNS offences (Part A), NDPS Act (Part B), and other Acts (Part C: Prevention of Corruption Act, SEBI Act, Customs Act, Companies Act, chit fund offences, wildlife offences, Copyright Act, IPR offences, etc.). Section 4 — Punishment: Rigorous imprisonment 3 to 7 years. If proceeds relate to NDPS scheduled offence: up to 10 years. Fine without upper limit. Vijay Madanlal Choudhary v. UOI (2022) — Supreme Court upheld PMLA's constitutional validity including twin conditions for bail, ED powers, and attachment provisions.
Section 48 — Authorities: Director of Enforcement, Additional/Joint/Deputy/Assistant Directors. ECIR (Enforcement Case Information Report): Equivalent of FIR — ED registers ECIR based on scheduled offence FIR/complaint. Section 50 — Summons & statements: ED may summon any person, examine on oath. Statements admissible as evidence (Section 50(4)). Section 17 — Search and seizure: Authorised officer may enter, search, seize records/property. Reasons to be recorded in writing. Section 16 — Survey: Enter premises during business hours, inspect books, take copies. Section 19 — Arrest: Director/designated officer may arrest if reason to believe person is guilty of money laundering. Must produce before Magistrate within 24 hours. Section 62: Offences under PMLA are cognizable and non-bailable. Section 45 — Bail: Twin conditions — (a) reasonable grounds to believe not guilty, AND (b) not likely to commit offence while on bail. Both conditions must be satisfied.
Section 5 — Provisional Attachment Order (PAO): Director/designated officer may provisionally attach property if reason to believe it constitutes proceeds of crime. Attachment valid for 180 days. Must file Original Complaint (OC) before Adjudicating Authority within 30 days. Section 8 — Adjudication: Adjudicating Authority (Joint Secretary level) decides whether property is involved in money laundering. If confirmed — attachment continues; property vests in Central Government. Section 8(5) — Rights of third parties: Bona fide claimant may apply to prove legitimate title. Section 9 — Vesting of property: Property confirmed as proceeds of crime vests in Central Government — can be managed, disposed. Section 10 — Appellate Tribunal: Appeal against Adjudicating Authority within 45 days. Further appeal to High Court (Section 42). Section 60 — Special Courts: Trial of PMLA offences by designated Special Court.
Section 12 — Reporting entities: Banks, financial institutions, intermediaries (stockbrokers, insurance companies), DNFBPs (real estate agents, lawyers for financial transactions, jewellers, accountants). Section 12(1) — Obligations: (a) Maintain records of transactions, (b) Furnish information to Financial Intelligence Unit (FIU-IND), (c) Verify identity of clients (KYC), (d) Maintain records for 5 years after transaction/cessation of relationship. CTR (Cash Transaction Report): Cash transactions ≥ ₹10 lakh (or equivalent in foreign currency) — monthly to FIU. STR (Suspicious Transaction Report): Transactions suspected of being proceeds of crime or related to terrorist financing — within 7 days to FIU. Section 13 — Penalty: Non-compliance by reporting entity — Director of FIU may impose monetary penalty.
Prohibition of Benami Property Transactions Act, 1988 (amended 2016): Benami transaction — property in the name of one person but consideration paid by another. Property liable to confiscation. Penalty: imprisonment up to 7 years + fine up to 25% of fair market value. Union of India v. Ganpati Dealcom (2022) — Supreme Court struck down retrospective application but provisions apply prospectively. Initiating Officer → Adjudicating Authority → Appellate Tribunal → High Court. Black Money (Undisclosed Foreign Income & Assets) Act, 2015: Tax on undisclosed foreign income/assets at 30% + 90% penalty (total 120%). Wilful evasion: imprisonment 3-10 years. Non-disclosure in return: ₹10 lakh penalty. Beneficial ownership disclosure mandatory. ED and Income Tax share jurisdiction.
This guide is for educational purposes. For advice specific to your situation, consult a qualified advocate.
ED investigations, provisional attachment challenges, PMLA bail applications, Appellate Tribunal representation, and FATF compliance advisory.