The PMLA was enacted in response to India’s global commitment (Vienna Convention)to combat the menace of money laundering. These include:

• • • United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances 1988
    • Basle Statement of Principles, 1989
    • Forty Recommendations of the Financial Action Task Force on Money Laundering, 1990
    • Political Declaration and Global Program of Action adopted by the United Nations General Assembly in 1990.
  • It is a criminal law enacted to prevent money laundering and to provide for confiscation of property derived from, or involved in, money-laundering and related matters.
  • It forms the core of the legal framework put in place by India to combat Money Laundering.
  • The provisions of this act are applicable to all financial institutions, banks(Including RBI), mutual funds, insurance companies, and their financial intermediaries.
• Recent Amendments:
  • Clarification about the Position of Proceeds of Crime: Proceeds of the Crime not only includes the property derived from scheduled offence but would also include any other property derived or obtained indulging into any criminal activity relate-able or similar to the scheduled offence.
  • Money Laundering Redefined:Money Laundering was not an independent crime rather depended on another crime, known as the predicate offence or scheduled offence.
    • The amendment seeks to treat money laundering as a stand-alone crime.
    • Under Section 3 of PMLA, the person shall be accused of money laundering if in any manner that person is directly or indirectly involved in the proceeds of the crime.
      • Concealment
      • Possession
      • Acquisition
      • Use or projecting as untainted property
      • Claiming as untainted property
    • Continuing Nature of Offence:This amendment further mentioned that the person will be considered to be involved in the offence of money laundering till the time that person is getting the fruits of activities related to money laundering as this offence is of a continuing nature.

Enforcement Directorate

• History:
  • The Directorate of Enforcement or the ED is a multi-disciplinary organization mandated with investigation of economic crimes and violations offoreign exchange laws.
  • The origin of this Directorate goes back to 1^stMay, 1956, when an ‘Enforcement Unit’ was formed in the Department of Economic Affairs for handling Exchange Control Laws violations under Foreign Exchange Regulation Act, 1947 (FERA ’47).
  • With the onset of the process of economic liberalization,FERA, 1973, which was a regulatory law, was repealed and in its place, Foreign Exchange Management Act, 1999 (FEMA) came into operation.
  • Recently, with the increase in the number of cases relating to economic offenders taking shelter in foreign countries, the Government has passed the Fugitive Economic Offenders Act, 2018 (FEOA)and ED is entrusted with its enforcement.
• Functions:
  • The PMLA, 2002:
    • ED has been given the responsibility to enforce the provisions of the PMLA by conducting investigation to trace the assets derived from proceeds of crime, to provisionally attach the property and to ensure prosecution of the offenders and confiscation of the property by the Special court.
  • The FEMA, 1999:
    • ED has been given the responsibility to conduct investigation into suspected contraventions of foreign exchange laws and regulations, to adjudicate and impose penalties on those adjudged to have contravened the law.
  • The FEOA, 2018:
    • It is a law whereby the Directorate is mandated to attach the properties of the fugitive economic offenders who have escaped from India warranting arrest and provide for the confiscation of their properties to the Central Government.
  • Sponsoring agency under COFEPOSA:
    • Under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA), Directorate is empowered to sponsor cases of preventive detention with regard to contraventions of FEMA.

Serious Fraud Investigation Office

The Serious Frauds Investigation Office (SFIO) has arrested the alleged mastermind of a widespread racket involving the setting up of shell companies with Chinese links and supply of dummy directors.

• SFIO was assigned by the government to investigate Jillian Consultants India Pvt Ltdand 32 other companies.

Shell Companies

• A shell company is afirm that does not conduct any operations in the economy, but it is formally registered, incorporated, or legally organized in the economy.
• These are sometimes used illegitimately, such as to disguise businessownership from law enforcement or the public.

SFIO

• SFIO is amulti-disciplinary organization under the Ministry of Corporate Affairs, consisting of experts in the field of accountancy, forensic auditing, law, information technology, investigation, company law, capital market and taxation for detecting and prosecuting or recommending for prosecution white-collar crimes/frauds.
• It has its head office inNew Delhi.
• TheComputer Forensic and Data Mining Laboratory (CFDML) was set up in 2013 to provide support and service to the officers of SFIO in their investigations.
• SFIO is headed bya Director as Head of Department in the rank of Joint Secretary to the Government of India.
• Serious Fraud investigation (SFIO) was initially set up by the Government of India by way of a resolution dated 2^ndJuly, 2003. At that time SFIO did not enjoy a formal legal status.
• Function and Roles:
• Section 211 of the Companies Act, 2013, has accorded statutory status to the Serious Fraud Investigation Office (SFIO).
• SFIO also has powers to arrest people for the violation of the Company law.
• An investigation into the affairs of a company can be initiated by the Central Government andentrusted to the Serious Fraud Investigation Office under the following circumstances:
• On receipt of a report of the Registrar or inspector under section 208(Report on Inspection made) of the Companies Act, 2013.
• On intimation of a special resolution passed by a company that its affairs are required to be investigated.
• In public interest.
• On request from any Department of the Central Government or a State Government.