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PREVENTION OF MONEY LAUNDERING (AMENDMENT) ACT, 2012

Ministry of Law and Justice

Act nº 2 of 2013


  • Act nº 2 of 2013

Preamble

THE PREVENTION OF MONEY-LAUNDERING (AMENDMENT) ACT, 2012

[Act No. 2 of 2013]

[3rd January, 2012]

PREAMBLE

An Act further to amend the Prevention of Money-laundering Act, 2002.

Be it enacted by Parliament in the Sixty-third Year of the Republic of India as follows:--

Section  1.  Short title and commencement

(1) This Act may be called the Prevention of Money-laundering (Amendment) Act, 2012.

(2) It shall come into force on such 1date as the Central Government may, by notification in the Official Gazette, appoint.

1. Effective from 15.02.2013 vide Notification S.O. 343(E) Dated 08.02.2013.


Section  2.  Amendment of section 2

In section 2 of the Prevention of Money-laundering Act, 2002(15 of 2003) (hereinafter referred to as the principal Act), in sub-section (1),--

(i) after clause (f), the following clause shall be inserted, namely:--

'(fa) "beneficial owner" means an individual who ultimately owns or controls a client of a reporting entity or the person on whose behalf a transaction is being conducted and includes a person who exercises ultimate effective control over a juridical person;';

(ii) after clause (h), the following clause shall be inserted, namely:--

'(ha) "client" means a person who is engaged in a financial transaction or activity with a reporting entity and includes a person on whose behalf the person who engaged in the transaction or activity, is acting;';

(iii) after clause (i), the following clauses shall be inserted, namely:--

'(ia) "corresponding law" means any law of any foreign country corresponding to any of the provisions of this Act or dealing with offences in that country' corresponding to any of the scheduled offences;

(ib) "dealer" has the same meaning as assigned to it in clause (b) of section 2 of the Central Sales Tax Act, 1956(74 of 1956);';

(iv) clause (ja) shall be omitted;

(v) for clause (l), the following clause shall be substituted, namely:--

'(l) "financial institution" means a financial institution as defined in clause (c) of section 45-I of the Reserve Bank of India Act, 1934(2 of 1934) and includes a chit fund company, a housing finance institution, an authorised person, a payment system operator, a non-banking financial company and the Department of Posts in the Government of India;';

(vi) for clause (n), the following clause shall be substituted, namely:--

'(n) "intermediary" means, --

(i) a stock-broker, sub-broker, share transfer agent, banker to an issue, trustee to a trust deed, registrar to an issue, merchant banker, underwriter, portfolio manager, investment adviser or any other intermediary associated with securities market and registered under section 12 of the Securities and Exchange Board of India Act, 1992(15 of 1992); or

(ii) an association recognised or registered under the Forward Contracts (Regulation) Act, 1952(74 of 1952) or any member of such association; or

(iii) intermediary registered by the Pension Fund Regulatory and Development Authority; or

(iv) a recognised stock exchange referred to in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956(42 of 1956);';

(vii) in clause (q), the words "and includes a person carrying on designated business or profession'' shall be omitted;

(viii) in clause (ra), in sub-clause (i), for the word "remits", the words "transfers in any manner" shall be substituted;

(ix) after clause(s), the following clauses shall be inserted, namely:--

'(sa) "person carrying on designated business or profession" means,-

(i) a person carrying on activities for playing games of chance for cash or kind, and includes such activities associated with casino;

(ii) a Registrar or Sub-Registrar appointed under section 6 of the Registration Act, 1908(16 of 1908), as may be notified by the Central Government;

(iii) real estate agent, as may be notified by the Central Government;

(iv) dealer in precious metals, precious stones and other high value goods, as may be notified by the Central Government;

(v) person engaged in safekeeping and administration of cash and liquid securities on behalf of other persons, as may be notified by the Central Government; or

(vi) person carrying on such other activities as the Central Government may, by notification, so designate, from time to time;

(sb) "precious metal" means gold, silver, platinum, palladium or rhodium or such other metal as may be notified by the Central Government;

(sc) "precious stone" means diamond, emerald, ruby, sapphire or any such other stone as may be notified by the Central Government;';

(x) after clause (v), the following shall be inserted, namely:--

'Explanation.---For the removal of doubts, it is hereby clarified that the term "property" includes property of any kind used in the commission of an offence under this Act or any of the scheduled offences;

(va) "real estate agent" means a real estate agent as defined in clause (88) of section 65 of the Finance Act, 1994(32 of 1994);';

(xi) after clause (w), the following clause shall be inserted, namely:--

'(wa) "reporting entity" means a banking company, financial institution, intermediary or a person carrying on a designated business or profession;'.

Section  3.  Amendment of section 3

In section 3 of the principal Act, for the words ''proceeds of crime and projecting", the words "proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming" shall be substituted.

Section  4.  Amendment of section 4

In section 4 of the principal Act, the words "'which may extend to five lakh rupees" shall be omitted.

Section  5.  Amendment of section 5

In section 5 of the principal Act, for sub-section (1), the following sub-section shall be substituted, namely:--

"(1) Where the Director or any other officer not below the rank of Deputy Director authorised by the Director for the purposes of this section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of material in his possession, that-

(a) any person is in possession of any proceeds of crime; and

(b) such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter,

he may, by order in writing, provisionally attach such property for a period not exceeding one hundred and eighty days from the date of the order, in such manner as may be prescribed:

Provided that no such order of attachment shall be made unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 173 of the Code of Criminal Procedure, 1973(2 of 1974), or a complaint has been filed by a person authorised to investigate the offence mentioned in that Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be, or a similar report or complaint has been made or filed under the corresponding law of any other country:

Provided further that, notwithstanding anything contained in clause (b), any property of any person may be attached under this section if the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section has reason to believe (the reasons for such belief to be recorded in writing), on the basis of material in his possession, that if such property involved in money-laundering is not attached immediately under this Chapter, the non-attachment of the property is likely to frustrate any proceeding under this Act.".

Section  6.  Amendment of section 8

In section 8 of the principal Act,--

(i) in sub-section (1), after the words and figure "section 5, or, seized", the words "or frozen" shall be inserted;

(ii) in sub-section (3),--

(a) in the opening portion, for the words and figures "record seized under section 17 or section 18 and record a finding to that effect, such attachment or retention of the seized property", the words and figures "record seized or frozen under section 17 or section 18 and record a finding to that effect, whereupon such attachment or retention or freezing of the seized or frozen property" shall be substituted;

(b) in clause (a), for the words "scheduled offence before a court; and", the words "offence under this Act before a court or under the corresponding law of any other country, before the competent court of criminal jurisdiction outside India, as the case may be; and" shall be substituted;

(c) for clause (b), the following clause shall be substituted, namely:---

"(b) become final after an order of confiscation is passed under sub-section (5) or sub-section (7) of section 8 or section 58B or sub-section (2A) of section 60 by the Adjudicating Authority";

(iii) in sub-section (4), for the words "possession of the attached property", the following shall be substituted, namely:--

"possession of the property attached under section 5 or frozen under sub-section (1A) of section 17, in such manner as may be prescribed:

Provided that if it is not practicable to take possession of a property frozen under sub-section (1A) of section 17, the order of confiscation shall have the same effect as if the property had been taken possession of";

(iv) for sub-sections (5) and (6), the following sub-sections shall be substituted, namely:--

"(5) Where on conclusion of a trial of an offence under this Act, the Special Court finds that the offence of money-laundering has been committed, it shall order that such property involved in the money-laundering or which has been used for commission of the offence of money-laundering shall stand confiscated to the Central Government.

(6) Where on conclusion of a trial under this Act, the Special Court finds that the offence of money-laundering has not taken place or the property is not involved in money-laundering, it shall order release of such property to the person entitled to receive it.

(7) Where the trial under this Act cannot be conducted by reason of the death of the accused or the accused being declared a proclaimed offender or for any other reason or having commenced but could not be concluded, the Special Court shall, on an application moved by the Director or a person claiming to be entitled to possession of a property in respect of which an order has been passed under sub-section (3) of section 8, pass appropriate orders regarding confiscation or release of the property, as the case may be, involved in the offence of money-laundering after having regard to the material before it.".

Section  7.  Amendment of section 9

In section 9 of the principal Act,--

(i) in the opening portion, for the words, brackets and figures "sub-section (6) of section 8", the words, brackets, figures and letter "sub-section (5) or sub-section (7) of section 8 or section 58B or sub-section (2A) of section 60" shall be substituted;

(ii) in the first proviso,--

(a) for the words "Adjudicating Authority'', the words "Special Court or the Adjudicating Authority, as the case may be," shall be substituted;

(b) after the words "or seized", the words "or frozen" shall be inserted.

Section  8.  Amendment of section 10

In section 10 of the principal Act, in sub-section (2), for the words, brackets and figures "sub-section (6) of section 8", the words, brackets, figures and letters "sub-section (5) or sub-section (6) or sub-section (7) of section 8 or section 58B or sub-section (2A) of section 60" shall be substituted.

Section  9.  Substitution of new section for section 12

For section 12 of the principal Act, the following section shall be substituted, namely:--

"12. Reporting entity to maintain records.--

(1) Every reporting entity shall-

(a) maintain a record of all transactions, including information relating to transactions covered under clause (b), in such manner as to enable it to reconstruct individual transactions;

(b) furnish to the Director within such time as may be prescribed, information relating to such transactions, whether attempted or executed, the nature and value of which may be prescribed;

(c) verify the identity of its clients in such manner and subject to such conditions, as may be prescribed;

(d) identify the beneficial owner, if any, of such of its clients, as may be prescribed;

(e) maintain record of documents evidencing identity of its clients and beneficial owners as well as account files and business correspondence relating to its clients.

(2) Every information maintained, furnished or verified, save as otherwise provided under any law for the time being in force, shall be kept confidential.

(3) The records referred to in clause (a) of sub-section (1) shall be maintained for a period of five years from the date of transaction between a client and the reporting entity.

(4) The records referred to in clause (e) of sub-section (1) shall be maintained for a period of five years after the business relationship between a client and the reporting entity has ended or the account has been closed, whichever is later.

(5) The Central Government may, by notification, exempt any reporting entity or class of reporting entities from any obligation under this Chapter."

Section  10.  Insertion of new section 12A

After section 12 of the principal Act, the following section shall be inserted, namely:

'12A. Access to information--

(1) The Director may call for from any reporting entity any of the records referred to in sub-section (1) of section 12 and any additional information as he considers necessary for the purposes of this Act.

(2) Every reporting entity shall furnish to the Director such information as may be required by him under sub-section (1) within such time and in such manner as he may specify.

(3) Save as otherwise provided under any law for the time being in force, every information sought by the Director under sub-section (1), shall be kept confidential.".

Section  11.  Amendment of section 13

In section 13 of the principal Act,--

(i) in sub-section (1), for the words, brackets and figures "call for records referred to in sub-section (1) of section 12 and may make such inquiry or cause such inquiry to be made, as he thinks fit", the words "make such inquiry or cause such inquiry to be made, as he thinks fit to be necessary, with regard to the obligations of the reporting entity, under this Chapter" shall be substituted;

(ii) after sub-section (1), the following sub-sections shall be inserted, namely:--

"(1A) If at any stage of inquiry or any other proceedings before him, the Director having regard to the nature and complexity of the case, is of the opinion that it is necessary to do so, he may direct the concerned reporting entity to get its records, as may be specified, audited by an accountant from amongst a panel of accountants, maintained by the Central Government for this purpose.

(1B) The expenses of, and incidental to, any audit under sub-section (1A) shall be borne by the Central Government.";

(iii) for sub-section (2), the following sub-section shall be substituted, namely:--

"(2) If the Director, in the course of any inquiry, finds that a reporting entity or its designated director on the Board or any of its employees has failed to comply with the obligations under this Chapter, then, without prejudice to any other action that may be taken under any other provisions of this Act, he may--

(a) issue a warning in writing; or

(b) direct such reporting entity or its designated director on the Board or any of its employees, to comply with specific instructions; or

(c) direct such reporting entity or its designated director on the Board or any of its employees, to send reports at such interval as may be prescribed on the measures it is taking; or

(d) by an order, impose a monetary penalty on such reporting entity or its designated director on the Board or any of its employees, which shall not be less than ten thousand rupees but may extend to one lakh rupees for each failure.";

(iv) after sub-section (3), the following Explanation shall be inserted, namely:--

"'Explanation.--For the purpose of this section, "accountant" shall mean a chartered accountant within the meaning of the Chartered Accountants Act, 1949(38 of 1949).".

Section  12.  Substitution of new section for section 14

For section 14 of the principal Act, the following section shall be substituted, namely:--

"14. 'No civil or criminal proceedings against reporting entity, its directors and employees in certain cases.--

Save as otherwise provided in section 13, the reporting entity, its directors and employees shall not be liable to any civil or criminal proceedings against them for furnishing information under clause (b) of sub-section (1) of section 12.".

Section  13.  Substitution of new section for section 15

For section 15 of the principal Act, the following section shall be substituted, namely:--

"15. Procedure and manner of furnishing information by reporting entities.--

The Central Government may, in consultation with the Reserve Bank of India, prescribe the procedure and the manner of maintaining and furnishing information by a reporting entity under sub-section (1) of section 12 for the purpose of implementing the provisions of this Act.".

Section  14.  Amendment of section 17

In section 17 of the principal Act,--

(i) in sub-section (1),--

(a) in clause (iii), after the word "money-laundering,", the word "or" shall be inserted;

(b) after clause (iii), the following clause shall be inserted, namely:--

"(iv) is in possession of any property related to crime,";

(c) in clause (d), after the words "such record or", the words "property, if required or" shall be inserted;

(d) for the proviso, the following proviso shall be substituted, namely:- -

"Provided that no search shall be conducted unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 157 of the Code of Criminal Procedure, 1973(2 of 1974), or a complaint has been filed by a person, authorised to investigate the offence mentioned in the Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be, or in cases where such report is not required to be forwarded, a similar report of information received or otherwise has been submitted by an officer authorised to investigate a scheduled offence to an officer not below the rank of Additional Secretary to the Government of India or equivalent being head of the office or Ministry or Department or Unit, as the case may be, or any other officer who may be authorised by the Central Government, by notification, for this purpose.";

(ii) after sub-section (1), the following sub-section shall be inserted, namely:- --

"(1A) Where it is not practicable to seize such record or property, the officer authorised under sub-section (7), may make an order to freeze such property whereupon the property shall not be transferred or otherwise dealt with, except with the prior permission of the officer making such order, and a copy of such order shall be served on the person concerned:

Provided that if, at any time before its confiscation under sub-section (5) or sub-section (7) of section 8 or section 58B or sub-section (2A) of section 60, it becomes practical to seize a frozen property, the officer authorised under sub-section (1) may seize such property.";

(iii) in sub-section (2), after the words, ''immediately after search and seizure" the words "or upon issuance of a freezing order" shall be inserted;

(iv) for sub-section (4), the following sub-section shall be substituted, namely:--

"(4) The authority seizing any record or property under sub-section (1) or freezing any record or property under sub-section (1A) shall, within a period of thirty days from such seizure or freezing, as the case may be, file an application, requesting for retention of such record or property seized under sub-section (1) or for continuation of the order of freezing served under sub-section (1A), before the Adjudicating Authority'.".