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Move to give more teeth to money laundering law

Hema Ramakrishnan

NEW DELHI, Dec. 12

THE Union Cabinet is set to consider official amendments to the legislation on prevention of money laundering (PMLB) at its next meeting, following the Law Ministry approving the modifications proposed by the Finance Ministry.

The Finance Ministry has proposed changes in the definition of the offence and fixing of a minimum threshold limit of Rs 30 lakh for recognition of a certain category of offences committed under the Indian Penal Code (IPC) and other legislations.

It has also proposed bringing chit funds, housing finance companies and co-operative banks under the ambit of the legislation and making it mandatory for financial institutions and intermediaries to maintain records of transactions with clients for a per iod of 10 years.

These changes are in line with the recommendations of the Select Committee of Rajya Sabha.

Significantly, the Ministry was earlier not inclined towards accepting the changes proposed by the Select Committee in the very definition of the offence of money laundering, stating that it could dilute the legislation and result in litigation.

The Finance Minister, Mr Yashwant Sinha, has now cleared the proposal to endorse the recommendations of the Select Committee, since the other option was to refer the Bill back to it.

Exercising the second option could have further delayed passage of the legislation, which was introduced in 1998.

With international pressure mounting on India to expedite passage of the legislation, further delay would have only compounded the problems. ``The idea is to obtain Cabinet approval at the earliest and move the amendments for approval by Parliament," so urces said.

The new definition of money laundering recommended by the Select Committee covers `whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity concerned with the pro ceeds of crime and projecting it as untainted property.'

The Finance Ministry has also proposed classification of offences into two. The minimum threshold limit of Rs 30 lakh will not apply to offences committed under Sec.121, 121 (A) of the Indian Penal Code and offences under the Narcotic Drugs and Psychotro pic Substances Act.

Offences committed under these Acts, even if involving a lower monetary limit, are set to attract stringent punishment.

The PMLB 1999 had also sought to empower the Government to prescribe the threshold limit for mandatory reporting of transactions by financial institutions and banks.

However, the Select Committee was of the view that this monetary limit may be circumvented by persons involved in money laundering by splitting amounts into smaller ones in different banking companies and financial institutions, to avoid detection.

To resolve this issue, it had recommended empowering the principal officer of a financial institution or a banking company to furnish information with respect to transactions below the prescribed limit.

Certain changes have been proposed in the provisions on attachment, adjudication and confiscation of properties involved in money laundering.

According to sources, only one clause relating to ``deemed sanction'', proposed by the Select Committee, has not been included in the Cabinet proposal.

Those engaging in money laundering are set to be liable for rigorous imprisonment that could range from three to seven years. It can stretch up to 10 years in the case of offences committed under some sections of the IPC and the Narcotics Act.