MODULE 1

Money laundering:

 Money Laundering is the process by which illegal funds and assets are converted into
legitimate funds and assets.
 The process generally involves 3 steps: placement (illegal funds or assets are first
brought into the financial system)  layering (use of multiple accounts, banks,
intermediaries, corporations, trusts, countries to disguise the origin) Separates the
proceeds from their criminal origin by moving them through a series of financial
transactions  Integration (laundered funds are made available as apparently
legitimate funds) Creating a legitimate explanation for their sources of funds,
allowing them to be retained, invested or used, to acquire goods or assets

The Prevention of Money Laundering Act, 2002 (“PMLA”), and the rules issued thereunder
(“PML Rules”), provide the key legislative framework for the prosecution of money
laundering. The primary legal authority responsible for investigating and prosecuting money
laundering offences under the PMLA at the national level is the Directorate of Enforcement
(“ED”), under the aegis of the Department of Revenue, Ministry of Finance.

In addition to the above, regulators such as the Reserve Bank of India (“RBI”), the Securities
and Exchange Board of India (“SEBI”) and the Insurance Regulatory and Development
Authority of India (“IRDAI”) are empowered to deal with issues relating to money
laundering activities and lay down guidelines on anti-money laundering (“AML”) standards.
These guidelines, read with the PMLA and PML Rules, form the core of the legal framework
for AML law and enforcement in India.

Financial Action Task Force on Money Laundering (FATF) defines money laundering as
“the processing of criminal proceeds to disguise their illegal origin in order to legitimize the
ill-gotten gains of crime.”+

Methods of Money Laundering:

1. Structuring (Smurfing): most commonly used. It involves many individuals who

deposit cash into bank accounts or buy bank drafts in amounts in small amounts to
avoid the reporting threshold. These smaller amounts are then deposited into bank
accounts or used for purchases below the reporting threshold to avoid suspicion.
2. Bank Complicity: When bank employees or officials knowingly help criminals to
launder money. This may include ignoring suspicious activity, faking documents,
or not reporting transactions as required. Often happens in cases involving
politically exposed persons (PEPs) or bribes.
3. Money Services and Currency Exchanges: Criminals use money transfer services
like Western Union or local money changers to send/convert money. This helps them
move funds across borders or change them into a different currency without clear
documentation.
4. Asset Purchases with bulk cash: Criminals buy high-value items using illegal cash
(e.g., cars, gold, jewellery, art). These assets are later resold, and the proceeds appear
legitimate. Example: Buying a diamond ring with ₹25 lakh in cash and selling it to
claim it as a business transaction.
5. Electronic Funds Transfer (EFT): Moving money through online banking, crypto
platforms, or wire transfers. Often routed through multiple countries, making it
harder to trace. Can involve "layering" — frequent transfers between shell accounts
to obscure origin.
6. Postal Money Orders: Using money orders from the post office to send small sums
of illegal cash. Criminals may use fake identities or multiple people (smurfs) to send
these in bulk.
7. Credit Cards: Using prepaid or reloadable credit cards to spend or move illicit
money. These cards can be used anonymously, especially when bought with cash.
After spending abroad or online, they can be reloaded through layered payments.
8. Casinos: Criminals buy casino chips with cash, gamble for a short time, and then
cash out the chips as "winnings". These winnings can now be shown as legitimate
income, even if there was no real gambling.
9. Refining (Breaking Bulk Cash): Taking large notes (e.g., ₹2000 notes) and
exchanging them for smaller denominations or different currencies. Helps avoid
detection and make the money easier to use for transactions.
10. Legitimate Business/ Co-mingling of Funds: Using a real business (like a restaurant
or shop) as a front. Criminals mix illegal money with genuine business revenue and
show it as legit earnings. Popular in cash-heavy businesses (bars, salons, etc.).
11. Value Tampering: Involves under- or over-invoicing goods and services in
international trade. For example, exporting goods at inflated prices to justify receiving
large foreign payments.
 12. Loan Back: A criminal gives money to a third party, who then "loans it back" to
them. This fake loan appears legitimate, and the criminal now has clean money with
a paper trail showing it as debt.

MODULE 2 – PMLA

Objectives:

 Prevent and control money laundering

 Confiscate and seize property earned from criminal activities
 Deal with cross-border money laundering
 Provide for the investigation and prosecution of offenders

Under the PMLA, Section 4 criminalises the offence of money laundering to any property
derived or obtained by any person as a result of an offence (“proceeds of crime”). The
predicate offences are all listed in the Schedule to the PMLA.

1. What is a Predicate or Scheduled Offence?

Before someone can be accused of money laundering, they must be linked to a predicate
offence—which means a serious crime like drug trafficking, corruption, illegal wildlife trade,
etc.
This offence must be registered with the police or the right authority. The money earned from
this crime is called "proceeds of crime."

2. When is a Person Guilty of Money Laundering?

A person can be found guilty of money laundering if they:

 Try to use money made from a crime,

 Help someone hide it,

 Are involved in handling or using it in any way, and they try to make it look like
clean or legal money.

This includes:

 Hiding the money,

 Owning or using it,

 Claiming it's legal.

Even if the person is not directly using the money anymore, the offence continues as long as
they benefit from it.

What Counts as Proceeds of Crime?

It’s not just the money made directly from the crime. It also includes:

 Anything bought with that money,

 Anything earned from investing that money,

 Or money connected in any way to the original crime.

Types of Predicate Offences (Listed in the PMLA Schedule)

✅ Part A

Includes many serious crimes under laws like:

 Indian Penal Code (now replaced by Bharatiya Nyaya Sanhita),

 NDPS Act (drug offences),

 Prevention of Corruption Act,

 SEBI Act (stock market frauds),

 IT Act (cybercrime),

 Wildlife Protection Act, Environment laws, Copyright and Trademark laws,

Child Labour laws, etc.

✅ Part B

Includes one specific offence:

 Smuggling under the Customs Act, but only if the amount involved is ₹1 crore or
more.

✅ Part C

Covers international or cross-border crimes.

For example:

 Hiding foreign income/assets (like in the Black Money Act).

Is there extraterritorial jurisdiction for the crime of money laundering? Is money

laundering of the proceeds of foreign crimes punishable?
Yes, the PMLA confers extraterritorial jurisdiction to authorities constituted thereunder
where the offence has cross-border implications:

a. where any proceeds of crime arising out of a Scheduled Offence committed in India
or part thereof have been transferred or attempted to be transferred to a place outside
India; or

b. where any conduct by a person at a place outside India, which constitutes an offence
at that place and which would have qualified as a Scheduled Offence, had it been
committed in India, and if such person transfers or attempts to transfer in any manner
the proceeds of crime or part thereof.

KEY AMENDMENTS TO THE PMLA & THEIR IMPACT

🔹 1. 2005 Amendment

 Brought PMLA into force (effective from 1 July 2005)

 Initial focus: Banking crimes and drug trafficking.

 Added Part B offences for serious crimes (minimum ₹30 lakh threshold, later
removed).

 Introduced Adjudicating Authority and Appellate Tribunal.

 Established Reporting Entity obligations (banks, intermediaries).

🔹 2. 2009 Amendment

 Broadened the definition of "proceeds of crime" to include:

Property derived directly or indirectly from criminal activity.

 Removed ₹30 lakh threshold for Part B scheduled offences.

 Introduced corresponding value in India if property is held abroad.

 Allowed provisional attachment of equivalent assets.

 Expanded the scope to attempts and indirect involvement in laundering.

🔹 3. 2012 Amendment
  Added corporate and legal entities as possible offenders.

 Redefined "money laundering" to include projecting or claiming property as

untainted, even without direct concealment.

 Introduced “Reporting Entities”: Includes banking companies, financial institutions,

intermediaries, real estate agents, jewelers, etc.

 Empowered authorities to search people, not just premises.

 Mandated record retention for 5 years by reporting entities.

 Aligned PMLA with FATF (Financial Action Task Force) global standards.

 provide for the process of transfer of the cases of Scheduled offence pending in a
court which had taken cognizance of the offence to the Special Court for trial of
offence of money-laundering and also provide that the Special Court shall, on receipt
of such case proceed to deal with it from the stage at which it is committed.

🔹 4. 2015 Black Money Act Linkage

 Scheduled offence under Part C: Wilful attempt to evade tax on foreign assets under
the Black Money (Undisclosed Foreign Income and Assets) Act, 2015.

 Expanded PMLA’s international jurisdiction.

🔹 5. 2018 Fugitive Economic Offenders Act

 Linked with PMLA — allowed confiscation of assets of offenders who flee the
country.

 Targeted economic fugitives like Nirav Modi, Vijay Mallya.

🔹 6. 2019 Amendment

 Pivotal change: Made money laundering a standalone offence, not merely dependent
on conviction in a predicate offence.

 Expanded “proceeds of crime” to include property derived from any criminal

activity related to the scheduled offence.
  Clarified that money laundering is a continuing offence.

 Allowed ED to retain seized property for 365 days (earlier 180 days).

 Allowed ED to use statements made during investigation as evidence.

 Allowed confession before ED to be admissible (was controversial).

 Changed burden of proof: Accused must prove innocence once prosecution shows
possession of proceeds of crime.

 Exempted ED from the Code of Criminal Procedure (CrPC) in key areas like arrest
and bail (e.g., twin conditions under Sec 45).

🔹 7. 2023 Supreme Court Ruling & Legislative Response

 Supreme Court in Vijay Madanlal Choudhary v. Union of India (2022) upheld

many provisions (twin conditions, reverse burden of proof).

 The Court's ruling led to:

o Strengthening ED’s powers.

o Further affirming money laundering as independent and continuing.

o Upheld non-requirement of predicate offence conviction for PMLA to

apply.

AUTHORITIES EMPOWERED TO ENFORCE AML GUIDELINES

1. ED - The ED is empowered to initiate proceedings for attachment of property and

launch proceedings in the designated Special Court for the offence of money
laundering.
2. Financial Intelligence Unit - the central national agency responsible for receiving,
processing, analysing, and disseminating information relating to suspect financial
transactions to enforcement agencies and foreign FIUs.
 The FIU is an independent body accountable to the Economic Intelligence
Council, headed by the Union Finance Minister of India. The FIU’s primary
functions are to receive cash/suspicious transaction reports (“STRs”), analyse
them and, as appropriate, disseminate valuable financial information to
 intelligence/enforcement agencies and regulatory authorities. Other functions
include, inter alia:
A. Collection of Information: Act as the central reception point for receiving
cash transaction reports, NPO transaction reports, cross-border wire transfer
reports, reports on the purchase or sale of immovable property and STRs from
various Reporting Entities.
B. Analysis of Information: Analyse information received to uncover
transaction patterns suggesting potential money laundering and related crimes.
C. Sharing of Information: Share information with national intelligence/law
enforcement agencies, national regulatory authorities and foreign FIUs.
D. Act as Central Repository: Establish and maintain a national database of
reports received from Reporting Entities.
E. Coordination: Coordinate and strengthen the collection and sharing of
financial intelligence through an effective national, regional, and global
network to combat money laundering and related crimes.
F. Research and Analysis: Monitor and identify strategic key areas on money
laundering trends, typologies and development.
3. SEBI - The SEBI has issued detailed know your customer (“KYC”) norms and
requirements for financial intermediaries and investors in the securities market.
4. RBI - The RBI has prescribed KYC and AML guidelines for banks and other
financial institutions regulated by it.
5. IRDAI - IRDAI has prescribed certain AML guidelines on combating the financing
of terrorism (“CFT”), applicable to certain categories of insurers. It has also recently
released Draft Master Guidelines on AML/CFT, and final master guidelines
consolidating and updating the guidelines on AML/CFT, covering provisions of the
PMLA and PML Rules, and other applicable norms.
6. Economic Offences Wing, Central Bureau of Investigation (CBI) - The CBI is a
specialised police establishment, established for the investigation of specific types of
crimes such as corruption by public servants, serious economic offences, fraud and
crime with inter-state/all-India ramifications.
7. Income Tax Department - This department is empowered to take steps to prevent
the offence of money laundering by imposing tax on undisclosed foreign income and
assets of Indian residents.
 8. Registrar of Companies - As per the new requirement under the CA, 2013, every
Indian company, both private and public, is mandated to file with the RoC a record of
the company’s significant beneficial owners (in eForm MGT-6).

What is the statute of limitations for money laundering crimes?

The PMLA does not specifically provide for a limitation period with respect to the offences
therein. In absence thereof, the provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023
(“BNSS”) may apply. Section 514 does not prescribe any limitation period for offences
punishable with imprisonment of more than three years.

Further, the amendments brought to the PMLA through the Finance Act, 2019, offer
clarification to Section 3 of the PMLA, setting out that it would be incorrect to interpret
money laundering as a one-time, instantaneous offence that ceases with the concealment,
possession, acquisition, use or projection of the proceeds of crime as untainted property or
through claiming it as untainted. Thus, a person shall be liable to be prosecuted for the
offence of money laundering for as long as the said person is enjoying the “proceeds of
crime” – thus, making the offence of money laundering a continuous offence. Accordingly,
for offences punishable under the PMLA, there does not appear to be a specific limitation
period.

Are there related forfeiture/confiscation authorities? What property is subject to

confiscation? Under what circumstances can there be confiscation against funds or
property if there has been no criminal conviction, i.e., non-criminal confiscation or civil
forfeiture?

The ED is empowered to initiate proceedings for attachment of property and to launch

proceedings in a criminal court or a Special Court set up for the trial of the offence of money
laundering.

Properties that are derived or obtained, directly or indirectly, by any person as a result of
criminal activities relating to a Scheduled Offence are subject to attachment/confiscation
under the PMLA. Under the PMLA, the term “property”: means any property or assets of
any description, whether corporeal or incorporeal, movable or immovable, tangible or
intangible; includes deeds and instruments evidencing title to, or interest in, such property or
assets, wherever located; and covers property of any kind used in the commission of an
offence under the PMLA or any of the Scheduled Offences. Thus, not all properties of the
accused person can be attached, and only those properties that appear to be the proceeds of
crime, based on the material in possession of the authorised officer, can be attached.

The PMLA does not make a separate provision for non-conviction-based forfeitures. On the
contrary, Sections 5 and 8 of the PMLA deal with pre-trial attachment/confiscation of
properties. In this regard, the Supreme Court (in line with the second proviso to Section 5
sub-section 1 of PMLA) held in its decision in Vijay Madanlal Choudhary and Others v.
Union of India and Ors. (2022 SCC Online SC 929) (pending review), that for initiating an
action for the provisional attachment of properties, registration of the predicate offence is not
mandatory. Accordingly, the confiscation is only crystallised upon order of conviction from
the designated Special Court and that such property is proceeds of crime. Nevertheless, it
may also be possible to initiate such forfeiture proceedings against an accused where the
accused assisted/indulged in the money laundering offence alone, without having participated
in the Scheduled Offence.

IMPORTANT DEFINITIONS

 Reporting entity – 2(wa) - means a banking company, financial institution,

intermediary or a person carrying on a designated business or profession
 Pursuant to the PMLA and PML Rules, Reporting Entities are required to
undertake certain AML measures that include, inter alia, customer
identification, enhanced client due diligence (“CDD”), customer acceptance,
maintenance of records, and tracking and reporting of certain types of
transactions. Reporting Entities must ensure implementation of PMLA
provisions, including operational instructions issued from time to time.
 Reporting Entities are required to, inter alia, register with the FIU, appoint a
principal officer and designated director, formulate a risk management
practice, perform CDD, maintain records, train employees, and ensure the
implementation of internal mechanisms to detect and report suspicious
transactions to the FIU.
 The RBI, SEBI and IRDAI have detailed frameworks regulating the “persons”
and “Reporting Entities”, as defined under the PMLA.
 Through Notification No. S.O. 2036(E),[ii] dated May 3, 2023, practising
professionals in the field of Chartered Accountancy, Company Secretaries and
Cost and Works Accountants are now brought under the ambit of the PMLA
 as a Reporting Entity if they execute some specific listed financial transactions
on behalf of their clients in the course of their profession.
 Principal Officer - A Principal Officer is a senior official (usually at a managerial
level) appointed by a reporting entity to:
 Coordinate and oversee the internal AML systems,
 Ensure compliance with reporting obligations under PMLA, and
 Act as a point of contact with the Financial Intelligence Unit-India (FIU-IND).
 The requirement to appoint a Principal Officer comes from:
 Section 12 of the PMLA
 PMLA Maintenance of Records Rules, 2005
 RBI/SEBI/IRDA/other regulators’ AML Guidelines

Duty Description

🔎 Monitor Keep a close watch on suspicious or large transactions, cash deposits,

transactions wire transfers, etc.

File various reports like: STR – Suspicious Transaction Reports, CTR

📄 Report to FIU-
– Cash Transaction Reports (over ₹10 lakh), NTR – Non-profit
IND
Transaction Reports, CBWTR – Cross Border Wire Transfer Reports

Ensure the entity retains transaction records and customer

📁 Maintain records
identification documents for at least 5 years.

📚 Implement Design and monitor internal AML procedures, and ensure staff are
internal controls trained to detect and report suspicious activity.

Customer Due Work with the Designated Director and compliance teams to ensure
Diligence (CDD) KYC (Know Your Customer) norms are followed.

🔄 Coordinate with Act as the liaison between the entity and the FIU-IND, ED, or other
regulators enforcement bodies.

🧑‍🏫 Training & Promote awareness and conduct training of employees on AML
Awareness obligations and red flags.
Proceeds of Crime – 2(1)(u) - means any property that is:

1. Derived or obtained, directly or indirectly,

2. By any person
3. As a result of a criminal activity related to a scheduled offence under the PMLA.
It also includes:
 The value of such property, even if the actual property is held abroad.
 Any property derived from such property — e.g., if you buy a house using stolen
money, the house is also proceeds of crime.
 Equivalent value of property, especially when the original asset has been transferred
or held overseas.

In Vijay Madanlal Choudhary & Ors. v. Union of India & Ors. (2022 SCC Online SC 929),
there was a challenge to the constitutionality of some provisions of the PMLA. The Supreme
Court upheld the validity of certain challenged provisions that relate to the power of arrest,
attachment, and search and seizure conferred on the ED under the PMLA:

The Supreme Court held that “investigation” must be regarded as interchangeable with the
function of “inquiry” undertaken by the authorities for submitting such evidence before the
adjudicating authority. Therefore, any act done in pursuance of an investigation conducted
by the officials under Section 2(na) of the PMLA would not attract the right guaranteed under
Articles 20(3) and 21 of the Constitution of India.

The Supreme Court upheld Section 45 of the PMLA, which provides for bail of the accused.
It noted that the rigours of bail under Section 45 of the PMLA, even though more expansive
while restricting the right of the accused to secure bail, do not impose absolute restraint on
the grant of bail.

The Supreme Court upheld, with regards to Section 3 of the PMLA, that it is not necessary to
demonstrate that the proceeds of crime are untainted for the offence to be prosecuted under
the PMLA. Indulging in or aiding in the activity of obtaining the proceeds of crime is a
sufficient and reliable piece of evidence for attracting the crime under the PMLA, and the
property need not be shown to be untainted.

The Supreme Court upheld the validity of Section 5 of the PMLA, observing that even
though the second proviso of Section 5 provides the power of provisional attachment without
safeguards, it is necessary to view the urgency felt by the competent authority to secure the
property, and effectively prevent and regulate the offence of money laundering.

The Supreme Court stated that the authorised officer cannot resort to the action of provisional
attachment of property (proceeds of crime) mechanically and has to record satisfaction and
the reason for his belief in writing on the basis of the material in his possession; if an
immediate provisional attachment is foregone, the proceedings may be frustrated.

The petitioners contended that Section 24 of the PMLA reverses the burden of proof and falls
foul of Articles 20 and 21 of the Constitution of India. The Court further held that Section 24
has reasonable nexus with purposes and objects sought to be achieved by the PMLA and
cannot be regarded as manifestly arbitrary or unconstitutional.

The Supreme Court held that supply of a copy of an ECIR in every case to the person
concerned is not mandatory; it is instead enough if the ED at the time of arrest discloses the
grounds of such arrest. However, it is important to note that the above judgment is pending
review before the Supreme Court, where the question of validity of the law laid down in
points (vi) and (vii) are being reconsidered.

SECTION 3 OF PMLA

A person commits money laundering if they are directly or indirectly involved in any
process or activity connected with:

 Concealing

 Possessing

 Acquiring

 Using

 Transferring

the “proceeds of crime”, or

 Projecting or claiming those proceeds as untainted (clean) property.

➤ Key Points:

 Proceeds of crime = money or property earned from a criminal activity (i.e., a

"scheduled offence").

 Even if someone assists or is a party to the activity, they are guilty.

  It is a continuing offence — it goes on as long as the person is enjoying the illegal
money/property.

SECTION 4

This section tells us what the punishment is for committing the offence defined in Section 3.

➤ What is the punishment?

 Minimum imprisonment: 3 years

 Maximum imprisonment: 7 years

 Fine: No fixed limit — the court may impose any amount as fine.

🔸 BUT: If the scheduled offence is under the NDPS Act, the maximum punishment goes
up to 10 years.

SECTION 17 – SEARCH OF PREMISES

When can ED search premises?

An officer not below the rank of Deputy Director, has reason to believe (based on material
in possession) that:

 A person has proceeds of crime,

 These proceeds are hidden in any place or property, or

 Relevant records or evidence are kept that may be useful for proceedings under
PMLA.

What does Section 17 empower the ED to do?

 Enter and search any building, place, vessel, vehicle, or aircraft.

 Break open locks if access is denied.

 Seize any property or record believed to be proceeds of crime.

 Place identification marks on records or make copies.

 Record the statements of persons present.

 Search any person on the premises.

2019 Amendment: Prior to this, ED needed an FIR or complaint for a Scheduled Offence.
The amendment removed this pre-condition, giving ED more autonomy.
 SEARCH OF PERSONS – SECTION 18

When can ED search a person?

If the officer has reason to believe that a person has on their person:

 Proceeds of crime,

 Relevant documents or records.

Procedure for person search:

 Must take the person to a gazetted officer or a Magistrate if the person demands it.

 Must allow the search to be made in the presence of two witnesses.

 Female suspects must be searched by a female officer only.

 A copy of the search list and items seized must be given to the person.

SEIZURE & FREEZING OF PROPERTY

 ED may seize the property found during the search.

 If seizure is not practical (e.g., immovable property), the property may be frozen (i.e.,
barred from transfer or use).

 The officer must send a report to the Adjudicating Authority within 30 days of
seizure/freeze.

SAFEGUARDS AND JUDICIAL OVERSIGHT

 The ED officer must record reasons in writing for the search and seizure.

 The action is subject to judicial review by courts and tribunals.

 Any arbitrary or excessive action can be challenged under Articles 14 and 21 of the
Constitution.

SECTION 5 – PROVISIONAL ATTACHMENT OF PROPERTY

ED can attach property (believed to be proceeds of crime) provisionally for 180 days, if
there is reason to believe it may be hidden, transferred, or dealt with to frustrate confiscation.
 SECTION 12 – OBLIGATIONS OF REPORTING ENTITIES

Applies to:

 Banks

 Financial institutions

 Intermediaries (stock brokers, etc.)

They must:

 Maintain client records and transactions

 Conduct KYC (Know Your Customer)

 Report suspicious transactions to the FIU-IND

SECTION 19 – POWER TO ARREST UNDER PMLA

An officer, not below the rank of Deputy Director of the Enforcement Directorate, may
arrest a person if they have "reason to believe", based on material in their possession,
that the person has been guilty of an offence punishable under PMLA (i.e., under Section 3
read with Section 4).

Step-by-Step Process Under Section 19:

1. Recording of "Reason to Believe"

o The ED officer must record in writing the specific reasons why they believe
the person has committed money laundering.

o This ensures accountability and can be reviewed by courts if challenged.

2. Informing the Person of Grounds of Arrest

o The arrested individual must be informed of the grounds of arrest "as soon
as may be".

o After the Vijay Madanlal Choudhary case (2022), and later clarification, it
was mandated that written grounds must be given to the person arrested.

3. Forwarding the Arrest Information

o The ED must forward a copy of the arrest order and related materials to
the Adjudicating Authority, in a sealed envelope, immediately after the
arrest.
 4. Production Before a Magistrate

o The arrested person must be produced before a Special Court or Magistrate

within 24 hours (excluding travel time), as per Article 22(2) of the
Constitution and Section 57 of CrPC.

SECTION 24 – BURDEN OF PROOF UNDER THE PMLA, 2002

Under Section 24 of the Prevention of Money Laundering Act, 2002, the burden of proof
is reversed. Unlike general criminal law—where the burden is on the prosecution—in
PMLA, it is on the accused to prove that:

 the proceeds of crime are not involved in money laundering, or

 the property in question is not tainted, and is not connected to criminal activity.

There are two sub-parts:

(a) For persons charged with the offence of money laundering

 They must prove that the property in question is untainted.

(b) For any other person (not directly charged), if they hold property on behalf of someone
accused

 They must also prove that it is not proceeds of crime.

FINANCIAL INTELLIGENCE UNIT – INDIA (FIU-IND)

 Established: November 2004

 Acts as the central agency for receiving, processing, analysing, and disseminating
financial information related to suspected money laundering and terrorism financing.
 Operates under PMLA Rules, specifically the Maintenance of Records Rules, 2005.
 Reporting entities are mandated to report to FIU under Section 12.

Function Explanation

Collects data from reporting entities (banks, NBFCs, stockbrokers,

📥Receiving Reports
real estate firms, jewellers, etc.) under Section 12 of PMLA.

📊Analyzing Reports Scrutinises reports like: Suspicious Transaction Reports (STRs),

Function Explanation

Cash Transaction Reports (CTRs), Cross Border Wire Transfer

Reports (CBWTRs), Non-Profit Organisation Transaction
Reports (NTRs)

Shares intelligence with enforcement agencies like ED, CBI, Income

📤 Dissemination
Tax, SEBI, NIA, and others when suspicious activity is found.

📚Maintaining
Stores and safeguards data to assist future investigations.
Database

🧑‍🏫 Training & Guides reporting entities on AML obligations, suspicious indicators,
Guidance and compliance procedures.

ENFORCEMENT DIRECTORATE (ED)

 Established: Originally in 1956 (as an enforcement unit under the Dept. of Economic
Affairs)
 Core Mandate: Investigates and prosecutes offences related to money laundering
and foreign exchange violations.
 Section 50 – Powers of ED (Summons, Inquiry) - ED has powers similar to a civil
court:
 Summon persons
 Enforce attendance
 Examine under oath
 Call for documents
 Statements made to ED are admissible evidence (unlike normal police investigations).

Role Description

🔍Investigate Money ED investigates offences under Section 3 of PMLA (i.e.

Laundering laundering of proceeds of crime).

Can provisionally attach assets suspected to be proceeds of

🧾Attach Proceeds of Crime
crime under Section 5.
Role Description

🧑‍⚖️File Prosecution Files prosecution complaints (similar to charge sheets) before

Complaints the Special PMLA Court under Section 44.

Has wide powers under Section 19 to arrest persons involved in

Arrest Powers
laundering activities.

📂Conduct Search & Can search premises and seize documents, cash, and properties
Seizure under Sections 17 and 18.

Under Section 50, ED officers can summon any person, record

🏦 Summons & Evidence statements, and collect evidence (these statements are
admissible).

FIU-IND vs ED: Summary Comparison

Feature FIU-IND Enforcement Directorate (ED)

Intelligence & data

Function Investigation & prosecution
analysis

Power to Arrest ❌ No ✅ Yes

Receives Reports Receives data from FIU-IND or own

Reporting Entities
From investigation

Legal Basis PMLA & Rules PMLA, FEMA, FEOA

Acts Like Financial Watchdog Investigative Agency

Pre-investigation
Focus Post-suspicion enforcement
analysis

FINANCIAL ACTION TASK FORCE

FATF (Financial Action Task Force) is an intergovernmental organization established to

develop international standards and promote policies to combat:
  Money laundering (ML)

 Terrorist financing (TF)

 Proliferation financing (e.g., funding for nuclear weapons programs)

Feature Details

Established 1989 by the G7 countries

Headquarters Paris, France (at the OECD headquarters)

Current Members 39 (including India, USA, UK, EU, China)

Not a treaty-based body, but a policy-making organization with political

Official Status
and moral authority

India's
India became a full member in 2010
Membership

Objectives of FATF

1. Set global standards for AML/CFT (Anti-Money Laundering / Countering the

Financing of Terrorism)

2. Monitor countries’ compliance

3. Identify non-cooperative jurisdictions ("black" and "grey" lists)

4. Promote effective implementation of legal, regulatory, and operational measures

FATF Recommendations (The 40 + 9)

 40 Recommendations: Cover preventive measures, criminal justice, transparency,

international cooperation, etc.

 9 Special Recommendations: Focus on terrorism financing (added after 9/11, now

integrated into the 40).

These recommendations form the global AML/CFT standard, and countries are evaluated
on how well they implement them.

Mutual Evaluations
FATF conducts peer reviews of its members through Mutual Evaluation Reports (MERs).
These assess:

 Technical compliance with FATF Recommendations

 Effectiveness of AML/CFT systems

Poor-performing countries may face:

 Greylisting (under increased monitoring)

 Blacklisting (non-cooperative jurisdictions – subject to sanctions and isolation)

India and FATF

 India became a member in 2010

 Enacted and strengthened laws like:

o Prevention of Money Laundering Act, 2002

o Fugitive Economic Offenders Act, 2018

o Changes to FEMA, Companies Act, and Income Tax Act

 India regularly submits reports and faces evaluations

FATF-Style Regional Bodies (FSRBs)

FATF also collaborates with regional bodies like:

 APG – Asia/Pacific Group on Money Laundering

 MONEYVAL – Europe

 MENAFATF – Middle East & North Africa

India is also a member of APG.

Respected Authorities,

I hope this email finds you well.

I am Sejal Jain, a final-year student at National Law University, Odisha, graduating in May
2025, and I am writing to express my keen interest in the Associate position at PSL
Advocates & Solicitors, Mumbai.
Over the past five years, I have built a strong academic foundation in procedural and
substantive law, consistently ranking among the top students in my batch. I have developed a
focused interest in litigation and dispute resolution, complemented by my participation in
ADR competitions and certified courses on international dispute resolution.

My internships at leading law firms—including AZB & Partners, Shardul Amarchand

Mangaldas, JSA, and Wadia Ghandy—have given me exposure to diverse litigation and
arbitration matters before various courts and tribunals in Mumbai and beyond. I have worked
on civil and commercial disputes, insolvency proceedings, and arbitration matters, and gained
hands-on experience in legal research, drafting pleadings, preparing case notes, and assisting
in court and tribunal hearings.

I am highly motivated to pursue a career in contentious legal practice, and I am confident in

my ability to deliver quality work under pressure, communicate effectively, and contribute
meaningfully to a collaborative legal team. I am eager to work in a fast-paced environment,
take on challenging assignments, and grow under the guidance of experienced litigation
professionals.

Please find my resume attached for your kind consideration. I would be grateful for the
opportunity to discuss my application further.