‘Money laundering Act needs teeth’

Pointing out several loopholes in the PMLA, the ARC has recommended changes in the Act to include organized crime, terrorism and terror financing within its ambit, reports Satya Prakash.

India's much-hyped Prevention of Money Laundering Act (PMLA) can’t deal with terror financing. Pointing out several loopholes in the PMLA, the Administrative Reforms Commission (ARC) has recommended changes in the Act to include organized crime, terrorism and terror financing within its ambit.

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Under PMLA, money laundering is confined to activities/offences connected with ‘proceeds of crime’, which has been defined to mean any property derived or obtained as a result of criminal activity relating to a set of “offences” listed under the Act.

“A glance at the offences listed in the Schedule reveals that offences related to organized crime and racketeering; terrorism, including terrorist financing; trafficking in human beings; illicit trafficking in stolen and other goods; fraud, especially financial frauds; counterfeiting and piracy of goods; smuggling and insider trading and capital market manipulations etc. are not listed therein,” the commission said.

“This limits the effectiveness of the Act as far as dealing with complex money laundering and terrorist financing operations is concerned,” it pointed out.

National Security Advisor MK Narayanan had earlier said that terrorists were misusing banking channels and there had been certain isolated instances of terrorist organizations manipulating the stock markets to raise funds for their operations.

In its eighth report titled “Combatting Terrorism: Protecting by Righteousness”, the panel headed by M Veerappa Moily suggested that like in the US all enforcement agencies should be given power to investigate money-laundering cases. At present the Enforcement Directorate ED) has the exclusive jurisdiction to investigate money-laundering cases under the PMLA, which has been in force since 2002.

However, the panel suggested putting in place institutional coordination mechanisms between the ED and other intelligence/investigating agencies, besides delegating certain powers under the Act to the latter.