Abstract

This article examines the development of the Prevention of Money Laundering Act (PMLA) in India, focusing on the historical background of money laundering, the legislative process of the Act, and the current difficulties and adjustments in its implementation. Money laundering, an old practice that originated in China, gained significant recognition during the Prohibition era in the United States. The necessity for a strong and comprehensive legal structure to address the issue of money laundering in India became evident with the founding of the Financial Action Task Force (FATF) in 1989. The FATF established global benchmarks for implementing measures against money laundering. The legislative response of India resulted in the implementation of the PMLA in 2002, which became effective in 2005. The correlation between money laundering accusations and the prosecution of predicate offences is intricate, as both crimes are interrelated but handled separately according to legal provisions. In cases of money laundering, the weight of proof is shifted, necessitating the accused to provide evidence that the funds obtained from criminal activities have not been laundered. The procedural elements of trials conducted under the Prevention of Money Laundering Act (PMLA), such as the jurisdiction of Special Courts and the strict bail restrictions, pose distinctive difficulties. The application of the PMLA has been consistently influenced by judicial interpretations and changes. Notable cases, such as Vijay Mandal Chaudhary and Nikesh Tarachand Shah, have dealt with matters of the enforceability of the Code of Criminal Procedure, the validity of bail terms, and the shifting of the burden of proof. The procedural complexities of transferring cases and the jurisdictional authority of Special Courts under the PMLA are also explored. Moreover, the article examines the detrimental impacts of money laundering on economies and financial institutions, highlighting the necessity for strong anti-money laundering measures. The three phases of money laundering—placement, layering, and integration—are outlined to demonstrate the intricacies involved in concealing illegal funds. Ultimately, the PMLA, 2002, has made a substantial impact on combating money laundering in India by creating a structure for ensuring adherence to regulations and overseeing potentially illicit activities. However, the efficacy of the system relies on the collaboration of financial institutions and the general public in reporting and thwarting financial offences. To effectively tackle the ever-changing nature of money laundering, it is crucial to continue adapting and enforcing strict measures.

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