Prevention of Money Laundering Act will need more changes

• India will have to make money laundering an explicitly standalone offence to upgrade its compliance ahead of the on-site mutual evaluation by the Financial Action Task Force (FATF), which is due in November-December 2020
• ATF had undertaken mutual evaluation of India in 2010 when the body expressed satisfaction with the measures taken by the country. However, in its report, the FATF highlighted a number of lacunae in the then extant legislation, for which it suggested changes.
• As per FATF recommendations, money laundering should be made a standalone offence. However, despite several amendments, the Prevention of Money Laundering Act (PMLA) remains a predicate-offence-oriented law. This means a case under the Act depends on the fate of cases pursued by primary agencies such as the CBI, the Income Tax Department or the police.

About FATF:

• The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 by the Ministers of its Member jurisdictions.
• The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.
• The FATF is therefore a “policy-making body” which works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.
• The FATF has developed a series of Recommendations that are recognised as the international standard for combating of money laundering and the financing of terrorism and proliferation of weapons of mass destruction.
• They form the basis for a co-ordinated response to these threats to the integrity of the financial system and help ensure a level playing field.
• First issued in 1990, the FATF Recommendations were revised in 1996, 2001, 2003 and most recently in 2012 to ensure that they remain up to date and relevant, and they are intended to be of universal application.
• The FATF monitors the progress of its members in implementing necessary measures, reviews money laundering and terrorist financing techniques and counter-measures, and promotes the adoption and implementation of appropriate measures globally.
• In collaboration with other international stakeholders, the FATF works to identify national-level vulnerabilities with the aim of protecting the international financial system from misuse.

By: Vishal