The PMLA – is the net cast too wide

The Prevention of Money Laundering Act, 2002 (‘PMLA’) has undergone multiple amendments after it was brought into operation on July 1, 2005. Most recently, the PMLA was amended through the –

  • Finance Act, 2015 (‘2015 Amendment’)
  • Finance Act, 2018 (‘2018 Amendment’)
  • Finance Act, 2019 (‘2019 Amendment’)

These amendments aimed to plug loopholes in the operation of the PMLA – to strengthen the framework for tackling money laundering. In furtherance of this objective, the 2019 Amendment has clarified the definition of “proceeds of crime” under Section 2(1)(u). Amendments were also made to Section 45, following the Supreme Court’s decision in the Nikesh Tarachand Shah[1] case – which struck down the pre-conditions for bail prescribed under Section 45(1). Over the years, the list of “scheduled offences” under Schedule I of the PMLA has also been amended significantly. Another aspect that arises in many PMLA proceedings is the admissibility of statements made to investigating officers.
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Non-Debt Instruments -The New Rules for Foreign Flows

In a quiet mid-October surprise, nearly four and a half years after the passage of the Finance Act 2015 (20 of 2015), the Government notified the effective date for implementation of the clauses that amended Section 6 of the Foreign Exchange Management Act, 1999 (FEMA). The notification defining debt and non-debt instruments followed suit and then of course the Non Debt Instrument Rules (NDI Rules) under FEMA, which superseded the extant FEMA 20R and 21R.
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