Prevention of Money Laundering Act (PMLA), 2002
Complete guide to India's anti-money laundering framework — ED investigations, suspicious transaction reporting, property attachment, KYC obligations, FATF compliance, and penalties.
🏛️ Background
The Prevention of Money Laundering Act (PMLA), 2002 came into force on 1 July 2005. It criminalizes money laundering (concealing proceeds of crime), mandates record-keeping and reporting by financial intermediaries, and enables provisional attachment of property involved in money laundering. Administered by the Enforcement Directorate (ED) under the Ministry of Finance. India is a member of FATF (Financial Action Task Force) since 2010.
⚖️ What Constitutes Money Laundering?
- 🚨 Definition (Section 3): Directly or indirectly attempting to indulge, knowingly assisting, or being a party to any process connected with proceeds of crime — including concealment, possession, acquisition, use, or projection as untainted property
- 📋 Scheduled Offences: Predicate offences under IPC, NDPS Act, Prevention of Corruption Act, SEBI Act, Customs Act, Environment Protection Act, etc. — listed in the Schedule to PMLA
- ⚠️ Penalty (Section 4): Rigorous imprisonment of 3 to 7 years, and fine. For offences related to Narcotics: up to 10 years
- 🔄 Burden of Proof: Reversed — the accused must prove that the property is not proceeds of crime (Section 24). Bail provisions are stringent (Section 45)
📋 Reporting Obligations
🏦 Reporting Entities
Banks, financial institutions, intermediaries (stockbrokers, insurance companies), casinos, real estate agents, jewellers (≥₹10 lakh transactions), and crypto exchanges must comply with KYC and reporting requirements.
📊 CTR & STR
Cash Transaction Reports (CTR): All cash transactions ≥₹10 lakh (individual) or ₹50 lakh (aggregate/month). Suspicious Transaction Reports (STR): Any suspicious activity regardless of amount — to FIU-IND within 7 days.
📁 Record Keeping
All records must be maintained for 5 years from the date of transaction. Identity records: 5 years after business relationship ends. Non-compliance: fine ₹10,000 to ₹1 lakh per failure.
🔍 FIU-IND
Financial Intelligence Unit — India receives, processes, analyses, and disseminates information on suspicious transactions. Works with ED, CBI, Income Tax, and international FIUs.
🏠 Property Attachment & Investigation
- 📌 Provisional Attachment (Sec 5): ED Director can provisionally attach property believed to be proceeds of crime for 180 days. Must be confirmed by Adjudicating Authority
- 📌 Search & Seizure (Sec 16-17): ED officers can enter, search premises, seize documents and property. Applies to any place where proceeds are kept
- 📌 ECIR: Enforcement Case Information Report — equivalent of FIR. Filed when ED has reason to believe money laundering is involved
- 📌 Appellate Tribunal: Appeals against Adjudicating Authority orders go to Appellate Tribunal (PMLA). Further appeal to High Court on substantial questions of law
⚠️ Disclaimer
This page is for educational and informational purposes only and does not constitute legal, tax, or financial advice. While we strive for 100% accuracy, laws and regulations change frequently. Always refer to the official gazette notifications, consult a qualified Chartered Accountant (CA), Company Secretary (CS), or legal professional before making any financial or legal decisions. Tenhash is not responsible for any actions taken based on this information. Last reviewed: March 2026.