India Govt to widen scope of Money Laundering Act

The government has proposed expansion of the scope of the Prevention of Money Laundering Act (PMLA) by bringing into its ambit international wire transfer agencies such as Western Union Money Transfer and payment gateways like Visa and MasterCard to compulsorily report transactions to the Financial Intelligence Unit (FIU) in the country.

So far, besides banks and other financial institutions, only the Indian agents of international wire transfer services were covered under time-bound reporting obligation as provided under the PMLA.

Once the Act is amended, even the foreign operations of a wire service would have to report all transactions to FIU, irrespective of their origin, sources said. The fresh amendments have been proposed in view of a number of recent instances where terrorists and drug syndicates used wire transfer services and some payment gateways to fund their activities in India.

In 2006, Al Badr terrorist Mohammad Fahad, arrested in Mysore, had allegedly collected two instalments of Rs 3-4 lakh each from Western Union Money Transfer and further distributed the money to the outfit's members in different cities, including Delhi.

Khalistani terrorist Jagtar Singh Hawara, involved in the bomb blasts in Delhi cinema halls Liberty and Satyam a few years ago, had also allegedly received foreign remittances from one Sukhvinder Kaur of Germany.

Inquiries were made in Germany about the identity of Kaur while local agents of Western Union Money Transfer in Mumbai were asked to submit details related to payments made to Hawara on different dates.

Sources said the Enforcement Directorate (ED) — the notified agency which has powers to investigate proceeds of crime under PMLA — booked 11 cases relating to money laundering and terrorist financing alone.

Of the 11, three were connected with narco-terrorism and booked in Chennai while four were related to counterfeit currency and arms seizure in other cities.

The scope of PMLA, which is primarily designed to deprive terrorists and druglords money to fund their activities, is now being widened to incorporate certain mandatory international obligations by expanding the list of specified offences.

At present, PMLA does not provide for considering offences committed outside India as scheduled offences to be tried in India.

However, with the amendments any conduct that takes place in another country, which may or may not constitute an offence in that country and which would have constituted an offence had it occurred in India, will now be termed as an offence and tried in India.

Investigations in several recent drug bust cases have revealed that drug syndicates have largely been using international payment gateways and banking channels to transfer proceeds of crime and fund their activities across continents.

Last year, the Narcotics Control Bureau (NCB) had arrested an IIT graduate running a BPO in Kolkata and it was found that the person was actually involved in drug running in the US.

Officials had unearthed and seized at least 30 bank accounts of the accused in Kolkata and US.

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