NEW DELHI: In its crackdown on illicit funds, the government has proposed a lower monetary threshold for invoking the anti-money laundering law and more powers at the initial stages of investigation.
The finance ministry's proposals also seek to bring more entities, such as commodity brokers, under the law for reporting financial transactions, allowing the government to keep a tab on money movement.
"A draft cabinet note has been circulated to ministries concerned for their comments," a finance ministry official told ET. The ministry has proposed that the monetary threshold for invoking the already stringent law be lowered to Rs 10 lakh, from Rs 30 lakh at present.
"Monetary thresholds are usually broken down in the case of transactions, so it makes sense not to have any threshold. Same applies for removing the limit for offences covered under the law," said Vikram Babbar, senior manager, fraud investigation & dispute services, Ernst & Young .
The final draft of the proposals will be prepared after interministerial consultations, after which an amendment bill is likely to be introduced in the monsoon session of Parliament. It has also been proposed that investigating authorities be allowed to seize bank accounts of violators at the investigation stage itself, and more powers be given to the special court.
At present, violators must be produced before the magistrate, but if the amendment bill is passed, presenting them before the special court would be considered enough. "This would ensure speedy trial as laundering crimes have to be dealt with expeditiously, as money changes hands fast and trails are destroyed," said another ministry official. To bring more entities under the law, commodity brokers and property registrars would have to report transactions in their respective spheres.
The anti-money laundering law has been invoked in many cases recently, including the grant of lucrative telecom licences in 2007-08, commonly referred to as the 2G-spectrum scam, which may have cost the country $39 billion in lost revenue. India has also committed to the Financial Action Task Force , a global watchdog, to make its current antimoney laundering regime more effective.
"The amendments had become must as India has to align its anti-money laundering framework with global best practices," said the official. "There are a number of areas where India is partially compliant so it needs to amend the law to fulfill its commitment at the FATF," said Babbar.
The ministry was earlier mulling bringing all money laundering offences under the law, irrespective of the amount involved, but decided to keep the threshold at Rs 10 lakh for fear of overburdening the system. The proposed changes also aim at making money laundering a standalone offence, which will allow the adjudicating authority to attach property even if the predicate offence is not proved.
'Predicate offence' refers to any offence as a result of which proceeds generated may become the subject of an offence under the Prevention of Money Laundering Act (PMLA).
The FATF had also observed that India's anti-money laundering regime should cover a range of designated non-financial professionals and businesses, such as lawyers, real estate agents, and ensure they are effectively regulated.
The finance ministry's proposals also seek to bring more entities, such as commodity brokers, under the law for reporting financial transactions, allowing the government to keep a tab on money movement.
"A draft cabinet note has been circulated to ministries concerned for their comments," a finance ministry official told ET. The ministry has proposed that the monetary threshold for invoking the already stringent law be lowered to Rs 10 lakh, from Rs 30 lakh at present.
"Monetary thresholds are usually broken down in the case of transactions, so it makes sense not to have any threshold. Same applies for removing the limit for offences covered under the law," said Vikram Babbar, senior manager, fraud investigation & dispute services, Ernst & Young .
The final draft of the proposals will be prepared after interministerial consultations, after which an amendment bill is likely to be introduced in the monsoon session of Parliament. It has also been proposed that investigating authorities be allowed to seize bank accounts of violators at the investigation stage itself, and more powers be given to the special court.
At present, violators must be produced before the magistrate, but if the amendment bill is passed, presenting them before the special court would be considered enough. "This would ensure speedy trial as laundering crimes have to be dealt with expeditiously, as money changes hands fast and trails are destroyed," said another ministry official. To bring more entities under the law, commodity brokers and property registrars would have to report transactions in their respective spheres.
The anti-money laundering law has been invoked in many cases recently, including the grant of lucrative telecom licences in 2007-08, commonly referred to as the 2G-spectrum scam, which may have cost the country $39 billion in lost revenue. India has also committed to the Financial Action Task Force , a global watchdog, to make its current antimoney laundering regime more effective.
"The amendments had become must as India has to align its anti-money laundering framework with global best practices," said the official. "There are a number of areas where India is partially compliant so it needs to amend the law to fulfill its commitment at the FATF," said Babbar.
The ministry was earlier mulling bringing all money laundering offences under the law, irrespective of the amount involved, but decided to keep the threshold at Rs 10 lakh for fear of overburdening the system. The proposed changes also aim at making money laundering a standalone offence, which will allow the adjudicating authority to attach property even if the predicate offence is not proved.
'Predicate offence' refers to any offence as a result of which proceeds generated may become the subject of an offence under the Prevention of Money Laundering Act (PMLA).
The FATF had also observed that India's anti-money laundering regime should cover a range of designated non-financial professionals and businesses, such as lawyers, real estate agents, and ensure they are effectively regulated.
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