THE PREVENTION OF MONEY-LAUNDERING ACT, 2002 (15 of 2003) Part I

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THE PREVENTION OF MONEY-LAUNDERING

ACT, 2002
(15 of 2003)
[17th January, 2003]

An Act to prevent money-laundering and to provide for confiscation of property derived from, or
involved in, money-laundering and for matters connected therewith or incidental thereto.
WHEREAS the Political Declaration and Global Programme of Action,
annexed to the resolution S-17/2 was adopted by the General Assembly of the
United Nations at its seventeenth special session on the twenty-third day of
February, 1990;
AND WHEREAS the Political Declaration adopted by the Special Session of
the United Nations General Assembly held on 8th to 10th June, 1998 calls upon
the Member States to adopt national money-laundering legislation and programme;
AND WHEREAS it is considered necessary to implement the aforesaid
resolution and the Declaration;
BE it enacted by Parliament in the Fifty-third Year of the Republic of India as
follows:-

CHAPTER I
PRELIMINARY

1. Short title, extent and commencement.-(l) This Act may be called the
Prevention of Money-laundering Act, 2002.
(2) It extends to the whole of India.
(3) It shall come into force on such date as the Central Government may, by
notification in the Official Gazette, appoint, and different dates may be appointed
for different provisions of this Act and any reference in any such provision to the
commencement of this Act shall be construed as a reference to the coming into
force of that provision.
2.Definitions.-(l) In this Act, unless the context otherwise requires,-
(a) "Adjudicating Authority" means an Adjudicating Authority appointed
under sub-section (1) of section 6;
(b) "Appellate Tribunal" means the Appellate Tribunal established under
section 25;
(c) "Assistant Director" means an Assistant Director appointed under sub￾section (1) of section 49;
(d) "attachment" means prohibition of transfer, conversion, disposition or
movement of property by an order issued under Chapter III;
(da) "authorised person" means an authorised person as defined in clause (c)
of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999);
(e) "banking company" means a banking company or a co-operative bank to
which the Banking Regulation Act, 1949 (10 of 1949) applies and
includes any bank or banking institution referred to in section 51 of that
Act;
(f) "Bench" means a Bench of the Appellate Tribunal;
(fa) "beneficial owner" means an individual who ultimately owns or controls
a client of a reporting entity or the person on whose behalf a transaction
is being conducted and includes a person who exercises ultimate
effective control over a juridical person;
(g) "Chairperson" means the Chairperson of the Appellate Tribunal;
(h) "chit fund company" means a company managing, conducting or
supervising, as foreman, agent or in any other capacity, chits as
defined in section 2 of the Chit Funds Act, 1982 (40 of 1982);
(ha) "client" means a person who is engaged in a financial transaction or
activity with a reporting entity and includes a person on whose behalf the
person who engaged in the transaction or activity, is acting;
(i) "co-operative bank" shall have the same meaning as assinged to it in
clause (dd) of section 2 of the Deposit Insurance and Credit Guarantee
Corporation Act, 1961 (47 of 1961);
(ia)"corresponding law" means any law of any foreign country
corresponding to any of the provisions of this Act or dealing with
offences in that country corresponding to any of the scheduled offences;
(ib) "dealer" has the same meaning as assigned to it in clause (b) of section 2 of the Central Sales Tax Act, 1956 (74 of 1956);
(j) "Deputy Director" means a Deputy Director appointed under
sub-section (1) of section 49;
(k) "Director" or "Additional Director" or "Joint Director" means a Director
or Additional Director or Joint Director, as the case may be, appointed
under sub-section (1) of section 49;
(l) "financial institution" means a financial institution as defined in clause
(c) of section 45-1 of the Reserve Bank of India Act, 1934 (2 of 1934) and
includes a chit fund company, a housing finance institution, an authorised
person, a payment system operator, a non- banking financial company
and the Department of Posts in the Government of India;
(m) "housing finance institution" shall have the meaning as assigned to it
in clause (d) of section 2 of the National Housing Bank Act, 1987 (53 of
1987);
(n) "intermediary" means,-
(i) a stock-broker, sub-broker share transfer agent, banker to an
issue, trustee to a trust deed, registrar to an issue, merchant banker,
underwriter, portfolio manager, investment adviser or any other
intermediary associated with securities market and registered
under section 12 of the Securities and Exchange Board of India
Act, 1992 (15 of 1992); or
(ii) an association recognised or registered under the Forward
Contracts (Regulation) Act, 1952 (74 of 1952) or any member of
such association; or
(iii)intermediary registered by the Pension Fund Regulatory and
Development Authority; or
(iv) a recognised stock exchange referred to in clause (f) of section
2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
(na) "investigation" includes all the proceedings under this Act conducted by
the Director or by an authority authorised by the Central Government
under this Act for the collection of evidence;
(o) "Member" means a Member of the Appellate Tribunal and includes the
Chairperson;
(p) "money-laundering" has the meaning assigned to it in section 3;
(q) "non-banking financial company" shall have the same meaning as
assigned to it in clause (f) of section 45-1 of the Reserve Bank of India
Act, 1934 (2 of 1934) ;
(r) "notification" means a notification published in the Official Gazette;
(ra) "offence of cross border implications", means-
(i) any conduct by a person at a place outside India which
constitutes an offence at that place and which would have constituted
an offence specified in Part A, Part B or Part C of the Schedule, had
it been committed in India and if such person transfers in any manner
the proceeds of such conduct or part thereof to India; or
(ii) any offence specified in Part A, Part B or Part C of the
Schedule which has been committed in India and the proceeds of
crime, or part thereof have been transferred to a place outside India or
any attempt has been made to transfer the proceeds of crime, or part
thereof from India to a place outside India.
Explanation.-Nothing contained in this clause shall adversely affect
any investigation, enquiry, trial or proceeding before any authority in
respect of the offences specified in Part A or Part B of the Schedule
to the Act before the commencement of the Prevention of Money￾laundering (Amendment) Act, 2009.
(rb) "payment system" means a system that enables payment to be effected
between a payer and a beneficiary, involving clearing, payment or
settlement service or all of them.
Explanation.-For the purposes of this clause, "payment system"
includes the systems enabling credit card operations, debit card
operations, smart card operations, money transfer operations or
similar operations;
(rc) "payment system operator" means a person who operates a payment
system and such person includes his overseas principal.
Explanation.-For the purposes of this clause, "overseas principal"
means,-
(A) in the case of a person, being an individual, such individual residing outside India, who owns or controls or
manages, directly or indirectly, the activities or functions of
payment system in India;
(B) in the case of a Hindu undivided family, Karta of such
Hindu undivided family residing outside India who owns or
controls or manages, directly or indirectly, the activities or
functions of payment system in India;
(C) in the case of a company, a firm, an association of
persons, a body of individuals, an artificial juridical person,
whether incorporated or not, such company, firm, association of
persons, body of individuals, artificial juridical person
incorporated or registered outside India or existing as such and
which owns or controls or manages, directly or indirectly, the
activities or functions of payment system in India;
(s) "person" includes;-
(i) an individual,
(ii) a Hindu undivided family,
(iii) a company,
(iv) a firm,
(v) an association of persons or a body of individuals, whether
incorporated or not,
(vi)every artificial juridical person, not falling within any of the
preceding sub-clauses, and
(vii) any agency, office or branch owned or controlled by any of the
above persons mentioned in the preceding sub-clauses;
(sa) "person carrying on designated business or profession" means,-
(i) a person carrying on activities for playing games of chance for
cash or kind, and includes such activities associated with
casino;
(ii) a Registrar or Sub-Registrar appointed under section 6 of the
Registration Act, 1908 (16 of 1908) as may be notified by the
Central Government;
(iii)real estate agent, as may be notified by the Central
Government;
(iv) dealer in precious metals, precious stones and other high value
goods, as may be notified by the Central Government;
(v) person engaged in safekeeping and administration of cash and
liquid securities on behalf of other persons, as may be notified by the Central Government; or
(vi) person carrying on such other activities as the Central
Government may, by notification, so designate, from time-to￾time;
(sb) "precious metal" means gold, silver, platinum, palladium or rhodium or
such other metal as may be notified by the Central Government;
(sc) "precious stone" means diamond, emerald, ruby, sapphire or any such
other stone as may be notified by the Central Government;
(t) "prescribed" means prescribed by rules made under this Act;
(u) "proceeds of crime" means any property derived or obtained,
directly or indirectly, by any person as a result of criminal activity
relating to a scheduled offence or the value of any such property;
(v) "property" means any property or assets of every description,
whether corporeal or incorporeal, movable or immovable, tangible or
intangible and includes deeds and instruments evidencing title to, or
interest in, such property or assets, wherever located;
Explanation.-For the removal of doubts, it is hereby clarified that the term
"property" includes property of any kind used in the commission of an
offence under this Act or any of the scheduled offences;
(va)"real estate agent" means a real estate agent as defined in clause (88) of
section 65 of the Finance Act, 1994;
(w) "records" include the records maintained in the form of books or stored
in a computer or such other form as may be prescribed;
(wa) "reporting entity" means a banking company, financial institution,
intermediary or a person carrying on a designated business or
profession:
(x) “Scheduled” means the Schedule to this Act;
(y) "scheduled offence" means-
(i) the offences specified under Part A of the Schedule; or
(ii) the offences specified under Part B of the Schedule if the total
value involved in such offences is thirty lakh rupees or more; or(iii) the offences specified under Part C of the Schedule;
(z) “Special Court” means a Court of Session designated as Special Court
under sub-section (1) of section 43;
(za) "transfer" includes sale, purchase, mortgage, pledge, gift, loan or any
other form of transfer of right, title, possession or lien;
(zb) "value" means the fair market value of any property on the date of its
acquisition by any person, or if such date cannot be determined, the
date on which such property is possessed by such person.
(2) Any reference, in this Act or the Schedule, to any enactment or any provision
thereof shall, in relation to an area in which such enactment or such provision is
not in force, be construed as a reference to the corresponding law or the relevant
provisions of the corresponding law, if any, in force in that area. CHAPTER II
OFFENCE OF MONEY-LAUNDERING
3. Offence of money-Laundering.-Whosoever directly or indirectly
attempts to indulge or knowingly assists or knowingly is a party or is actually
involved in any process or activity connected proceeds of crime including its
concealment, possession, acquisition or use and projecting or claiming it as
untainted property shall be guilty of offence of money-laundering.
4. Punishment for money-Laundering.-Whoever commits the offence of
money-laundering shall be punishable with rigorous imprisonment for a term
which shall not be less than three years but which may extend to seven years and
shall also be liable to fine:
Provided that where the proceeds of crime involved in money-laundering
relates to any offence specified under paragraph 2 of Part A of the Schedule, the
provisions of this section shall have effect as if for the words "which may extend
to seven years", the words "which may extend to ten years" had been substituted.  CHAPTER III
ATTACHMENT, ADJUDICATION AND CONFISCATION
5. Attachment of property involved in money-Laundering.- (1) Where
the Director or any other officer not below the rank of Deputy Director authorised
by the Director for the purposes of this section, has reason to believe (the reason
for such belief to be recorded in writing), on the basis of material in his possession,
that-
(a) any person is in possession of any proceeds of crime; and
(b) such proceeds of crime are likely to be concealed, transferred or dealt
with in any manner which may result in frustrating any proceedings relating
to confiscation of such proceeds of crime under this Chapter, he may, by
order in writing, provisionally attach such property for a period not
exceeding one hundred and eighty days from the date of the order, in such
manner as may be prescribed:
Provided that no such order of attachment shall be made unless, in relation
to the scheduled offence, a report has been forwarded to a Magistrate under section
173 of the Code of Criminal Procedure, 1973 (2 of 1974), or a complaint has been
filed by a person authorised to investigate the offence mentioned in that Schedule,
before a Magistrate or court for taking cognizance of the scheduled offence, as the
case may be, or a similar report or complaint has been made or filed under the
corresponding law of any other country:
Provided further that, notwithstanding anything contained in clause (b), any
property of any person may be attached under this section if the Director or any
other officer not below the rank of Deputy Director authorised by him for the
purposes of this section has reason to believe (the reasons for such belief to be
recorded in writing), on the basis of material in his possession, that if such
property involved in money-laundering is not attached immediately under this
Chapter, the non-attachment of the property is likely to frustrate any proceeding
under this Act.
(2) The Director, or any other officer not below the rank of Deputy Director,
shall, immediately after attachment under sub-section (1), forward a copy of the
order, along with the material in his possession, referred to in that sub-section, to
the Adjudicating Authority, in a sealed envelope, in the manner as may be
prescribed and such Adjudicating Authority shall keep such order and material for
such period as may be prescribed. (3) Every order of attachment made under sub-section (1) shall cease to have
effect after the expiry of the period specified in that sub-section or on the date of
an order made under sub-section (2) of section 8, whichever is earlier.
(4) Nothing in this section shall prevent the person interested in the
enjoyment of the immovable property attached under sub-section (1) from such
enjoyment
Explanation.- For the purposes of this sub-section “person interested”, in
relation to any immovable property, includes all persons claiming or entitled to
claim any interest in the property.
(5) The Director or any other officer who provisionally attaches any
property under sub-section (1) shall, within a period of thirty days from such
attachment, file a complaint stating the facts of such attachment before the
Adjudicating Authority.
6. Adjudicating Authorities, composition, powers, etc.-(l) The Central
Government shall, by notification, appoint an Adjudicating Authority to exercise
jurisdiction, powers and authority conferred by or under this Act.
(2) An Adjudicating Authority shall consist of a Chairperson and two other
Members:
Provided that one Member each shall be a person having experience in the
field of law, administration, finance or accountancy.
(3) A person shall, however, not be qualified for appointment as Member of
an Adjudicating Authority,-
(a) in the field of law, unless he-
(i) is qualified for appointment as District Judge; or
(ii) has been a member of the Indian Legal Service and has held a post
in Grade I of that service;
(b) in the field of finance, accountancy or administration unless he
possesses such qualifications, as may be prescribed.
(4) The Central Government shall appoint a Member to be the Chairperson
of the Adjudicating Authority.
(5) Subject to the provisions of this Act,-
(a) the jurisdiction of the Adjudicating Authority may be exercised by Benches thereof;
(b) a Bench may be constituted by the Chairperson of the Adjudicating
Authority with one or two Members as the Chairperson of the
Adjudicating Authority may deem fit;
(c) the Benches of the Adjudicating Authority shall ordinarily sit at New
Delhi and such other places as the Central Government may, in
consultation with the Chairperson by notification, specify;
(d) the Central Government shall, by notification, specify the areas in
relation to which each Bench of the Adjudicating Authority may
exercise jurisdiction.
(6) Notwithstanding anything contained in sub-section (5), the Chairperson
may transfer a Member from one Bench to another Bench.
(7) If at any stage of the hearing of any case or matter it appears to the
Chairperson or a Member that the case or matter is of such a nature that it ought to
be heard by a Bench consisting of two Members, the case or matter may be
transferred by the Chairperson or, as the case may be, referred to him for transfer,
to such Bench as the Chairperson may deem fit.
(8) The Chairperson and every Member shall hold office as such for a term
of five years from the date on which he enters upon his office:
Provided that no Chairperson or other Member shall hold office as such after
he has attained the age of sixty-five years.
(9) The salary and allowances payable to and the other terms and conditions
of service of the Member shall be such as may be prescribed:
Provided that neither the salary and allowances nor the other terms and
conditions of service of the Member shall be varied to his disadvantage after
appointment.
(10) If, for reasons other than temporary absence, any vacancy occurs in the
office of the Chairperson or any other Member, then the Central Government shall
appoint another person in accordance with the provisions of this Act to fill the
vacancy and the proceedings may be continued before the Adjudicating Authority
from the stage at which the vacancy is filled.
(11) The Chairperson or any other Member may, by notice in writing under
his hand addressed to the Central Government, resign his office:
Provided that the Chairperson or any other Member shall, unless he is
permitted by the Central Government or relinquish his office sooner, continue to hold office until the expiry of three months from the date of receipt of such notice or
until a person duly appointed as his successor enters upon his office or until the
expiry of his term of office, whichever is the earliest.
(12) The Chairperson or any other Members shall not be removed from his
office except by an order made by the Central Government after giving necessary
opportunity of hearing.
(13) In the event of the occurrence of any vacancy in the office of the
Chairperson by reason of his death, resignation or otherwise, the senior-most
Member shall act as the Chairperson of the Adjudicating Authority until the date on
which a new Chairperson appointed in accordance with the provisions of this Act to
fill such vacancy, enters upon his office.
(14) When the Chairperson of the Adjudicating Authority is unable to
discharge his functions owing to absence, illness or any other cause, the senior- most
Member shall discharge the functions of the Chairperson of the Adjudicating
Authority until the date on which the Chairperson of the Adjudicating Authority
resumes his duties.
(15) The Adjudicating Authority shall not be bound by the procedure laid
down by the Code of Civil Procedure, 1908, (5 of 1908) but shall be guided by the
principles of natural justice and, subject to the other provisions of this Act, the
Adjudicating Authority shall have powers to regulate its own procedure,
7. Staff of Adjudicating Authorities.- (1)The Central Government shall
provide each Adjudicating Authority with such officers and employees as that
Government may think fit.
(2) The officers and employees of the Adjudicating Authority shall discharge
their functions under the general superintendence of the Chairperson of the
Adjudicating Authority.
(3) The salaries and allowances and other conditions of service of the
officers and employees of the Adjudicating Authority shall be such as may be
prescribed.
8. Adjudication.- (1) On receipt of a complaint under sub-section (5) of
section 5, or applications made under sub-section (4) of section 17 or under sub￾section (10) of section 18, if the Adjudicating Authority has reason to believe that
any person has committed an offence under section 3 or is in possession of
proceeds of crime, he may serve a notice of not less than thirty days on such
person calling upon him to indicate the sources of his income, earning or assets, out of which or by means of which he has acquired the property attached under
sub-section (1) of section 5, or, seized or frozen under section 17 or section 18, the
evidence on which he relies and other relevant information and particulars, and to
show cause why all or any of such properties should not be declared to be the
properties involved in money-laundering and confiscated by the Central
Government:
Provided that where a notice under this sub-section specifies any property as
being held by a person on behalf of any other person, a copy of such notice shall
also be served upon such other person:
Provided further that where such property is held jointly by more than one
person, such notice shall be served to all persons holding such property.
(2) The Adjudicating Authority shall, after-
(a) considering the reply, if any, to the notice issued under sub￾section (1);
(b) hearing the aggrieved person and the Director or any other officer
authorised by him in this behalf, and
(c)taking into account all relevant materials placed on record before
him,
by an order, record a finding whether all or any of the properties referred to in the
notice issued under sub-section (1) are involved in money-laundering:
Provided that if the property is claimed by a person, other than a person to
whom the notice had been issued, such person shall also be given an opportunity of
being heard to prove that the property is not involved in money-laundering.
(3) Where the Adjudicating Authority decides under sub-section (2) that any
property is involved in money-laundering, he shall, by an order in writing, confirm
the attachment of the property made under sub-section (1) of section 5 or retention
of property or l[record seized or frozen under section 17 or section 18 and record a
finding to that effect, whereupon such attachment or retention or freezing of the
seized or frozen property or record shall-
(a) continue during the pendency of the proceedings relating to any offence
under this Act before a court or under the corresponding law of any other
country, before the competent court of criminal jurisdiction outside India,
as the case may be; and
(b) become final after an order of confiscation is passed under sub- section
(5) or sub-section (7) of section 8 or section 58B or sub-section (2A) of
section 60 by the Adjudicating Authority (4) Where the provisional order of attachment made under sub-section (1) of
section 5 has been confirmed under sub-section (3), the Director or any other
officer authorised by him in this behalf shall forthwith take the possession of the
property attached under section 5 or frozen under sub-section (lA) of section 17, in
such manner as may be prescribed:
Provided that if it is not practicable to take possession of a property frozen
under sub-section (lA) of section 17, the order of confiscation shall have the same
effect as if the property had been taken possession of.
(5) Where on conclusion of a trial of an offence under this Act, the Special
Court finds that the offence of money-laundering has been committed, it shall
order that such property involved in the money-laundering or which has been used
for commission of the offence of money-laundering shall stand confiscated to the
Central Government.
(6) Where on conclusion of a trial under this Act, the Special Court finds that
the offence of money-laundering has not taken place or the property is not
involved in money-laundering, it shall order release of such property to the person
entitled to receive it.
(7) Where the trial under this Act cannot be conducted by reason of the death
of the accused or the accused being declared a proclaimed offender or for any
other reason or having commenced but could not be concluded , the Special Court
shall, on an application moved by the Director or a person claiming to be entitled
to possession of a property in respect of which an order has been passed under sub￾section (3)of section 8, shall pass appropriate orders regarding confiscation or
release of the property, as the case may be, involved in the offence of money￾laundering after having regard to the material placed before it.

9. Vesting of property in Central Government.-Where an order of
confiscation has been made under sub-section (5) or sub-section (7) of section 8 or
section 58B or sub-section (2A) of section 60 in respect of any property of a person,
all the rights and title in such property shall vest absolutely in the Central
Government free from all encumbrances:
Provided that where the Special Court or the Adjudicating Authority, as the
case may be, after giving an opportunity of being heard to any other person
interested in the property attached under this Chapter or seized or frozen under
Chapter V is of the opinion that any encumbrance on the property or lease-hold
interest has been created with a view to defeat the provisions of this Chapter, it may,
by order, declare such encumbrances or lease-hold interest to be void and there upon
the aforesaid property shall vest in the Central Government free from such encumbrances or lease-hold interest:
Provided further that nothing in this section shall operate to discharge any
person from any liability in respect of such encumbrances which may be enforced
against such person by a suit for damages.
10. Management of properties confiscated under this Chapter.- (1) The
Central Government may, by order published in the Official Gazette, appoint as
many of its officers (not below the rank of a Joint Secretary to the Government of
India) as it thinks fit, to perform the functions of an Administrator.
(2) The Administrator appointed under sub-section (1) shall receive and
manage the property in relation to which an order has been made under sub- section
(5) or sub-section (6) or sub-section (7) of section 8 or section 58B or sub- section
(2A) of section 60 in such manner and subject to such conditions as may be
prescribed.
(3) The Administrator shall also take such measures, as the Central
Government may direct, to dispose of the property which is vested in the Central
Government under section 9.
11. Power regarding summons, production of documents and evidence,
etc.-(l) The Adjudicating Authority shall, for the purposes of this Act, have the
same powers as are vested in a civil court under the Code of civil Procedure, 1908
(5 of 1908) while trying a suit in respect of the following matters, namely:-
(a) discovery and inspection;
(b) enforcing the attendance of any person, including any officer of a banking
company or a financial institution or a company, and examining him on
oath;
(c) compelling the production of records;
(d)receiving evidence on affidavits;
(e) issuing commissions for examination of witnesses and documents;
and
(f) any other matter which may be prescribed.
(2) All the persons so summoned shall be bound to attend in person or through
authorised agents, as the Adjudicating Authority may direct, and shall be bound to
state the truth upon any subject respecting which they are examined or make
statements, and produce such documents as may be required.
(3) Every proceeding under this section shall be deemed to be a judicial
proceeding within the meaning of section 193 and section 228 of the Indian Penal
Code (45

CHAPTER 4
OBLIGATIONS OF BANKING COMPANIES, FINANCIAL
 INSTITUTIONS AND INTERMEDIARIES
12. Reporting entity to maintain records.-(l) Every reporting entity shall-
(a) maintain a record of all transactions, including information relating to
transactions covered under clause (b), in such manner as to enable it to
reconstruct individual transactions;
(b) furnish to the Director within such time as may be prescribed,
information relating to such transactions, whether attempted or
executed, the nature and value of which may be prescribed;
(c) verify the identity of its clients in such manner and subject to such
conditions, as may be prescribed;
(d) identify the beneficial owner, if any, of such of its clients, as may be
prescribed;
(e) maintain record of documents evidencing identity of its clients and
beneficial owners as well as account files and business correspondence
relating to its clients.
(2) Every information maintained, furnished or verified, save as otherwise
provided under any law for the time being in force, shall be kept confidential.
(3) The records referred to in clause (a) of sub-section (1) shall be
maintained for a period of five years from the date of transaction between a client
and the reporting entity.
(4) The records referred to in clause (e) of sub-section (1) shall be
maintained for a period of five years after the business relationship between a
client and the reporting entity has ended or the account has been closed,
whichever is later.
(5) The Central Government may, by notification, exempt any reporting
entity or class of reporting entities from any obligation under this Chapter.
12A. Access to information.-(l) The Director may call for from any
reporting entity any of the records referred to in sub-section (1) of section 12 and
any additional information as he considers necessary for the purposes of this Act.
(2) Every reporting entity shall furnish to the Director such information as
may be required by him under sub-section (1) within such time and in such manner as he may specify.
(3) Save as otherwise provided under any law for the time being in force,
every information sought by the Director under sub-section (1), shall be kept
confidential.
13. Powers of Director to impose fine.-(l) The Director may, either of his
own motion or on an application made by any authority, officer or person, make
such inquiry or cause such inquiry to be made, as he thinks fit to be
necessary, with regard to the obligations of the reporting entity, under this
Chapter.
(lA) If at any stage of inquiry or any other proceedings before him, the
Director having regard to the nature and complexity of the case, is of the opinion
that it is necessary to do so, he may direct the concerned reporting entity to get its
records, as may be specified, audited by an accountant from amongst a panel of
accountants, maintained by the Central Government for this purpose.
(lB) The expenses of, and incidental to, any audit under sub-section (lA)
shall be borne by the Central Government.
(2) If the Director, in the course of any inquiry, finds that a reporting entity
or its designated director on the Board or any of its employees has failed to
comply with the obligations under this Chapter, then, without prejudice to any
other action that may be taken under any other provisions of this Act, he may-
(a) issue a warning in writing; or
(b)direct such reporting entity or its designated director on the Board or
any of its employees, to comply with specific instructions; or
(c) direct such reporting entity or its designated director on the Board or
any of its employees, to send reports at such interval as may be
prescribed on the measures it is taking; or
(d)by an order, impose a monetary penalty on such reporting entity or its
designated director on the Board or any of its employees, which shall
not be less than ten thousand rupees but may extend to one lakh
rupees for each failure.
(3) The Director shall forward a copy of the order passed under sub- section
(2) to every banking company, financial institution or intermediary or person who
is a party to the proceedings under that sub-section.
Explanation.-For the purpose of this section, "accountant" shall mean a charterted accountant within the meaning of the Chartered Accountant Act, 1949 (38 of
1949).
14. No civil or criminal proceedings against reporting entity, its
directors and employees in certain cases.-Save as otherwise provided in section
13, the reporting entity, its directors and employees shall not be liable to any civil
or criminal proceedings against them for furnishing information under clause (b)
of sub-section (1) of section 12.
15. Procedure and manner of furnishing information by reporting
entities.- The Central Government may, in consultation with the Reserve Bank of
India, prescribe the procedure and the manner of maintaining and furnishing
information by a reporting entity under sub-section (1) of section 12 for the
purpose of implementing the provisions of this Act.

CHAPTER V
SUMMONS, SEARCHES AND SEIZURES, ETC.
16. Power of survey.-(l) Notwithstanding anything contained in any other
provisions of this Act, where an authority, on the basis of material in his
possession, has reason to believe (the reasons for such belief to be recorded in
writing) that an offence under section 3 has been committed, he may enter any
place-
(i) within the limits of the area assigned to him; or
(ii) in respect of which he is authorised for the purposes of this section by
such other authority, who is assigned the area within which such
place is situated,
at which any act constituting the commission of such offence is carried on, and
may require any proprietor, employee or any other person who may at that time
and place be attending in any manner to, or helping in, such act so as to,-
(i) afford him the necessary facility to inspect such records as he may
require and which may be available at such place;
(ii) afford him the necessary facility to check or verify the proceeds of
crime or any transaction related to proceeds of crime which may be
found therein; and
(iii) furnish such information as he may require as to any matter which may
be useful for, or relevant, to any proceedings under this Act.
Explanation.-For the purposes of this sub-section, a place, where an act which
constitutes the commission of the offence is carried on, shall also include any
other place, whether any activity is carried on therein or not, in which the person
carrying on such activity states that any of his records or any part of his property
relating to such act are or is kept.
(2) The authority referred to in sub-section (1) shall, after entering any
place referred to in that sub-section immediately after completion of survey,
forward a copy of the reasons so recorded along with material in his possession,
referred to in that sub-section, to the Adjudicating Authority in a sealed envelop in
the manner as may be prescribed and such Adjudicating Authority shall keep such
reasons and material for such period as may be prescribed.
(3) An authority acting' under this section may-
(i) place marks of identification on the records inspected by him and make
or cause to be made extracts or copies therefrom,
(ii) make an inventory of any property checked or verified by him, and
(iii) record the statement of any person present in the place which may be
useful for, or relevant to, any proceeding under this Act.
17. Search and seizure.-(l) Where the Director or any other officer not below
the rank of Deputy Director authorised by him for the purposes of this section, on
the basis of information in his possession, has reason to believe (the reason for
such belief to be recorded in writing) that any person-
(i) has committed any act which constitutes money-laundering, or
(ii) is in possession of any proceeds of crime involved in money￾laundering, or
(iii) is in possession of any records relating to money-laundering, or
(iv) is in possession of any property related to crime
then, subject to the rules made in this behalf, he may authorise any officer
subordinate to him to-
(a) enter and search any building, place, vessel, vehicle or aircraft where he has
reason to suspect that such records or proceeds of crime are kept;
(b) break open the lock of any door, box, locker, safe, almirah or other
receptacle for exercising the powers conferred by clause (a) where the
keys thereof are not available;
(c) seize any record or property found as a result of such search;
(d) place marks of identification on such record or property, if required or make
or cause to be made extracts or copies therefrom;
(e) make a note or an inventory of such record or property;
(f) examine on oath any person, who is found to be in possession or control of
any record or property, in respect of all matters relevant for the purposes of
any investigation under this Act:
Provided that no search shall be conducted unless, in relation to the
scheduled 5offence, a report has been forwarded to a Magistrate under section 157
of the Code of Criminal Procedure, 1973, (2 of 1974) or a complaint has been filed
by a person, authorised to investigate the offence mentioned in the Schedule, before
a Magistrate or court for taking cognizance of the scheduled offence, as the case
may be, or in cases where such report is not required to be forwarded, a similar
report of information received or otherwise has been submitted by an officer
authorised to investigate a scheduled offence to an officer not below the rank of
Additional Secretary to the Government of India or equivalent being head of the
office or Ministry or Department or Unit, as the case may be, or any other officer who may be authorised by the Central Government, by notification, for this purpose.
(lA) Where it is not practicable to seize such record or property, the officer
authorised under sub-section (1), may make an order to freeze such property
whereupon the property shall not be transferred or otherwise dealt with, except with
the prior permission of the officer making such order, and a copy of such order shall
be served on the person concerned:
Provided that if, at any time before its confiscation under sub-section (5) or
sub-section (7) of section 8 or section 58B or sub-section (2A) of section 60, it
becomes practical to seize a frozen property, the officer authorised under sub￾section (1) may seize such property.
(2) The authority, who has been authorised under sub-section (1) shall,
immediately after search and seizure or upon issuance of a freezing order forward a
copy of the reasons so recorded along with material in his possession, referred to in
that sub-section, to the Adjudicating Authority in a sealed envelope, in the manner,
as may be prescribed and such Adjudicating Authority shall keep such reasons and
material for such period, as may be prescribed.
c'
(3) Where an authority, upon information obtained during survey under
section 16, is satisfied that any evidence shall be or is likely to be concealed or
tampered with, he may, for reasons to be recorded in writing, enter and search
the building or place where such evidence is located and seize that evidence:
Provided that no authorisation referred to in sub-section (1) shall be required
for search under this sub-section.
(4) The authority seizing any record or property under sub-section (1) or
freezing any record or property under sub-section (lA) shall, within a period of thirty
days from such seizure or freezing, as the case may be, file an application,
requesting for retention of such record or property seized under sub-section (1) or
for continuation of the order of freezing served under sub-section (lA), before the
Adjudicating Authority.
18. Search of persons.-(1) If an authority, authorised in this behalf by the
Central Government by general or special order, has reason to believe (the
reason for such belief to be recorded in writing) that any person has secreted
about his person or in anything under his possession, ownership or control, any
record or proceeds of crime which may be useful for or relevant to any
proceedings under this Act, he may search that person and seize such record or
property which may be useful for or relevant to any proceedings under this Act: Provided that no search of any person shall be made unless, in relation to
the scheduled offence, a report has been forwarded to a Magistrate under section
157 of the Code of Criminal Procedure, 1973, (2 of 1974), or a complaint has been
filed by a person, authorised to investigate the offence mentioned in the Schedule,
before a Magistrate or court for taking cognizance of the scheduled offence, as the
case may be, or in cases where such report is not required to be forwarded, a
similar report of information received or otherwise has been submitted by an
officer authorised to investigate a scheduled offence to an officer not below the
rank of Additional Secretary to the Government of India or equivalent being head
of the office or Ministry or Department or Unit, as the case may be, or any other
officer who may be authorised by the Central Government, by notification, for this
purpose.
(2) The authority, who has been authorised under sub-section (1) shall,
immediately after search and seizure, forward a copy of the reasons so recorded
along with material in his possession, referred to in that sub-section, to the
Adjudicating Authority in a sealed envelope, in the manner, as may be
prescribed and such Adjudicating Authority shall keep such reasons and
material for such period, as may be prescribed.
(3) Where an authority is about to search any person, he shall, if such person
so requires, take such person within twenty-four hours to the nearest gazetted
officer, superior in rank to him, or a Magistrate:
Provided that the period of twenty-four hours shall exclude the time
necessary for the journey undertaken to take such person to the nearest gazetted
officer, superior in rank to him, or Magistrate's Court.
(4) If the requisition under sub-section (3) is made, the authority shall not
detain the person for more than twenty-four hours prior to taking him before the
Gazetted Officer superior in rank to him, or the Magistrate referred to in that
sub-section:
Provided that the period of twenty-four hours shall exclude the time
necessary for the journey from the place of detention to the office of the Gazetted
Officer, superior in rank to him, or the Magistrate's Court.
(5) The Gazetted Officer or the Magistrate before whom any such person is
brought shall, if he sees no reasonable ground for search, forthwith discharge
such person but otherwise shall direct that search be made.
(6) Before making the search under sub-section (1) or sub-section (5) the
authority shall call upon two or more persons to attend and witness the search,
and the search shall be made in the presence of such persons.(7) The authority shall prepare a list of record or property seized in the
course of the search and obtain the signatures of the witnesses on the list.
(8) No female shall be searched by anyone except a female.
(9) The Authority shall record the statement of the person searched under
sub-section (1) or sub-section (5) in respect of the records or proceeds of crime
found or seized in the course of the search:
(10) The authority seizing any record or property under sub-section (1) shall,
within a period of thirty days from such seizure, file an application requesting for
retention of such record or property, before the Adjudicating Authority.
19. Power to arrest.-(l) If the Director, Deputy Director, Assistant
Director, or any other officer authorised in this behalf by the Central Government
by general or special order, has on the basis of material m his possession reason to
believe (the reason for such belief to be recorded in writing) that any person has
been guilty of an offence punishable under this Act, he may arrest such person and
shall, as soon as may be, inform him of the grounds for such arrest.
(2) The Director, Deputy Director, Assistant Director or any other officer
shall, immediately after arrest of such person under sub-section (I), forward a
copy of the order, along with the material in his possession, referred to in that
sub-section, to the Adjudicating Authority, in a sealed envelope, in the manner,
as may be prescribed and such Adjudicating Authority shall keep such order and
material for such period, as may be prescribed.
(3) Every person arrested under sub-section (1) shall within twenty-four
hours, be taken to a Judicial Magistrate or a Metropolitan Magistrate, as the case
may be, having jurisdiction:
Provided that the period of twenty-four hours shall exclude the time
necessary for the journey from the place of arrest to the Magistrate's Court.
20. Retention of property.-(1) Where any property has been seized under
section 17 or section 18 or frozen under sub-section (IA) of section 17 and the
officer authorised by the Director in this behalf has, on the basis of material in his
possession, reason to believe (the reason for such belief to be recorded by him in
writing) that such property is required to be retained for the purposes of
adjudication under section 8, such property may, if seized, be retained or if frozen,
may continue to remain frozen, for a period not exceeding one hundred and eighty
days from the day on which such property was seized or frozen, as the case may
be. (2) The officer authorised by the Director shall, immediately after he has
passed an order for retention or continuation of freezing of the property for
purposes of adjudication under section 8, forward a copy of the order along with
the material in his possession, referred to in sub-section (1), to the Adjudicating
Authority, in a sealed envelope, in the manner as may be prescribed and such
Adjudicating Authority shall keep such order and material for such period as
may be prescribed.
(3) On the expiry of the period specified in sub-section (1), the property
shall be returned to the person from whom such property was seized or whose
property was ordered to be frozen unless the Adjudicating Authority permits
retention or continuation of freezing of such property beyond the said period.
(4) The Adjudicating Authority, before authorising the retention or
continuation of freezing of such property beyond the period specified in sub￾section (1), shall satisfy himself that the property is prima facie involved in
money-laundering and the property is required for the purposes of adjudication
under section 8.
(5) After passing the order of confiscation under sub-section (5) or sub￾section (7) of section 8, the Court or the Adjudicating Authority, as the case may
be, shall direct the release of all property other than the property involved in
money-laundering to the person from whom such property was seized or the
persons entitled to receive it.
(6) Where an order releasing the property has been made by the Court under
sub-section (6) of section 8 or by the Adjudicating Authority under section 58B or
sub-section (2A) of section 60, the Director or any officer authorised by him in this
behalf may withhold the release of any such property for a period of ninety days
from the date of such order, if he is of the opinion that such property is relevant for
the appeal proceedings under this Act.
21. Retention of records.-(1)Where any records have been seized, under
section 17 or section 18 or frozen under sub-section (IA) of section 17 and the
Investigating Officer or any other officer authorised by the Director in this behalf
has reason to believe that any of such records are required to be retained for any
inquiry under this Act, such records may if seized, be retained or if frozen, may
continue to remain frozen, for a period not exceeding one hundred and eighty days
from the day on which such records were seized or frozen, as the case may be.
(2) The person, from whom records seized or frozen, shall be entitled to
obtain copies of records. (3) On the expiry of the period specified under sub-section (1), the records
shall be returned to the person from whom such records were seized or whose
records were ordered to be frozen unless the Adjudicating Authority permits
retention or continuation of freezing of such records beyond the said period.
(4) The Adjudicating Authority, before authorising the retention or
continuation of freezing of such records beyond the period specified in sub￾section (1), shall satisfy himself that the records are required for the purposes of
adjudication under section 8.
(5) After passing of an order of confiscation under sub-section (5) or sub￾section (7) of section 8, the Adjudicating Authority shall direct the release of the
records to the person from whom such records were seized.
(6) Where an order releasing the records has been made by the Court under
sub-section (6) of section 8 or by the Adjudicating Authority under section 58B or
sub-section (2A) of section 60, the Director or any other officer authorised by him
in this behalf may withhold the release of any such record for a period of ninety
days from the date of such order, if he is of the opinion that such record is relevant
for the appeal proceedings under this Act.
22. Presumption as to records or property in certain cases.-(l) Where
any records or property are or is found in the possession or control of any person in
the course of a surveyor a search, or where any record or property is produced by
any person or has been resumed or seized from the custody or control of any
person or has been frozen under this Act or under any other law for the time being
in force it shall be presumed that-
(i) such records or property belong or belongs to such person;
(ii) the contents of such records are true; and
(iii) the signature and every other part of such records which purport to
be in the handwriting of any particular person or which may
reasonably be assumed to have been signed by, or to be in the
handwriting of, any particular person, are in that person's
handwriting, and in the case of a record, stamped, executed or
attested, that it was executed or attested by the person by whom it
purports to have been so stamped, executed or attested.
(2) Where any records have been received from any place outside India,
duly authenticated by such authority or person and in such manner as may be
prescribed, in the course of proceedings under this Act, the Special Court, the
Appellate Tribunal or the Adjudicating Authority, as the case may be, shall-(a) presume, that the signature and every other part of such record,
which purports to be in the handwriting of any particular person or
which the court may reasonably assume to have been signed by, or
to be in the handwriting of, any particular person, is in that person's
handwriting; and in the case of a record executed or attested, that it
was executed or attested by the person by whom it purports to have
been so executed or attested;
(b) admit the document in evidence, notwithstanding that it is not duly
stamped, if such document is otherwise admissible in evidence.
23. Presumption in inter-connected transactions.-Where money￾laundering involves two or more inter-connected transactions and one or more
such transactions is or are proved to be involved in money-laundering, then for
the purposes of adjudication or confiscation under section 8 or for the trial of
the money-laundering offence, it shall unless otherwise proved to the satisfaction
of the Adjudicating Authority or the Special Court, be presumed that the
remaining transactions form part of such inter-connected transactions.
24. Burden of Proof.-In any proceeding relating to proceeds of crime
under this Act,-
(a) in the case of a person charged with the offence of money-laundering
under section 3, the Authority or Court shall, unless the contrary is
proved, presume that such proceeds of crime are involved in money￾laundering; and
(b) in the case of any other person the Authority or Court, may presume
that such proceeds of crime are involved in money-laundering.