The Prevention of Money Laundering Act, 2002, India's main law to prevent and punish the conversion of crime proceeds into legitimate-looking assets, enforced by the Enforcement Directorate with powers to attach property and arrest.
Money laundering is the process of hiding the criminal origin of money, typically in three stages: placement of cash into the financial system, layering through complex transactions to obscure the trail, and integration back into the economy as apparently legitimate wealth. International concern grew in the 1980s with drug trafficking, leading to the 1988 Vienna Convention against illicit drug trafficking and the creation of the Financial Action Task Force (FATF) in 1989 by the G7. A UN General Assembly special session in 1998 called on states to adopt anti-money laundering laws.
India responded with the Prevention of Money Laundering Act, passed in 2002 and brought into force in 2005. The law has been amended several times, notably in 2009, 2012 and 2019, widening the list of scheduled offences, the definition of money laundering and the powers of the Enforcement Directorate. India became a full member of FATF in 2010, and the Act forms the backbone of its compliance with FATF standards.
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