UN Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, 1988 to which India is a party, calls for prevention of laundering to proceeds of drug crimes and other connected activities and confiscation of proceeds derived from such offence.
The Basle Statement of Principles, (Switzerland) enunciated in 1989, outlined basic policies and procedures that banks should follow to assist the law enforcement agencies in tackling the problem of money laundering.
Financial Action Task Force (FATF) established in Paris in 1989 and made 40 Recommendations to combat money laundering. The recommendations were classified as under various heads such as:
- Declaring laundered money carried through serious offence a criminal offence;
- Modalities disclosed by financial institutions regarding reportable transactions;
- Confiscations of the proceeds of crime;
- Money laundering to be an extraditable offence; and
- Promote international co-operation in investigation on money-laundering.
Political Declaration adopted by UN General Assembly by its Resolution No. S-17/2 on 23.02.1990 which calls upon the member States to develop mechanism to prevent financial institutions from being used for laundering of drug related money and enactment of legislation to prevent such laundering.
The International Federation of Accountants (IFAC) classifies money laundering activities in three stages;
- Layering; and
Powers of Investigating Officers
- Section 2 (na): investigation
- Power to attach property [Section 5]
- Power of Survey [S. 16]
- Power to Search and Seizure [S. 17]
- Power of Freezing [S. 17 (1A)]
- Power to Search Persons [S. 18]
- Power to Arrest [S. 19]
- Power to summon, production of documents and give evidence [S. 11 & 50]
- Power of retention of property and records [Ss. 20 & 21]
Attachment and confirmation
- Provisional Attachment of property involved in money –laundering;
- filing of complaint based on material in possession, reason to believe are to be recorded in writing
- Confirmation of attachment by the Adjudicating Authority.
- Confiscation or release of property.
- Confiscation of property by Special Court on conclusion of a trial, if involved in money laundering.
- Special Courts (section 43)
- Offence triable by Special Courts
- Session Trial in accordance with the provisions of CrPC
- Section 65 – CrPC to apply if it is not inconsistent with the provisions of PMLA
- Section 71 – PMLA to have overriding effecting.