Penalties for Violating Anti-Money Laundering (AML) Obligations in India

Overview of Penalties

In India, the Prevention of Money Laundering Act, 2002 (PMLA) outlines both administrative/civil and criminal penalties for violating anti-money laundering obligations.

Criminal Penalties under PMLA

According to Section 13 of the PMLA, any person who contravenes any provision of the PMLA or any rule made thereunder shall be punishable with:

• Imprisonment: up to five years
• Fine: up to INR 50 lakh (approximately USD 65,000)
• Both Imprisonment and Fine

Additionally, as per Section 13(1)(b) of the PMLA, any person who fails to comply with provisions related to:

• Verification of identity and determination of beneficial ownership
• Maintenance of records and furnishing information
• Reporting of suspicious transactions
• Reporting of cash transactions

shall be punishable with:

• Imprisonment: up to one year
• Fine: up to INR 5 lakh (approximately USD 6,500)
• Both Imprisonment and Fine

Civil Penalties under PMLA

The Enforcement Directorate (ED) can also impose civil penalties under the PMLA, including:

• Monetary Penalty: up to INR 100,000 for each failure
• Attachment of Property: involved in money laundering
• Seizure, Freezing, or Retention of Properties
• Freezing Funds, Financial Assets, or Economic Resources or Related Services

Administrative Penalties

The RBI and other regulatory authorities can also impose administrative penalties, including fines and other sanctions, for non-compliance with AML regulations.