Financial Crime World

India Cracks Down on Money Laundering: New Regulations and Penalties for Individuals and Businesses

Money laundering continues to pose a significant threat to India’s administrative order and economic stability. Illicit funds infiltrating the financial system have the potential to undermine governance and fair competition. To tackle this issue, India has been implementing stringent regulations, establishing the Financial Intelligence Unit (FIU), and forging international collaborations.

Background: India’s Anti-Money Laundering (AML) Framework

  • India, as a developing economy, is considered a high-risk area for money laundering.
  • The Indian government is taking measures to prevent money laundering and protect the country from its risks to both the domestic economy and international reputation.
  • India’s AML regime was enacted with the Prevention of Money Laundering Act (PMLA) in 2002.
  • India is a member of the Financial Action Task Force (FATF), a global organization focused on preventing money laundering worldwide.

Recent Developments: Expansion of the PMLA

  • May 9, 2023: The Indian government expanded PMLA to cover all individuals involved in the formation of a company.
  • Asset-service providers, such as those offering registered offices, business addresses, lodging, correspondence, or administrative addresses for corporations, LLPS, or trusts are now under the law’s purview.

Which Sectors Face AML Compliance Requirements?

  • Specific sectors, including the banking industry, financial institutions, financial service providers, gaming businesses, and casinos, are now mandated to comply with AML regulations.
  • Organizations need to perform customer due diligence, record and retain customer information, conduct AML checks, detect and report suspicious transactions to authorized units.

Financial Intelligence Unit - India (FIU-IND)

  • The Financial Intelligence Unit of India (FIU-IND) was established in 2004.
  • FIU-IND serves as India’s primary organization responsible for the fight against financial crimes under the Ministry of Finance.
  • Businesses and organizations with AML obligations report to the Financial Intelligence Unit.

Reserve Bank of India (RBI)

  • The Reserve Bank of India (RBI) is India’s central bank and is responsible for the economic growth and stability of the Indian economy.
  • The RBI has regulatory powers to prevent money laundering.

Penalties for Money Laundering

  • India has strict laws against money laundering, as outlined by the Prevention of Money Laundering Act, 2002 (PMLA).
  • Penalties for money laundering in India include imprisonment for 3 to 7 years, extendable to 10 years, significant fines, confiscation of proceeds, attachment of properties, forfeiture of assets, and enhanced penalties for repeat offenders.

Anti-Money Laundering Solutions for India

Sanction Scanner offers advanced anti-money laundering solutions to help businesses in India meet their AML obligations. Our solutions enable organizations to easily satisfy their regulatory requirements. To learn more about how Sanction Scanner can assist your organization in compliance, reach out to us via our website or schedule a demonstration.