India Prevention of Money Laundering Act 2002 (PMLA, Act No. 15 of 2003)

What India Prevention of Money Laundering Act 2002 (PMLA, Act No. 15 of 2003) requires

The Prevention of Money Laundering Act 2002 (PMLA, Act No. 15 of 2003) is India's primary anti-money laundering statute, receiving Presidential assent on 17 January 2003 and coming into force on 1 July 2005. The PMLA is administered by the Financial Intelligence Unit - India (FIU-IND) under the Ministry of Finance and by the Enforcement Directorate (ED) under the Ministry of Home Affairs. Section 3 defines the offence of money laundering: whosoever directly or indirectly attempts to indulge in or knowingly assists or is a party or is actually involved in any process or activity connected with the proceeds of crime, including its concealment, possession, acquisition, or use, and projecting or claiming it as untainted property, shall be guilty of the offence of money laundering. Section 4 prescribes punishment: rigorous imprisonment for a term of not less than three years extendable to seven years and a fine, with the term extendable to ten years for offences related to narcotic drugs and psychotropic substances under the NDPS Act 1985. Section 5 empowers the Director of FIU-IND or officers authorised by the Director to provisionally attach property believed to be proceeds of crime for 180 days pending adjudication. Section 12 imposes obligations on reporting entities (banking companies, financial institutions, and intermediaries as defined) to: maintain records of all cash transactions of INR 10 lakh or more; maintain records of all series of cash transactions integrally connected to each other that individually are below the reporting threshold but together amount to INR 10 lakh or more; maintain records of all suspicious transactions whether or not made in cash; and maintain records of cross-border wire transfers of INR 5 lakh or more. Section 12A requires reporting entities to maintain the records of the identity of its clients and beneficial owners and the account files and business correspondence relating to its clients for a period of five years from the date of cessation of transactions. Section 13 empowers the Director to impose a fine of INR 10,000 and in the case of a continuing failure, a further fine of INR 1,000 for each day of default, on any person who fails to comply with the provisions of Section 12. The Prevention of Money Laundering (Maintenance of Records) Rules 2005 implement the Section 12 obligations, prescribing KYC documentation requirements, customer due diligence (CDD) processes, enhanced due diligence (EDD) for politically exposed persons (PEPs) and high-risk customers, and suspicious transaction reporting (STR) procedures to FIU-IND.

Pillar: Banking & Global Finance · Authority: Financial Intelligence Unit - India (FIU-IND); Enforcement Directorate (ED); Ministry of Finance · Version: 1.0.1 · Last updated: 2026-06-14

Primary source: https://fiuindia.gov.in/files/AML_Legislation/pmla_2002.html

SHA-256 integrity: c81131d8589c61e3e230e5c3461b3f1ab6bd0bada50c7f67e89b7cd864d6ca8c

Primary Citations — 7 traced to source

• Prevention of Money Laundering Act 2002 (Act No. 15 of 2003) (India), Section 3 - Offence of money laundering: whosoever directly or indirectly attempts to indulge in or knowingly assists in any process or activity connected with proceeds of crime, including concealment, possession, acquisition, use, or projecting as untainted property, is guilty of money laundering
• Prevention of Money Laundering Act 2002 (Act No. 15 of 2003) (India), Section 4 - Punishment: rigorous imprisonment for not less than three years extendable to seven years and fine; imprisonment extendable to ten years for offences involving narcotic drugs under the NDPS Act 1985

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