Authorities and Their Powers under the Prevention of Money Laundering Act, 2002

Introduction

The Prevention of Money Laundering Act, 2002  empowers specific authorities to detect, prevent, and investigate money laundering activities in India. The Act establishes a clear hierarchy of officers and defines their powers to ensure effective governance, investigation, and enforcement. Understanding these authorities and their powers is crucial for banks, financial institutions, intermediaries, and the general public to comply with the law and assist in curbing illicit financial activities.

🔹 Section 48 – Authorities under PMLA

The Act provides for the following authorities:

1. Director

2. Additional Director

3. Joint Director

4. Deputy Director

5. Assistant Director

6. Other officers as appointed by the Central Government

🔹 Director under PMLA

• Highest authority for governance of the Act

• Two domains:

  • Director, Financial Intelligence Unit – India (FIU-IND): Deals with banking, financial companies, and their intermediaries.

  • Director of Enforcement (ED): Deals with all other matters

Appointment: All authorities are appointed by the Central Government

🔹 Powers of the Director (Civil Court Powers)

For PMLA purposes, the Director has powers similar to a Civil Court under the Code of Civil Procedure, 1908. This includes:

• 📌 Enforcing attendance of persons (e.g., bank officers)

• 📌 Compelling production of documents and records

• 📌 Issuing notices to examine records/witnesses

• 📌 Admitting affidavits as evidence

• 📌 Ordering discovery and inspection of documents

Illustration: If a bank fails to report suspicious transactions, the Director can summon its officials, demand records, and examine them under oath.

🔹 Powers of Other Officers (Addl./Joint/Deputy/Assistant Director)

• 📌 Summon any person to give evidence or produce records

• 📌 Impound and retain records produced before them

• 📌 Deputy/Assistant Director must record reasons before impounding

• 📌 To retain records beyond 3 months, prior approval of the Joint Director is required

⚖️ Judicial Character of Proceedings

Every proceeding (summoning persons, producing records, etc.) under PMLA is treated as a judicial proceeding, with provisions for punishment under:

• Section 229 of BNS: Punishment for giving false evidence

• Section 267 of BNS: Punishment for insulting or interrupting a public servant in judicial proceedings

Conclusion

The authorities and their defined powers under PMLA ensure that India has a robust framework to combat money laundering. By granting investigative officers the authority to summon persons, inspect records, and conduct proceedings with judicial character, the Act strengthens enforcement and accountability. Banks, financial institutions, and individuals must remain vigilant and compliant, as these powers ensure that no illicit money goes undetected and that violations are swiftly addressed.