Anti-Money Laundering (AML) in India

AML Country Guide / Anti-Money Laundering (AML) in India

Money laundering poses a grave threat to India's administrative order and economic stability. Illicit funds infiltrating the financial system undermine governance and fair competition. To combat this, India has established stringent regulations, a Financial Intelligence Unit (FIU), and international collaborations. Asset forfeiture, public awareness campaigns, and robust Know Your Customer (KYC) measures further strengthen the country's anti-money laundering efforts, demonstrating a commitment to preserving the integrity of its financial system and ensuring economic stability. 

Background of AML Framework 

India is among the high-risk areas for money laundering. Therefore, the Indian government needs to take Anti-Money Laundering (AML) measures together with their developing economies. Failure to take the necessary measures increases money laundering crimes in India and undermines India's reputation in the international arena. The Indian government has been aware of the risks posed by money laundering from the past to the present. The government of India aims to protect the country from money laundering risks through laws and legal mechanisms. India enacted the Prevention of Money Laundering Act (PMLA) in 2002. The laws and regulations prior to this law were insufficient to combat money laundering. The PMLA has entered into force to combat money laundering and prevent money laundering.

In addition, India is among the countries that are members of the Financial Action Task Force (FATF). FATF is a global organization established to prevent money laundering all over the world. By publishing AML guidelines, FATF aims for countries to fight financial crime more effectively. The FATF member states' AML regimes must comply with FATF recommendations.

The PMLA has now been expanded by the Indian government, in accordance with a notification made public on May 9, 2023, to cover all people involved in the formation of a company, including those serving as a director, secretary, or proxy nominee director. Individuals who provide registered offices, business addresses, lodging, correspondence, or administrative addresses for corporations, limited liability partnerships, or trusts are now also covered by the law. 

Which Sectors Have to Ensure AML Compliance? 

In line with the Prevention of Money Laundering Act (PMLA), the banking industry, financial institutions, financial service providers, gaming businesses, and casinos have to ensure AML compliance. These organizations must implement customer due diligence (CDD) requirements during the customer onboarding phase. Customer due diligence helps determine the customer's risk level. In addition, these organizations must record and retain customer information. These organizations have to conduct AML checks, detect suspicious transactions of customers, and report to authorized units. 

AML compliance is vital not only in preventing money laundering and terrorist financing but also in combating fraud

Anti-Money Laundering Regulators in India 

Financial Intelligence Unit - India (FIU-IND

The Financial Intelligence Unit of India (FIU-IND) was established in 2004 by the Indian government to review and analyze suspicious financial transactions. The Financial Intelligence Unit of India (FIU-IND) is the organization responsible for the fight against the financial crimes of India under the Ministry of Finance. Businesses with AML obligations report to the Financial Intelligence Unit.  

Reserve Bank of India (RBI) 

Reserve Bank of India is the central bank of the Republic of India. It is responsible for the economic growth and economic stability of India. However, it also has some regulatory powers to prevent money laundering. 

Money Laundering Penalties 

India has strict laws against money laundering that are intended to dissuade people and organizations from engaging in this criminal conduct. In India, the Prevention of Money Laundering Act, 2002 (PMLA) specifies the sanctions for money laundering.  

Penalties for money laundering in India: 

  • Imprisonment (3 to 7 years, extendable to 10 years). 
  • Fines (percentage of laundered funds). 
  • Confiscation of proceeds. 
  • Attachment of properties. 
  • Forfeiture of assets. 
  • Enhanced penalties for repeat offenders. 

Anti-Money Laundering Solutions for India 

Utilizing advanced technologies, Sanction Scanner offers cutting-edge anti-money laundering solutions to assist businesses in meeting AML regulations. Companies operating in India with AML compliance obligations can effortlessly satisfy their AML requirements using Sanction Scanner's solutions. You can conveniently reach out to us via our website, where you can contact us or request a demonstration, ensuring a clear path to success for your company. 

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