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Explained: ED arrests Delhi minister Satyendar Jain in hawala case: 5 key points on PMLA Act

The ED action comes over a month after assets linked to Jain, worth around Rs 4.81 crore, were attached by the agency.

May 31, 2022 / 10:23 AM IST
Delhi Health Minister Satyendar Jain (File image)

Delhi Health Minister Satyendar Jain (File image)

On 30 May, the Enforcement Directorate arrested Delhi Health Minister and senior Aam Aadmi Party (AAP) leader Satyendar Jain in a "hawala transactions" case.

The ED action comes over a month after assets linked to Jain, worth around Rs 4.81 crore, were attached by the agency.

The alleged hawala transactions, which has led to the minister's arrest were "related to a Kolkata-based company", news agency ANI quoted the agency officials as saying.

The arrest was made under the criminal provisions of the Prevention of Money Laundering Act (PMLA) in connection with his alleged involvement in a ‘hawala transactions’ case.

PMLA Act has been a basis of many similar arrests. But what is this Act and what are the salient features of this act. Here’s an explainer:

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What is PMLA Act?

PMLA, 2002 is an act to prevent money-laundering. This enables the law enforcement agencies to confiscate property acquired through illegal activities including money laundering and hawala transactions. It was introduced to fight against the criminal offence of legalising the income from an illegal source.

How does the crime committed under PMLA?

According to legal experts, the first stage is ‘placement’ or when the money derived through crime is introduced into the formal financial system. In the second stage, money is introduced to formal financial system through a layer of transactions. In the third stage, money is placed in such a way so that the offender can use the amount. This is called integration.

What are the common forms of money laundering?

The common forms of money laundering include hawala, bulk cash smuggling, fictional loans, cash-intensive businesses, round-tripping, trade-based laundering, Shell companies and trusts, real estate, gambling, and fake invoicing are some of the common methods of money laundering.

Who are the agencies entrusted for investigation?

The ED in the Department of Revenue, Ministry of Finance, the Government of India is responsible for investigating the offences of money laundering under the PMLA. Financial Intelligence Unit – India (FIU-IND) under the Department of Revenue, Ministry of Finance is an independent body reporting directly to the Economic Intelligence Council (EIC) headed by the Finance Minister. FIU-IND is the central national agency responsible for receiving, processing, analysing, and disseminating the information relating to suspect financial transactions.

What are the actions if crime is established?

The agencies can seize or freeze property and records and attachment of property obtained with the proceeds of crime.

Any person who commits the offence of money laundering shall be punishable with rigorous imprisonment for a minimum term of three years and this may extend up to seven years.

(This copy has used inputs from cleartax report on PMLA Act)
Dinesh Unnikrishnan is Deputy Editor at Moneycontrol. Dinesh heads the Banking and Finance Bureau at Moneycontrol. He also writes a weekly column, Banking Central, every Monday.
first published: May 31, 2022 10:23 am
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