MONEY LAUNDERING

&
BENAMI TRANSACTIONS

BY: VIVEK GUPTA

{NRO0413861}
WHAT IS MONEY LAUNDERING ?

BLACK MONEY WHITE MONEY

DIRTY MONEY WHITE MONEY

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 BLACK MONEY DIRTY MONEY

• IT MEANS THE MONEY ON • IT MEANS THE MONEY

WHICH NO INCOME TAX OR EARNED FROM THE ILLEGAL
OTHER TAXES HAVE BEEN OR CRIMINAL ACTIVITIES.
PAID. • REGULATED BY THE
• REGULATED BY THE PREVENTION OF MONEY
INCOME TAX ACT, 1961 LAUNDERING ACT,2002

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 DEFINITION OF MONEY LAUNDERING
AS PER SECTION 3 OF THE PREVENTION OF MONEY
LAUNDERING ACT,2002
WHOSOEVER DIRECTLY OR INDIRECTLY ATTEMPTS TO
INDULGE OR ASSIST OTHER PERSON OR ACTUALLY
INVOLVED IN ANY ACTIVITY CONNECTED WITH THE
PROCEEDS OF CRIME AND PROJECTING IT AS UNTAINTED
PROPERTY WILL BE GUILTY OF OFFENCE OF MONEY
LAUNDERING.

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 STAGES IN MONEY LAUNDERING
2:LAYERING
[ MONEY INJECTED INTO SYSTEM IS LAYERED
AND SPREAD OVER VARIOUS TRANSACTIONS
IN DIFF. ACCOUNTS & DIFF. COUNTRIES ]

1: PLACEMENT 3: I N T EG R AT I O N
[ IN THIS PROCESS [ MONEY ENTERS
MONEY IS IN FINANCIAL
INJECECTED SYSTEM IN SUCH A
INTO WAY THAT THE
THE FORMAL FACT OFFENDOR
FINANCIAL CA N USE IT AS
SYSTEM ] CLEAN MONEY ]

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OVERVIEW OF THE PREVENTION OF MONEY
LAUNDERING ACT,2002
 EVERY BANKING COMPANY, FINANCIAL INSTITUTIONS & INTERMEDIARIES
SHALL MAINTAIN A RECORD OF ALL TRANSACTIONS AND SUCH RECORDS
SHALL BE KEPT CONFIDENTIAL.
 ENFORCEMENT DIRECTOR HAS THE RIGHT TO MAKE INQUIRY IN RESPECT OF
ABOVE & HE MAY ALSO DIRECT THE REPORTING ENTITY TO GET THESE
RECORDS AUDITED.FURTHER HE CAN IMPOSE PENALTY IF THOSE
CONDITIONS ARE NOT COMPLIED WITH.
 THE REPORTING ENTITY ,ITS’ DIRECTORS OR EMPLOYEES HAVE FULL
IMMUNITY AGAINST ANY CIVIL OR CRIMINAL PROCEEDINGS FOR
FURNISHING INFORMATION TO THE ENFORCEMENT DIRECTOR.
 ENFORCEMNT DIRECTOR HAS THE RIGHT TO ATTACH THE PROPERTY ON
PROVISONAL BASIS AND AFTER A REASONABLE OPPORTUNITY OF BEING
HEARD GIVEN TO THE PERSON, IF THE CRIME OF MONEY LAUNDERING IS
PROVED THEN THE ADJUDICATING AUTHORITY CAN CONFIRM ATTACHMENT.

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 BENAMI TRANSACTIONS
AS PER PROHIBITION OF BENAMI TRANSACTIIONS ACT,1988
‘ BENAMI TRANSACTION IS A TRANSACTION IN WHICH
PROPERTY IS TRANSFERRED TO ONE PERSON FOR WHICH
CONSIDERATION IS PAID BY SOME OTHER PERSON AND SUCH
PROPERTY WILL BE USED FOR IMMEDIATE OF FUTURE BENEFIT
OF THE PERSON GIVING CONSIDERATION ‘

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 IMPORTANT TERMINOLOGY
 PERSON: The meaning of person in this act is same as given in the
Income Tax Act,1961 ; except that here it excludes local
authority from its scope.

 BENAMIDAR: The person in whose name the property (benami) is

held is called benamidar.

 BENEFICIARY: The person who pays consideration for the property

held in the name of benamidar is called beneficiary.

 PROPERTY: It means all assets whether movable or immovable,

tangible or intangible, corporeal or non-corporeal. It also
includes right or such other document evidencing title or
interest in such property and also the consideration
received from such property.

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 CERTAIN TRANSACTIONS INCLUDED
IN BENAMI TRANSACTIONS
 Where a property related transaction is
carried out in a fictitious name.
 Where the owner of the property has no knowledge
or denies having any knowledge of the ownership
of such property.

 Where the person providing the consideration

is untraceable or fictitious.
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 EXCEPTIONS
 PROPERTY IS HELD BY A MEMBER OF HUF
& THE CONSIDERATION IS PAID FROM THE
KNOWN SOURCES OF HUF.
 A PERSON WHO HOLDS PROPERTY IN A FIDUCIARY
CAPACITY FOR SUCH OTHER PERSON; DIRECTOR
OF COMPANY, TRUSTEE OF TRUST
 AN INDIVIDUAL HOLDING PROPERTY IN THE NAME OF
HIS SPOUSE OR CHILD & WHERE THE CONSIDERATION
IS PAID FROM THE KNOWN SOURCES OF INDIVIDUAL

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THANK
YOU
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