The Prevention of Money Laundering Act (PMLA), 2002, is the primary legislation in India to combat money laundering. It criminalizes the process of integrating illegally obtained money into the formal financial system. The Act covers a wide range of offenses, including drug trafficking, corruption, and terrorism financing, as predicate offenses for money laundering.
The PMLA empowers authorities like the Enforcement Directorate to investigate and prosecute money laundering cases. It also mandates financial institutions and designated non-financial businesses and professions (DNFBPs) to implement KYC (Know Your Customer) and AML (Anti-Money Laundering) measures.
The Act provides for stringent penalties, including imprisonment and hefty fines, for individuals and entities found guilty of money laundering. It also allows for the confiscation of assets derived from or used in money laundering activities.