Internal Security & Disaster Management
Money Laundering and Organised Crime
GS Paper III
Money Laundering and Organised Crime — Quick Revision
One-page UPSC revision of money laundering and organised crime: PMLA sections, ED and FIU-IND, allied laws, FATF lists, key judgments and organised crime law.
SyllabusGS III · Money-laundering and its prevention; linkages of organised crime with terrorism
Everything on money laundering and organised crime on one page. The tables carry the Prelims facts; the grid at the end is a Mains skeleton.
Stages and Methods
| Stage | Methods |
|---|---|
| Placement | Structuring (smurfing), cash businesses, high-value goods |
| Layering | Shell companies, trade mis-invoicing, hawala, crypto-assets |
| Integration | Real estate, investments, round-tripping |
PMLA, 2002 (in force 1 July 2005)
| Section | Content |
|---|---|
| 3 | Offence of money laundering |
| 4 | 3–7 years; up to 10 years for NDPS-linked offences |
| 5 | Provisional attachment, up to 180 days |
| 8 | Adjudicating Authority confirms attachment |
| 12 | Reporting entities — KYC, records, reports |
| 19 | Arrest — grounds in writing (Pankaj Bansal, 2023) |
| 24 | Burden of proof on the accused |
| 45 | Twin bail conditions |
| 50 | Summons and statements |
Agencies and Laws
| Body / law | Detail |
|---|---|
| Enforcement Directorate | Department of Revenue; PMLA, FEMA, FEOA |
| FIU-IND | Department of Revenue; set up 2004; receives CTRs and STRs |
| FEMA | 1999; civil; replaced FERA |
| Black Money Act | 2015; undisclosed foreign income and assets |
| Benami Amendment Act | 2016 |
| Fugitive Economic Offenders Act | 2018; ₹100 crore threshold |
| BNS | 2023; Section 111 organised crime; Section 113 terrorist act |
| MCOCA | 1999; Maharashtra’s organised crime law |
High-yield facts
- FATF: set up in 1989 by the G7; 40 Recommendations; India member since 2010; India in regular follow-up after the June 2024 plenary.
- Black list = call for action; grey list = increased monitoring.
- India is also in the APG and EAG regional bodies.
- VDA service providers became PMLA reporting entities in March 2023.
- UNTOC (Palermo, 2000) — India ratified in 2011.
Judgments
| Case | Year | Holding |
|---|---|---|
| Nikesh Tarachand Shah | 2017 | Twin bail conditions (as then worded) struck down; re-enacted 2018 |
| Vijay Madanlal Choudhary | 2022 | PMLA’s key provisions upheld; ECIR not an FIR; ED officers not police |
| Pankaj Bansal | 2023 | Grounds of arrest must be furnished in writing |
Mains Grid: Crime–Terror Money Trail
| Source | Channel | Counter |
|---|---|---|
| Drugs | Hawala, cash couriers | NCB, PMLA, FIU-IND |
| Counterfeit currency | Border routes | NIA (since 2019), DRI |
| Extortion, kidnapping | Cash | State police, UAPA |
| Donations, charities | Formal and informal transfers | FCRA scrutiny, FATF Recommendation on non-profits |
| Crypto-assets | Online exchanges | VDA reporting under PMLA |
Traps
- ED and FIU-IND → Finance Ministry, not Home Ministry.
- FEMA is civil; PMLA is criminal.
- Money laundering needs a scheduled (predicate) offence.
Related Topics
- Money Laundering: PMLA, FATF and the Crime–Terror Money Trail
- Money Laundering and Organised Crime — practice questions
- Terrorism and Insurgency
- Border Management
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