‘Money Laundering refers to the conversion or laundering of money which is illegally obtained, so as to make it appear to originate from a legitimate source’. People throughout the world resorts to money laundering for concealing the associated criminal activities such as, drugs or arms trafficking, terrorism and extortion. The International Monetary Fund revealed that the aggregate size of money laundering in the world could be somewhere between two and five percent of the worlds gross domestic product. In view of the sophisticated technology for transfer of funds and liberalization of controls in the regulatory framework, India needed some strict measures to resist the practice of Money Laundering. Before the enactment of the law on Money Laundering in India, there were certain prudent banking practices and a wide legal framework to check the proliferation of Money Laundering activities in the country. The Special Session of the United Nations General Assembly held on 8th to 10th June, 1998 adopted a Political Declaration calling upon its Member States to adopt national money-laundering legislation and programme. With a view to implement the aforesaid resolution and the Declaration, the Prevention of Money Laundering Act, 2002 was enacted by the legislature of India to prevent money-laundering and to provide for confiscation of property derived from, or involved in, money-laundering and for other connected or incidental matters.
