Financial Intelligence Unit – India (FIU-IND)
Financial
Intelligence Unit – India (FIU-IND) was set by the Government of India in 2004
as
the
central national agency responsible for receiving, processing, analyzing and
disseminating
information
relating to suspect financial transactions. FIU-IND is also responsible for
coordinating
and strengthening efforts of national and international intelligence,
investigation
and
enforcement agencies in pursuing the global efforts against money laundering and
related
crimes.
FIU-IND is an independent body reporting directly to the Economic Intelligence
Council
(EIC) headed by the Finance Minister.
Functions of FIU-IND
The
main function of FIU-IND is to receive cash/suspicious transaction reports,
analyse them
and,
as appropriate, disseminate valuable financial information to
intelligence/enforcement
agencies
and regulatory authorities . The functions of FIU-IND are:
• Collection of Information: Act as the
central reception point for receiving Cash
Transaction
reports (CTRs) and Suspicious Transaction Reports (STRs) from various
reporting
entities.
• Analysis of Information: Analyze
received information in order to uncover patterns
of
transactions suggesting suspicion of money laundering and related crimes.
• Sharing of Information: Share
information with national intelligence/law
enforcement
agencies, national regulatory authorities and foreign Financial
Intelligence
Units.
• Act as Central Repository: Establish and
maintain national data base on cash
transactions
and suspicious transactions on the basis of reports received from
reporting
entities.
• Coordination: Coordinate and strengthen
collection and sharing of financial
intelligence
through an effective national, regional and global network to combat
money
laundering and related crimes.
• Research and Analysis: Monitor and
identify strategic key areas on money
laundering
trends, typologies and developments.
Organisational Set-up
FIU-IND
is a multi disciplinary body headed by a Director. Personnel in this Unit are
being
inducted
from different organizations namely Central Board of Direct Taxes (CBDT),
Central
Board
of Excise and Customs (CBEC), Reserve Bank of India (RBI), Securities Exchange
Board
of India (SEBI), Department of Legal Affairs and Intelligence agencies.
Authorities at FIU-IND
According
to Section 48 of the Prevention of Money Laundering Act, 2002
there
shall be the following classes of authorities for the purposes of this Act,
namely:-
(a)
Director or Additional Director or Joint Director,
(b)
Deputy Director,
(c)
Assistant Director, and
(d)
such other class of officers as may be appointed for the purposes of this Act.
Appointment of Authorities
As per
Section 49 of the Prevention of Money Laundering Act, 2002:
(1)
The Central Government may appoint such persons as it thinks fit to be
authorities for the
purposes
of this Act.
(2)
Without prejudice to the provisions of sub-section (1), the Central Government
may
authorise
the Director or an Additional Director or a Joint Director or a Deputy Director
or an
Assistant
Director appointed under that sub-section to appoint other authorities below
the
rank
of an Assistant Director.
(3)
Subject to such conditions and limitations as the Central Government may
impose, an
authority
may exercise the powers and discharge the duties conferred or imposed on it
under
this
Act.
Director and officers subordinate to him deemed to be public
servants
Section
40 of the Prevention of Money Laundering Act, 2002 declares the Chairperson,
Members
and other officers and employees of the Appellate Tribunal, the Adjudicating
Authority,
Director and the officers subordinate to him shall be deemed to be public
servants
within
the meaning of section 21 of the Indian Penal Code, 1860 (45 of 1860).
Powers of the Director
Section
13 of the Prevention of Money Laundering Act, 2002 confers following powers on
the
Director to ensure compliance:
(1)
The Director may, either of his own motion or on an application made by any
authority,
officer
or person, call for records referred to in sub-section (1) of section 12 and
may make
such
inquiry or cause such inquiry to be made, as he thinks fit.
(2) If
the Director, in the course of any inquiry, finds that a banking company,
financial
institution
or an intermediary or any of its officers has failed to comply with the
provisions
contained
in section 12, then, without prejudice to any other action that may be taken
under
any
other provisions of this Act, he may, by an order, levy a fine on such banking
company
or
financial institution or intermediary which shall not be less than ten thousand
rupees but
may
extend to one lakh rupees for each failure.
(3)
The Director shall forward a copy of the order passed under sub-section (2) to
every
banking
company, financial institution or intermediary or person who is a party to the
proceedings
under that sub-section.
Powers of authorities regarding summons, production of documents
and to give
evidence:
Section
50 of the Prevention of Money Laundering Act, 2002 confers following powers of
summons,
production of documents and to give evidence etc.:
(1)
The Director shall, for the purposes of section 13, have the same powers as are
vested in a
civil
court under the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit
in respect
of the
following matters, namely:-
(a)
discovery and inspection;
(b)
enforcing the attendance of any person, including any officer of a banking
company,
financial
institution or a company, and examining him on oath;
(c)
compelling the production of records;
(d)
receiving evidence on affidavits;
(e)
issuing commissions for examination of witnesses and documents; and
(f)
any other matter which may be prescribed
(2)
The Director, Additional Director, Joint Director, Deputy Director or Assistant
Director
shall
have power to summon any person whose attendance he considers necessary whether
to
give
evidence or to produce any records during the course of any investigation or
proceeding
under
this Act.
(3)
All the persons so summoned shall be bound to attend in person or through authorised
agents,
as such officer may direct, and shall be bound to state the truth upon any
subject
which
they are examined or make statements, and produce such documents as may be
required.
(4)
Every proceeding under sub-sections (2) and (3) shall be deemed to be a
judicial
proceeding
within the meaning of sections 193 and 228 of the Indian Penal Code, 1860 (45
of
1860).
(5)
Subject to any rules made in this behalf by the Central Government, any officer
referred
to in
sub-section (2) may impound and retain in his custody for such period, as he
thinks fit,
any
records produced before him in any proceedings under this Act:
Provided
that an Assistant Director or a Deputy Director shall not -
(a)
impound any records without recording his reasons for so doing; or
(b)
retain in his custody any such records for a period exceeding three months,
without
obtaining
the prior approval of the Director.
Assistance from other authorities for enforcement of the Act
Section
54 of the Prevention of Money Laundering Act, 2002 empowers and requires
various
authorities
to assist in the enforcement of the act. The following officers are empowered
and
required
to assist the authorities in the enforcement of this Act, namely:-
(a)
officers of the Customs and Central Excise Departments;
(b)
officers appointed under sub-section (1) of section 5 of the Narcotic Drugs and
Psychotropic
Substances Act, 1985 (61 of 1985);
(c)
income-tax authorities under sub-section (1) of section 117 of the Income-tax
Act, 1961
(43 of
1961);
(d) officers
of the stock exchange recognised under section 4 of the Securities Contracts
(Regulation)
Act, 1956 (42 of 1956);
(e)
officers of the Reserve Bank of India constituted under sub-section (1) of
section 3 of
the
Reserve Bank of India Act, 1934 (2 of 1934);
(f)
officers of Police;
(g)
officers of enforcement appointed under sub-section (1) of section 36 of the
Foreign
Exchange
Management Act, 1973 (40 of 1999);
(h)
officers of the Securities and Exchange Board of India established under
section 3 of the
Securities
and Exchange Board of India Act, 1992 (15 of 1992);
(i)
officers of any other body corporate constituted or established under a Central
Act or a
State
Act;
(j)
such other officers of the Central Government, State Government, local
authorities or
banking
companies as the Central Government may, by notification, specify, in this
behalf.
Agreements with foreign countries
Section
56 of the Prevention of Money Laundering Act, 2002 provides for agreements with
foreign
countries to facilitate exchange of information with them:
(1)
The Central Government may enter into an agreement with the Government of any
country
outside India for-
(a)
enforcing the provisions of this Act;
(b)
exchange of information for the prevention of any offence under this Act or
under the
corresponding
law in force in that country or investigation of cases relating to any offence
under
this Act.
and
may, by notification in the Official Gazette, make such provisions as may be
necessary
for
implementing the agreement.
(2)
The Central Government may, by notification in the Official Gazette, direct
that the
application
of this Chapter in relation to a contracting State with which reciprocal
arrangements
have been made, shall be subject to such conditions, exceptions or
qualifications
as are specified in the said notification.
Disclosure of information
Section
66 of the Prevention of Money Laundering Act, 2002 provides for disclosure of
information
to other officers, authority or body:
The
Director or any other authority specified by him by a general or special order
in this
behalf
may furnish or cause to be furnished to-
(i)
any officer, authority or body performing any functions under any law relating
to
imposition
of any tax, duty or cess or to dealings in foreign exchange, or prevention of
illicit
traffic
in the narcotic drugs and psychotropic substances under the Narcotic Drugs and
Psychotropic
Substances Act, 1985 (61 of 1985); or
(ii)
such other officer, authority or body performing functions under any other law
as the
Central
Government may, if in its opinion it is necessary so to do in the public
interest,
specify
by notification in the Official Gazette in this behalf, any information
received or
obtained
by such Director or any other authority, specified by him in the performance of
their
functions under this Act, as may, in the opinion of the Director or the other
authority so
specified
by him, be necessary for the purpose of the officer, authority or body
specified in
clause
(i) or clause (ii) to perform his or its functions under that law.
Recovery of fines
Section
69 of the Prevention of Money Laundering Act, 2002 refers to recovery of fines.
Where
any fine imposed on any person under section 13 or section 63 is not paid
within six
months
from the day of imposition of fine, the Director or any other officer
authorised by him
in
this behalf may proceed to recover the amount from the said person in the same
manner as
prescribed
in Schedule 11 of the Income-tax Act, 1961 (43 of 1961) for the recovery of
arrears
and he or any officer authorised by him in this behalf shall have all the
powers of the
Tax
Recovery Officer mentioned in the said Schedule for the said purpose.
The
new network, called FINnet (Financial Intelligence Network), is a
technology-based
secure
platform for bringing together investigative and enforcement agencies to
collect,
analyse
and disseminate valuable financial information for combating money laundering
and
related
crimes.
Restriction on Civil Court Jurisdiction
Section
41 of the Prevention of Money Laundering Act, 2002 says that no civil court
shall
have
jurisdiction to entertain any suit or proceeding in respect of any matter which
the
Director,
an Adjudicating Authority or the Appellate Tribunal is empowered by or under
this
Act to
determine and no injunction shall be granted by any court or other authority in
respect
of any
action taken or to be taken in pursuance of any power conferred by or under
this Act."
Appeal to Appellate Tribunal
Section
26 of the Prevention of Money Laundering Act, 2002 deals with appeal to
Appellate
Tribunal.
(1)
Save as otherwise provided in sub-section (3), the Director or any person
aggrieved by an
order
made by the Adjudicating Authority under this Act, may prefer an appeal to the
Appellate
Tribunal.
(2)
Any banking company, financial institution or intermediary aggrieved by any
order of the
Director
made under sub-section (2) of section 13, may prefer an appeal to the Appellate
Tribunal.
(3)
Every appeal preferred under sub-section (1) or sub-section (2) shall be filed
within a
period
of forty-five days from the date on which a copy of the order made by the
Adjudicating
Authority or Director is received and it shall be in such form and be
accompanied
by such fee as may be prescribed:
Provided
that the Appellate Tribunal may, after giving an opportunity of being heard,
entertain
an appeal after the expiry of the said period of forty-five days if it is
satisfied that
there
was sufficient cause for not filing it within that period.
(4) On
receipt of an appeal under sub-section (1), or sub-section (2), the Appellate
Tribunal
may,
after giving the parties to the appeal an opportunity of being heard, pass such
orders
thereon
as it thinks fit, confirming, modifying or setting aside the order appealed
against.
(5)
The Appellate Tribunal shall send a copy of every order made
Right of Appellant
Section
39 of the Prevention of Money Laundering Act, 2002 provides for the right of
the
appellant.
(1) A
person preferring an appeal to the Appellate Tribunal under this Act may either
appear
in
person or take the assistance of an authorised representative of his choice to
present his
case
before the Appellate Tribunal.
Explanation
- For the purposes of this sub-section, the expression "authorized
representative"
shall have the same meaning as assigned to it under sub-section (2) of
section
288 of the Income Tax Act, 1961.
(2)
The Central Government or the Director may authorise one or more authorised
representatives
or any of its officers to act as presenting officers and every person so
authorised
may present the case with respect to any appeal before the Appellate Tribunal.
Appeal to High Court
Section
42 of the Prevention of Money Laundering Act, 2002 provides for appeal to High
Court:
“Any person aggrieved by any decision or order
of the Appellate Tribunal may file an appeal
to the
High Court within sixty days from the date of communication of the decision or
order
of the
Appellate Tribunal to him on any question of law or fact arising out of such
order:
Provided
that the High Court may, if it is satisfied that the appellant was prevented by
sufficient
cause from filing the appeal within the said period, allow it to be filed
within a
further
period not exceeding sixty days.
Explanation.-For
the purposes of this section, "High Court" means-
(i)
the High Court within the jurisdiction of which the aggrieved party ordinarily
resides or
carries
on business or personally works for gain; and
(ii)
where the Central Government is the aggrieved party, the High Court within the
jurisdiction
of which the respondent, or in a case where there are more than one respondent,
any of
the respondents, ordinarily resides or carries on business or personally works
for gain.
Offences which can be seen by Special Courts
Section
44 of the Prevention of Money Laundering Act, 2002 provides for trial by
Special
Courts:
(1)
Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2
of
1974),-
a. the
schedule offence and the offence punishable under section 4 shall be tried only
by the
Special
Court constituted for the area in which the offence has been committed;
Provided
that the Special Court , trying a schedule offence before the commencement of
this
Act,
shall continue to try such scheduled offence, or
b. a
Special Court may, upon a complaint made by an authority authorised in this
behalf
under
this Act take cognizance of the offence for which the accused is committed to
it for
trial.
(2)
Nothing contained in this section shall be deemed to affect the special powers
of the
High
Court regarding bail under section 439 of the Code of Criminal Procedure, 1973
(2 of
1974)
and the High Court may exercise such powers including the power under clause
(b)
of
sub-section (1) of that section as if the reference to "Magistrate"
in that section includes
also a
reference to a "Special Court" designated under section 43.
