Chapter 16

Question 1

Money Laundering:

Answer 1

A person shall be guilty of offence of money laundering, if the person:
- Acquires, converts, possesses, uses or transfers property, knowing or having reason to believe that such property is proceeds of crime;
- Conceals or disguises the true nature, origin, location, disposition, movement or ownership of property, knowing or having reason to believe that such property is proceeds of crime;
- Holds or possesses on behalf of any other person any property knowing or having reason to believe that such property is proceeds of crime; or
- Participates in, associates, conspires to commit, attempts to commit, aids, abets, facilitates, or counsels the commission of
the above 3 acts

Question 2

“Electronic Fund Transfer”

Answer 2

means any transfer of funds, other than a transaction originated by cheque, draft or similar paper instrument, which is initiated through an Electronic Terminal, telephonic instrument, point-of -sale Terminal, stored value card Terminal, debit card, ATM, computer magnetic tape or any other electronic device so as to order, instruct, or authorize a Financial Institution to debit or credit an Account.

Question 3

Operator

Answer 3

means any financial or other institution or any person, authorized by the State Bank to operate any Designated Payment System (DP

Question 4

“Electronic Fund or Electronic Money”

Answer 4

means money transferred through
- An Electronic Terminal,
- ATM,
- Telephone instrument,
- Computer,
- Magnetic medium or
- Any other electronic device
so as to order, instruct, or authorize
A banking company,
- A Financial Institution or
- Any other company or person to debit or credit
an account; and
- includes monetary value as represented by a claim on the issuer which is stored in an electronic device or
Payment Instrument, issued on receipt of funds of an amount not less in value than the monetary value issued, accepted as means of payment by undertakings other than the issuer and
- includes electronic store of monetary value on an electronic device that may be used for making payments
or
- as may be prescribed by the State Bank.

Question 5

Financial institution

Answer 5

Includes any institution carrying on any one or more of the following activities, namely:—
· Acceptance of deposits and other repayable funds from the public;
· Lending in whatsoever form;
· Financial leasing;
· Money or value transfer;
· Issuing and managing means of payments including but not limited to credit and debit
cards, cheques, travelers cheques, money orders, bank drafts and electronic money;
· Financial guarantees and commitments;
· Trading in—
- Money market instruments;
- Foreign exchange;
- Exchange, interest rate and index instruments;
- Transferable securities; and
- Commodity futures trading

Question 6

Offence of Money Laundering

Answer 6

A person shall be guilty of offence of money laundering, if the person:

§ Acquires, converts, possesses, uses or transfers property, knowing or having reason to
believe that such property is proceeds of crime;

§ Conceals or disguises the true nature, origin, location, disposition, movement or
ownership of property, knowing or having reason to believe that such property is
proceeds of crime95;

§ Holds or possesses on behalf of any other person any property knowing or having reason
to believe that such property is proceeds of crime; or

§ Participates in, associates, conspires to commit, attempts to commit, aids, abets,
facilitates, or counsels the commission of the above 3 acts97.

Question 7

Punishment for Money Laundering

Answer 7

Whoever commits the offence of money laundering shall be

§ Punishable with rigorous imprisonment of at least 1 year (may extend up to 10 years);

§ Liable to fine which may extend to Rs. 25 Million; and

§ Liable to forfeiture of property involved in the money laundering
(or property of corresponding value)

Question 8

Penalty in case of a Company

Answer 8

§ Fine may extend to Rs. 100 Million

§ Where a company contravene the provisions of this Act or any related rules etc, every
responsible person (director/partner, manager, secretary or other officer) shall be liable to
be proceeded against and punished accordingly

§ Every director, officer or employee found guilty shall also be punishable under this section.