Background

Money Laundering is defined as hiding/disguising the source or ownership of illegally obtained/gained fund/money to make them appear arising out of legitimate source or hiding money to avoid paying taxes thereby converting black money into white money. The Prevention of Money Laundering Act, 2002 has come into effect from 1st July, 2005. As per the provisions of the Act, every banking company, financial institution, a co-operative bank, a housing finance institution and a non-banking financial company and intermediary (which includes a stock broker, sub-broker, share transfer agent, banker to the issue, underwriter, registrar to the issue, investment adviser and any other intermediary associated with the stock market has to maintain a record of all the transactions, the nature and value of the transactions which has been prescribed in the Rules under the PMLA.