Anti-Money Laundering in Indian Banking: PMLA and the Role of FIU-IND

Anti-Money Laundering (AML) refers to the policies and controls banks use to detect and prevent the financial system being used to disguise the origins of illegally obtained money.

The three stages. Money laundering is often described in three stages — placement (introducing illicit funds into the financial system), layering (moving funds through multiple transactions to obscure their origin), and integration (reintroducing the funds as apparently legitimate assets).

Prevention of Money Laundering Act (PMLA), 2002. India's principal AML legislation, which criminalises money laundering and empowers authorities to attach and confiscate proceeds of crime, alongside imposing AML compliance obligations on banks and other reporting entities.

FIU-IND. The Financial Intelligence Unit – India is the central national agency that receives, analyses, and disseminates information on suspicious financial transactions reported by banks and other regulated entities.

STRs and CTRs. Banks are required to file Suspicious Transaction Reports (STRs) when a transaction appears inconsistent with a customer's known profile or lacks economic rationale, and Cash Transaction Reports (CTRs) for cash transactions above prescribed thresholds, both routed to FIU-IND.