COMMENTARY
INTERVIEWS
SPECIALS
CHAT
ARCHIVES

FICCI demands changes to Money Bill

The Federation of Indian Chambers of Commerce and Industry has demanded the removal of the falsification of accounts clause from the ambit of the Prevention of Money Laundering Bill 1998. It said the clause should be under the Indian Penal Code.

FICCI says the rationale is that it may not be proper to put falsification of accounts in the category of offences like murder and drug peddling.

According to FICCI, it is generally difficult to find out whether there is any falsification of accounts and if so who is liable for such falsification. This will also impose onerous responsibility on the auditors who sign the final balance sheet and manipulation detected could invite action against them.

It also suggested that clause 11 of the bill which requires financial institutions and intermediaries to furnish information to the commissioner of income-tax about the transactions in a month exceeding the value of Rs 2.5 million, will unnecessarily add to the cost and also will give a big setback to the already sluggish capital market.

Therefore, if the Enforcement Directorate wants such information, then they may call for the same from the institutions/intermediaries instead of making it obligatory on their part to furnish the information to the commissioner of income-tax. At least the limit of Rs 2.5 million be enhanced to Rs 30 million. Those financial institutions and intermediaries which are not accepting any public deposit should be outside its ambit.

According to the chamber, in the very definition of the money laundering also there have to be certain changes. In terms of this clause, whoever acquires, owns, possesses or transfers any proceeds of crime or enters into any transaction which is related to proceeds of crime, either directly or indirectly, or conceals or aids in the concealment of the proceeds of crime, commits offence of money laundering.

The words 'wilfully' or 'knowingly' are not used anywhere in the definition. Mens rea, which is an essential ingredient or criminal jurisprudence, is altogether missing. It is not realistic to expect every transacting party to exhaustively investigate the ultimate source of funds being remitted to it for each transaction or to accept such an investigation every time it remits funds in the normal course of business or otherwise. Therefore, it is necessary that the words knowingly and wilfully should be inserted before the word acquires and the word directly be substituted for the words either directly or indirectly.

Another suggestion is that the punishment should be similar to the one provided for the accused under clause four that is, imprisonment for a period of three to seven years and also penalty. Other safeguards should also be provided against misuse of wide powers vested with the authorities. Clauses 54 and 55 provide for punishment of vexatious search and false information. Punishment provided for indiscreet use of these powers is insufficient and might result in abuse of these powers, the chamber says.

UNI