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Parliamentary panel tones down Money Bill

The parliamentary standing committee of finance has substantially watered down some of the harsh provisions of the Prevention of Money Laundering Bill, 1998, including the nature of crimes that are sought to be included for penal action.

It has suggested modifications in several areas including those relating to power to arrest, search and seize, and appointment of adjudicating authority.

The 12 report of the committee on the subject, which was laid on the table of the Lok Sabha today, has also changed the definition of money laundering.

There are, however, three notes of dissent -- these were put forward by Rupchand Pal, Dr Biplab Dasgupta and S Jaipal Reddy.

The salient features of the bill are that it proposes to define the terms of ''money laundering'', ''proceeds of crime'' and "scheduled offence'' which are important for the purpose of the bill.

The bill was introduced in the Lok Sabha on August 4, 1998. The Lok Sabha speaker referred the bill to the standing committee on finance for examination and report on the subsequent day.

The bill was stringently criticised by the industry and tax experts as being too harsh.

''The committee is astonished to find that the nature of crimes under different Acts which are sought to be included in the schedule for the purpose of Act is so wide that even crimes like falsification of accounts and imitation of fire arms find their place in the schedule,'' the report says.

The schedule to the Act consists of various offences under the Indian Penal Code 1960, the Immoral Traffic (Prevention) Act 1959, the Arms Act, 1959 the Narcotic Drugs and Psychotropic Substances Act, 1985 and the Prevention of Corruption Act, 1988.

The committee is of the opinion that only those crimes (namely drug trafficking, terrorist activities and some serious provisions contained in the IPC and the Arms Act), which are of a serious nature and pose threat not only to the integrity but sovereignty of the country, should be retained and the rest of the offences should be omitted.

The process of money laundering involves cleansing of money earned through illegal activities like extortion, drug trafficking and gun running. The tainted money is projected as clean money through intricate processes of placement, layering and laundering.

The outdated Foreign Exchange Regulation Act is intended to be replaced by the Foreign Exchange Management Act and Prevention of Money Laundering Act.

While industry has by and large welcomed the FEMA as being modern and in line with liberalisation and globalisation of the economy, it has attacked the money laundering bill as being draconian and obnoxious.

The committee apart from meeting experts had also met representatives of chambers of commerce.

UNI

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