PMLA Act 2002

Quick answer

PMLA stands for the Prevention of Money-laundering Act, 2002, India's main law that makes money laundering a crime, lets authorities attach and confiscate the proceeds of crime, and requires banks and other reporting entities to keep records and report cash and suspicious transactions to FIU-IND. The Act received assent on 17 January 2003 as Act No. 15 of 2003 and came into force on 1 July 2005. Section 3 defines the offence, section 4 sets the punishment, and section 12 places record-keeping and reporting duties on banks, financial institutions and intermediaries. The Directorate of Enforcement (ED) investigates money-laundering cases, while FIU-IND receives the reports that reporting entities file.

Key takeaways

1. PMLA Act at a glance

Short answer: The PMLA is a central Act that applies to the whole of India, has 10 chapters and a Schedule, came into force on 1 July 2005 and has been amended many times, with Act 23 of 2019 being the latest amending Act noted in the official consolidated text.

Here are the basic facts in one table. They come from the consolidated bare Act hosted on a government site, the Prevention of Money-laundering Act, 2002 (thc.nic.in, October 2026).

This guide explains the law for learning purposes only. It is not legal advice, so always check the current Act and notifications, or speak to a lawyer, before you rely on any provision for a real case.

2. What is the PMLA Act? Full form and purpose

Short answer: PMLA is the Prevention of Money-laundering Act, 2002; its purpose is to prevent money laundering, punish people who launder money, and take away property that comes from crime.

Money laundering means making money from crime look like it came from a legal source. A fraudster, drug trafficker or corrupt official cannot spend large amounts of dirty cash openly. So they move it through bank accounts, companies, property or other assets until it looks clean. If you want the basics of how laundering works and how banks fight it, read our pillar guide on anti-money laundering.

The PMLA attacks this problem in three ways:

A few terms you will see throughout this guide:

3. PMLA timeline and amendments

Short answer: Parliament passed the PMLA as a 2002 Act, it received assent in January 2003, came into force on 1 July 2005, and was amended in 2005, 2009, 2013, 2015, 2016, 2018 and 2019 according to the official consolidated text.

People are often confused about the year. The Act is called the 2002 Act, but it got presidential assent on 17 January 2003, which is why it carries the number "Act No. 15 of 2003". It then waited more than two years before the government notified it into force on 1 July 2005, through notification G.S.R. 436(E), as recorded in the footnote to section 1 of the official bare Act.

The official consolidated text we checked notes Act 23 of 2019 as the latest amending Act, so check the current text on an official government site before you quote any later change. Amendments to the PML Rules are a separate matter, covered in section 12 below.

4. Structure of the PMLA: 10 chapters and a Schedule

Short answer: The PMLA is divided into 10 chapters, from Preliminary and the offence itself to attachment, bank obligations, search powers, the Appellate Tribunal, Special Courts, authorities, international co-operation and miscellaneous provisions, followed by a Schedule of offences.

5. Key PMLA sections explained in one table

Short answer: The sections you will hear about most are 2(1)(u) on proceeds of crime, 3 on the offence, 4 on punishment, 5 and 8 on attachment and adjudication, 12 and 12A on reporting entity duties, 17 and 19 on search and arrest, 24 on burden of proof, 45 on bail, 50 on summons and 66 on sharing information.

All descriptions below are plain-English summaries of the consolidated bare Act (thc.nic.in, October 2026), not the legal wording.

The next few sections explain the most searched ones in more depth.

6. Section 3 and section 4: the offence and its punishment

Short answer: Section 3 says anyone who directly or indirectly attempts, knowingly assists, is knowingly a party to, or is actually involved in any process connected with proceeds of crime commits money laundering, and section 4 punishes this with 3 to 7 years of rigorous imprisonment plus fine, or up to 10 years for drug-related proceeds.

Section 3 in plain words

Section 3 is wide on purpose. It covers not only the person who committed the original crime but also anyone who knowingly helps, takes part in or is involved in handling the proceeds. The listed activities are concealment, possession, acquisition, use, and projecting or claiming the money as untainted (clean) property. An Explanation added by Act 23 of 2019, in force from 1 August 2019, says the offence is a continuing activity for as long as the person keeps enjoying the proceeds.

Section 4 in plain words

The punishment is rigorous imprisonment of 3 to 7 years plus a fine. The old ₹5 lakh fine cap was removed by Act 2 of 2013, so there is no fixed upper limit now. Where the proceeds relate to an offence under the Narcotic Drugs and Psychotropic Substances Act, 1985 (paragraph 2 of Part A of the Schedule), the maximum jail term rises to 10 years.

A fictional worked example

This example is made up to show how the sections fit together.

If you want to see how money moves through placement, layering and integration in cases like this, read our guide to the stages of money laundering.

7. Attachment, adjudication and confiscation: how property is taken away

Short answer: ED first attaches property provisionally for up to 180 days under section 5, the Adjudicating Authority then confirms or rejects the attachment under section 8, and the Special Court orders final confiscation only if it finds money laundering at the end of the trial.

Taking away the proceeds of crime is as important under the PMLA as jailing the launderer. Here is the flow, based on the bare Act.

Chapter III also allows the restoration of property to victims and legitimate claimants, which matters in fraud cases where ordinary people lost money.

8. ED's investigation powers: search, arrest, summons and burden of proof

Short answer: Section 17 lets authorised ED officers search places and seize records or property, section 19 lets them arrest a person they believe is guilty, section 50 lets them summon people and documents, and section 24 shifts the burden of proof onto the accused.

These are the powers that make the news.

Many people search for "section 19 PMLA punishment". Section 19 is not a punishment section. It is the arrest power. Punishment is in section 4.

9. Section 45: bail, the twin conditions and the Vijay Madanlal ruling

Short answer: Under section 45, a person accused of a PMLA offence gets bail only if the Public Prosecutor has a chance to oppose it and, if opposed, the court is satisfied there are reasonable grounds to believe the accused is not guilty and is not likely to commit an offence on bail; the Supreme Court upheld these twin conditions in 2022.

The twin conditions

Section 45 is titled "Offences to be cognizable and non-bailable". It says that, despite the normal criminal procedure law, no person accused of a PMLA offence will be released on bail unless:

These two tests are why lawyers call them the "twin conditions". They are much stricter than ordinary bail rules, because the court must form a view on guilt at the bail stage itself.

The exceptions

The Special Court may grant bail without the twin conditions to a person who is under 16 years of age, a woman, sick or infirm, or accused (alone or with co-accused) of laundering a sum of less than ₹1 crore. An Explanation in section 45 also confirms that all PMLA offences are cognizable and non-bailable, so authorised officers can arrest without a warrant, subject to the conditions in section 19.

Vijay Madanlal Choudhary v Union of India (2022)

On 27 July 2022, a three-judge bench of the Supreme Court led by Justice A.M. Khanwilkar upheld the challenged PMLA provisions, including ED's powers of arrest, attachment, search and seizure and the twin bail conditions in section 45, as reported by LiveLaw (July 2022). The question of whether some amendments were validly passed as a Money Bill was sent to a larger bench.

Review petitions against this judgment have been filed. We have not verified their current outcome, so check the latest Supreme Court orders before relying on this ruling in any matter.

10. Scheduled offences: Parts A, B and C in plain words

Short answer: A scheduled offence is a crime listed in the Schedule to the PMLA; Part A lists offences under the IPC and other Acts, Part B covers false declaration under the Customs Act where the value is ₹1 crore or more, and Part C covers offences with cross-border implications.

Money laundering always needs an underlying crime that generated the money. The PMLA calls these scheduled offences. If money comes from a crime that is not in the Schedule, the PMLA does not apply to it.

Part A was replaced in full by Act 2 of 2013, which is why older textbooks show a different list. Always read the current official text when you need the exact list, because the Schedule is long and gets amended.

11. Authorities under the PMLA: who does what

Short answer: ED investigates and prosecutes, FIU-IND receives and analyses reports from reporting entities, the Adjudicating Authority confirms attachments, the Appellate Tribunal hears appeals, and Special Courts try the offences.

Many learners mix up ED and FIU-IND. They have very different jobs.

FIU-IND is headed by a senior civil servant of Additional Secretary rank and has been a member of the Egmont Group, the international network of financial intelligence units, since 2007, according to the FIU-IND Annual Report 2024-25 (October 2026).

12. Obligations of reporting entities under the PMLA and PML Rules 2005

Short answer: Every reporting entity must verify customer identity, keep transaction records for 5 years and identity records for 5 years after the relationship ends, report cash transactions above ₹10 lakh and other specified transactions monthly by the 15th of the next month, and file STRs within 7 working days of deciding a transaction is suspicious.

This is the part of the PMLA that most AML jobs are built around. The details come from the PML (Maintenance of Records) Rules, 2005, as explained in the FIU-IND FAQs (October 2026).

Who is a reporting entity?

A reporting entity is a banking company, financial institution, intermediary or a person carrying on a designated business or profession. Each one must give FIU-IND the name of its Designated Director and Principal Officer and register on FIU-IND's FINnet reporting system. The Principal Officer is the person who decides whether a transaction is suspicious and files the report.

What must be recorded and reported

Record keeping

Under section 12, transaction records must be kept for 5 years from the date of the transaction. Identity records, account files and business correspondence must be kept for 5 years after the business relationship ends or the account is closed, whichever is later. All information must be kept confidential.

KYC under RBI's rules

The PMLA and PML Rules set the duty to verify customers. Each regulator then writes detailed KYC rules for the entities it supervises. For commercial banks, the current rule is the Reserve Bank of India (Commercial Banks – Know Your Customer) Directions, 2025, dated 28 November 2025, which replaced the earlier 2016 Master Direction on KYC for those banks. Separate RBI KYC Directions apply to other types of regulated entities. For the full KYC process, read our guide on KYC and AML, and for how customer checks deepen by risk level, see customer due diligence.

In July 2024, the PML Rules were amended so that reporting entities fetch KYC records from the Central KYC Records Registry (CKYCR) using the customer's KYC Identifier instead of asking clients to submit documents again, with some exceptions. The Department of Revenue notified this as G.S.R. 419(E) on 19 July 2024, according to the FIU-IND Annual Report 2024-25.

Penalties for reporting entities

Under section 13, the Director of FIU-IND can fine a reporting entity, its designated director or its employees between ₹10,000 and ₹1 lakh for each failure, according to the FIU-IND FAQs. Because the fine applies per failure, many missed reports can add up quickly. In FY 2024-25, FIU-IND passed 8 compliance orders with an aggregate penalty of ₹30,48,65,000 (about ₹30.5 crore), as reported in its Annual Report 2024-25.

13. The PMLA in numbers

Short answer: As on 31 March 2026, ED had recorded 8,851 money-laundering cases (ECIRs) and arrested 1,187 persons, and in FY 2024-25 reporting entities filed 4,34,668 STRs and 1,73,13,368 CTRs with FIU-IND.

The enforcement figures below come from ED's PMLA statistics as on 31.03.2026 (October 2026).

ED states a conviction rate of 93.33 percent. Keep in mind that this rate is calculated on only 60 completed trials, out of 2,396 prosecution complaints filed, so most cases are still pending.

On the reporting side, the FIU-IND Annual Report 2024-25 shows that reporting entities filed 4,34,668 STRs, 1,73,13,368 CTRs and 1,02,73,512 cross-border wire transfer reports in FY 2024-25. STRs stood at 6,45,905 in FY 2022-23 and 3,68,592 in FY 2023-24, so the number moves a lot from year to year.

14. What PMLA means for an AML analyst's daily work

Short answer: As an AML analyst, you apply the PMLA every day through KYC checks, transaction monitoring, alert investigation, record keeping and helping your Principal Officer file STRs on time.

You will not quote section numbers in most team meetings. But almost every task in an AML or KYC role exists because of the PMLA and the PML Rules.

Here is how a typical alert connects to the law, step by step. The case is fictional:

To understand how alerts are generated and reviewed in detail, read our guide to transaction monitoring.

15. How Brolly Academy helps

Short answer: Brolly Academy's AML course covers the regulatory framework, KYC, CDD and suspicious activity reporting in a 45-day programme, so you learn how laws like the PMLA turn into daily AML work.

Reading the PMLA is one thing. Applying it to an alert or a KYC file is what employers test. Brolly Academy's AML Course in India runs for 45 days, online across India and in classroom mode in Hyderabad. Its 7 modules include a Regulatory Framework module (FATF, RBI, SEBI, reporting, enforcement, penalties and suspicious activity reporting) and a Customer Due Diligence and KYC module.

Third-party certifications such as IIBF's AML and KYC certificate or ACAMS CAMS are issued and examined by those bodies, with separate fees. A free demo class is available, and the next batch listed on the course page starts on Monday, 2 November 2026.

Frequently asked questions