India's law on money laundering took its present form in three dated steps:
- 1 July 2005. The PMLA and its record keeping rules came into force.
- 1 August 2019. Act 23 of 2019 added Explanations to sections 2(1)(u) and 3.
- 27 July 2022. The Supreme Court upheld the act's main powers in Vijay Madanlal Choudhary v Union of India.
What is proceeds of crime under the PMLA, and how did the definition grow?
Section 2(1)(u) defines proceeds of crime as "any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property". Three amendments added to it:
- Act 20 of 2015, from 14 May 2015. Where the property is taken or held outside the country, property of equal value held in India.
- Act 13 of 2018, from 19 April 2018. The words "or abroad", so the value can be traced outside India too.
- Act 23 of 2019, from 1 August 2019. An Explanation that it includes property from any criminal activity "relatable to the scheduled offence".
A scheduled offense is one listed in Part A or Part C of the Schedule, or in Part B where the value involved is one crore rupees or more. Section 3's 2019 Explanation names six activities that make dealing with the property money laundering: concealment, possession, acquisition, use, projecting it as untainted and claiming it as untainted. The activity continues for as long as a person enjoys the proceeds. Punishment under section 4 is 3 to 7 years of rigorous imprisonment and a fine, up to 10 years for the drug offenses in paragraph 2 of Part A.
When can the Enforcement Directorate attach proceeds of crime?
Table 1. Attachment under the PMLA, stage by stage (sections 5 and 8, as of October 2026).
| Stage | Input | Output | Who decides | Clock |
|---|---|---|---|---|
| Reason to believe | Material showing a person holds proceeds of crime likely to be concealed, plus a police report or complaint on the scheduled offense (not needed where delay would frustrate the case, second proviso) | Reasons recorded in writing | The Director, or a Deputy Director or above whom the Director authorizes | None set |
| Provisional attachment | The recorded reasons | An order attaching the property | The same officer | Up to 180 days from the order (section 5(1)) |
| Complaint | The facts of the attachment | A complaint to the Adjudicating Authority | The attaching officer | Within 30 days of attachment (section 5(5)) |
| Confirmation | The complaint and a hearing | Attachment confirmed | The Adjudicating Authority | Holds during up to 365 days of investigation or while the trial runs (section 8(3)) |
| Confiscation | A finding that money laundering was committed | Property confiscated to the Central Government | The Special Court | On conclusion of the trial (section 8(5)) |
The first two stages show in a release of 7 October 2026: the ED's Guwahati office provisionally attached Rs. 2.12 crore in balances across 43 accounts at six banks (press release). Fraudsters posing as officials had held a senior citizen of Guwahati in a fake "digital arrest" between September and December 2025 and taken Rs. 2.13 crore in 19 transfers.
The money went first to mule accounts, then through more layers, and out as cash, digital currency or payment gateway transfers. The ED found the activity "wholly inconsistent with the declared profiles of the account holders".
Section 5 reaches "any person" in possession of proceeds of crime. So an order can freeze balances held in other people's names, as in those 43 accounts, whatever the account holders' own part turns out to be.
What did the Supreme Court decide on the PMLA in 2022?
Take a person (illustrative) finally acquitted of the scheduled offense that opened an ED case. Under paragraph 187(v)(d) of the 2022 judgment, there is then no money laundering offense against that person for property linked to it, and the same holds after a discharge or a quashed case. The court's other holdings in paragraph 187:
- The 2019 Explanation to section 2(1)(u) "does not travel beyond the main provision" (iv).
- No one can be prosecuted "on notional basis": the scheduled offense must be registered with the police or pending before a court (v)(d).
- Sections 5 (attachment), 24 (the burden of proof) and 45 (the conditions for bail) are valid (vi, xi, xiii).
- ED officers "are not police officers as such" (xv), and an "ECIR cannot be equated with an FIR" (xviii).
For a reporting entity the two holdings pull apart. The ED may attach long before any trial, once the scheduled offense has reached a police report or a complaint, or at once where delay would frustrate confiscation. A money laundering case still stands or falls with that offense. A suspicious transaction report therefore rests on the pattern in the account, never on a charge or a conviction.
What must reporting entities do under the PMLA?
Table 2. Reporting entity duties under section 12 and the PML (Maintenance of Records) Rules, 2005 (ED consolidation; as of October 2026).
| Record or report | Trigger | Deadline | Rule |
|---|---|---|---|
| Cash transaction report | Cash over Rs. 10 lakh, or a month's integrally connected cash transactions each under Rs. 10 lakh that total more | Monthly, by the 15th of the next month | Rules 3(1)(A), 3(1)(B), 8(1) |
| Cross border wire report | A wire over Rs. 5 lakh with its origin or destination in India | Monthly, by the 15th of the next month | Rules 3(1)(E), 8(1) |
| Suspicious transaction report | Any suspicious transaction, cash or not | Within seven working days of being satisfied it is suspicious | Rules 3(1)(D), 8(2) |
| Transaction records | Every transaction, kept so it can be reconstructed | Five years from the transaction | Section 12(1)(a), 12(3) |
| Identity records | Documents on clients and beneficial owners, account files, correspondence | Five years after the relationship ends or the account closes, whichever is later | Section 12(1)(e), 12(4) |
A reporting entity is a bank, a financial institution, an intermediary or a person in a designated business or profession, such as a casino, a real estate agent or a dealer in precious metals and stones the government has notified (section 2(1)(sa) and (wa)). Its principal officer reports to the Director of FIU-IND.
The monthly cash transaction report runs on the calendar, and the suspicious transaction report on the day the principal officer is satisfied, so the date of that decision belongs in the case file.
complead, formerly Sanction Scanner, opens each transaction monitoring alert as a case with the customer's risk assessment and counterparties attached and drafts the STR narrative from it, with the approval chain recorded.
What happened under the PMLA in 2025 and 2026?
- 28 November 2025. The Reserve Bank of India issued its KYC Directions, 2025 for commercial banks, which name the PMLA and the 2005 Rules as the legal frame for KYC rules in India; updated as on 1 October 2026.
- 31 March 2026. The ED's totals: 8,851 ECIRs recorded, 3,501 provisional attachment orders worth Rs. 2,36,016.61 crore, 2,593 confirmed (Rs. 1,28,858.35 crore), 56 convictions in 60 completed trials and Rs. 15,735.91 crore confiscated (ED statistics).
- 7 October 2026. The Guwahati office attached balances in 43 mule accounts in a digital arrest fraud.
The next question belongs to the UK, whose Proceeds of Crime Act 2002 is the law many "POCA" searches mean. Its section 340 defines criminal property as a benefit from criminal conduct that the offender knows or suspects it to be, and section 330 makes a failure to disclose in the regulated sector an offense, so the same suspicion is tested in different words there.
Related terms
- Money laundering. Under the PMLA, any process or activity connected with proceeds of crime, use and possession included.
- Money mule. A person whose account moves someone else's criminal money.
- Hawala. Informal value transfer outside the banking system.
- Currency transaction report. A report on large cash transactions.
- Suspicious activity report. The report on activity that looks suspicious; India's form is the STR.
- Anti-Money Laundering Act (AMLA). The Philippine law most "AMLA" searches mean.
How this entry was checked. Every section number here was read in the Enforcement Directorate's consolidated copy of the Prevention of Money-laundering Act, 2002 (sections 1 to 5, 8, 12, 24 and 45) and its copy of the PML (Maintenance of Records) Rules, 2005 (rules 3 and 8) on 29 October 2026. The 2022 holdings come from paragraph 187 of Vijay Madanlal Choudhary v Union of India (27 July 2022); the case and the totals from the ED's release of 7 October 2026 and its statistics up to 31 March 2026; the KYC item from the Reserve Bank of India's directions page; the UK lines from legislation.gov.uk. The definition is quoted from section 2(1)(u). Ufuk Gürdaş, Compliance Specialist, reads Tables 1 and 2 against sections 5, 8 and 12 and rules 3 and 8 before the entry goes live. Last reviewed: 30 October 2026.
