A CRITICAL STUDY ON THE EFFECTIVENESS OF THE PREVENTION OF MONEY LAUNDERING ACT IN INDIA
AUTHORS – A.P.ARTHIYA & E.RITHIKA SIVA SAKTHI
STUDENTS AT SAVEETHA SCHOOL OF LAW, SAVEETHA INSTITUTE OF MEDICAL AND TECHNICAL SCIENCES (SIMATS), SAVEETHA UNIVERSITY, CHENNAI-77
BEST CITATION – A.P.ARTHIYA & E.RITHIKA SIVA SAKTHI, A CRITICAL STUDY ON THE EFFECTIVENESS OF THE PREVENTION OF MONEY LAUNDERING ACT IN INDIA, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 6 (1) OF 2026, PG.921-930, APIS – 3920 – 0001 & ISSN – 2583-2344. DOI – https://doi.org/10.65393/XMPI6249
ABSTRACT
The Prevention of Money Laundering Act (PMLA), 2002 is a cornerstone of India’s legal framework to combat financial crimes, ensure economic stability, and curb illicit financial flows. The Act criminalizes the processing of proceeds derived from criminal activities, empowers authorities to attach and confiscate property obtained illegally, and aligns India with global anti-money laundering standards, including United Nations conventions and Financial Action Task Force (FATF) recommendations.
This study examines the effectiveness of the PMLA in controlling money laundering activities, its impact on financial institutions, and the efficiency of enforcement agencies, notably the Enforcement Directorate (ED) and the Financial Intelligence Unit-India (FIU-IND). Primary data from 210 respondents and secondary sources, including government reports, academic literature, and judicial decisions, were analyzed to assess public awareness, the role of banks and non-banking financial companies, and challenges to enforcement.
Independent variables included demographic factors such as age, gender, occupation, education, and place of residence, while dependent variables encompassed awareness of the PMLA, perception of factors facilitating money laundering, and recognition of white-collar crimes. Statistical tools like pie charts, bar diagrams, and chi-square analysis were applied to interpret the findings.
The study reveals that the PMLA has strengthened India’s regulatory framework, yet its effectiveness is constrained by judicial delays, sophisticated laundering techniques, and limited public awareness. Recent judgments, including the Supreme Court’s emphasis on procedural safeguards in bail under PMLA and the Delhi High Court’s ruling on attachment of ancestral property, underscore the Act’s evolving judicial interpretation.
Recommendations include adopting advanced technologies such as blockchain and AI, enhancing KYC and AML compliance, conducting public awareness campaigns, and streamlining judicial processes. Such measures are critical for India to effectively prevent money laundering and maintain financial transparency in a rapidly digitizing economy.
Keywords: Prevention of Money Laundering Act, Enforcement Directorate, White-Collar Crimes, Financial Institutions, AML Compliance