Anti-Money Laundering (AML) Compliance: Evolving Standards Under the Prevention of Money Laundering Act
This article is written by Kirti Krishna, pursuing B.A. LL.B. (Hons.) student from the School of Law, Christ (Deemed to be) University, Bengaluru.
Money laundering is no longer a fringe concern of financial regulators — it is a systemic risk that distorts markets, funds crime, and corrodes public institutions. India's principal legislative response, the Prevention of Money Laundering Act, 2002 (PMLA), has undergone nearly two decades of incremental evolution: broadening its predicate offences, expanding the class of reporting entities, sharpening attachment and prosecution powers, and increasingly aligning with the Financial Action Task Force (FATF) standards that govern global AML compliance.
Yet, the law's march has outpaced the compliance infrastructure of the regulated sector. Reporting entities — ranging from scheduled commercial banks to real estate brokers to cryptocurrency intermediaries — struggle with inconsistent know-your-customer (KYC) frameworks, under-resourced compliance functions, and a regulatory environment where the cost of non-compliance is rising sharply but the norms themselves remain fluid. This article traces the statutory evolution of the PMLA, examines the expanding obligations on reporting entities, and evaluates the structural deficiencies that undermine effective AML compliance in India. It concludes with proposals for legislative and regulatory reform that would bring Indian AML law closer to international best practice without sacrificing the procedural fairness that enforcement demands.
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