How to File a Complaint Under the Prevention of Money Laundering Act PMLA in India

The Prevention of Money Laundering Act, 2002 (PMLA) is India's primary legislation for combating money laundering. The Act criminalises the process of disguising the proceeds of crime as legitimate funds. Unlike most criminal offences where complaints can be filed directly by individuals, proceedings under the PMLA follow a distinct mechanism involving the Enforcement Directorate (ED) and require the existence of a predicate offence. This guide explains the process for reporting money laundering, the role of the ED, the concept of predicate offences, and the penalties prescribed under the Act.

Understanding the Offence of Money Laundering Under Section 3

Section 3 of the PMLA defines the offence of money laundering. Any person who directly or indirectly attempts to indulge in, or knowingly assists, or is a party to, any process or activity connected with the proceeds of crime, including its concealment, possession, acquisition, or use, and projecting or claiming it as untainted property, is guilty of the offence of money laundering. The term "proceeds of crime" refers to any property derived or obtained as a result of criminal activity relating to a scheduled offence. The element of "projecting or claiming as untainted property" is a key component that distinguishes money laundering from the predicate offence itself. For related developments in financial crime enforcement, see the coverage of the FERA proceedings against Standard Chartered Bank.

The Predicate Offence Requirement

A critical aspect of PMLA proceedings is the requirement of a predicate offence. The ED cannot initiate a money laundering investigation independently; there must first be a First Information Report (FIR) or charge sheet filed by a competent authority such as the police, CBI, Serious Fraud Investigation Office (SFIO), or Directorate of Revenue Intelligence (DRI) for a scheduled offence listed in the PMLA Schedule. The Schedule is divided into three parts. Part A lists offences under various statutes including the Bharatiya Nyaya Sanhita (BNS), the Narcotic Drugs and Psychotropic Substances Act, 1985, the Prevention of Corruption Act, the SEBI Act, and the Companies Act, 2013, among others. Part B covers certain offences under the Customs Act where the total value involved is Rs. 1 crore or more. Part C addresses cross-border crimes. Following the transition from the Indian Penal Code to the BNS, the Bombay High Court held in July 2025 that BNS offences corresponding to the erstwhile IPC provisions listed in the Schedule are to be treated as scheduled offences under the PMLA. For context on how courts handle electronic evidence in criminal proceedings, a related article is available.

How to Report Suspected Money Laundering

While the PMLA does not provide for a direct complaint mechanism by private individuals in the same manner as a regular FIR, individuals who suspect money laundering activity can take several steps. First, if the underlying criminal activity constitutes a scheduled offence, a complaint or FIR should be filed with the appropriate law enforcement agency (such as the local police, CBI, or the relevant regulatory authority) for the predicate offence. Once the FIR or charge sheet for the scheduled offence is registered, the ED may take cognizance and initiate a money laundering investigation. Second, individuals may also provide information directly to the Enforcement Directorate through its regional offices or the central office in New Delhi. The ED has the authority to initiate Enforcement Case Information Reports (ECIRs) based on such information. Third, under Section 12 of the PMLA, reporting entities such as banks, financial institutions, and intermediaries are required to report suspicious transactions to the Financial Intelligence Unit (FIU-IND), which may share information with the ED. It is important to note that the Special Court under the PMLA shall not take cognizance of any offence punishable under Section 4 except upon a complaint in writing made by the Director of Enforcement or an officer authorised by the Central Government. Understanding how interlocutory applications function in court proceedings may assist individuals engaging with the legal process.

Penalties Under Section 4 of the PMLA

Section 4 of the PMLA prescribes the punishment for the offence of money laundering. Any person found guilty is punishable with rigorous imprisonment for a term not less than three years, which may extend to seven years, along with a fine. However, where the proceeds of crime relate to an offence specified under Paragraph 2 of Part A of the Schedule (offences under the Narcotic Drugs and Psychotropic Substances Act, 1985), the maximum imprisonment extends to ten years instead of seven years. The Prevention of Money Laundering (Amendment) Bill, 2025, introduced in the Lok Sabha in December 2025, proposed the establishment of an Oversight and Accountability Committee to oversee the ED's actions and introduced provisions for punishing officers found guilty of abusing their powers under the Act. The ED also has the power to provisionally attach property believed to be proceeds of crime and must file a complaint seeking confirmation of such attachment within 30 days. For related procedures on challenging legal orders, a detailed guide is available.

Key Takeaways

The PMLA provides a specialised framework for investigating and prosecuting money laundering offences in India. The offence of money laundering under Section 3 requires the involvement of proceeds of crime from a scheduled offence. The ED's jurisdiction is derivative: a predicate offence in the form of an FIR or charge sheet for a scheduled offence must exist before money laundering proceedings can be initiated. Individuals can report suspected money laundering by filing an FIR for the predicate offence with the appropriate authority, or by providing information directly to the ED. Penalties under Section 4 include rigorous imprisonment of three to seven years (extendable to ten years for narcotics-related offences) and a fine. Only the Director of Enforcement or an authorised officer can file the formal complaint before the Special Court. For related criminal law procedures, readers may refer to guides on applying for transfer of criminal cases and filing cross-objections in appeals.