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Section 13 Prevention of Money-laundering Act 2002: Powers of Director to impose fine

Section 13 (Powers of Director to impose fine) under Chapter IV (Obligations of Banking Companies, Financial Institutions and Intermediaries) of the Prevention of Money-laundering Act, 2002 —

❝(1) The Director may, either of his own motion or on an application made by any authority, officer or person, make such inquiry or cause such inquiry to be made, as he thinks fit to be necessary, with regard to the obligations of the reporting entity, under this Chapter.

(1A) If at any stage of inquiry or any other proceedings before him, the Director having regard to the nature and complexity of the case, is of the opinion that it is necessary to do so, he may direct the concerned reporting entity to get its records, as may be specified, audited by an accountant from amongst a panel of accountants, maintained by the Central Government for this purpose.

(1B) The expenses of, and incidental to, any audit under sub-section (1A) shall be borne by the Central Government.

(2) If the Director, in the course of any inquiry, finds that a reporting entity or its designated director on the Board or any of its employees has failed to comply with the obligations under this Chapter, then, without prejudice to any other action that may be taken under any other provisions of this Act, he may—
 (a) issue a warning in writing; or
 (b) direct such reporting entity or its designated director on the Board or any of its employees, to comply with specific instructions; or
 (c) direct such reporting entity or its designated director on the Board or any of its employees, to send reports at such interval as may be prescribed on the measures it is taking; or
 (d) by an order, impose a monetary penalty on such reporting entity or its designated director on the Board or any of its employees, which shall not be less than ten thousand rupees but may extend to one lakh rupees for each failure.

(3) The Director shall forward a copy of the order passed under sub-section (2) to every banking company, financial institution or intermediary or person who is a party to the proceedings under that sub-section.

 Explanation.—For the purpose of this section, “accountant” shall mean a chartered accountant within the meaning of the Chartered Accountants Act, 1949 (38 of 1949).❞



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Notes:

The Prevention of Money-laundering Act, 2002 (Act No. 15 of 2003) was amended by:

1. Prevention of Money-Laundering (Amendment) Act, 2005 (No. 20 of 2005) (w.e.f. 01-7-2005);
2. Prevention of Money-Laundering (Amendment) Act, 2009 (No. 21 of 2009) (w.e.f. 01-6-2009);
3. Prevention of Money-Laundering (Amendment) Act, 2012 (No. 02 of 2013) (w.e.f. 15-2-2013);
4. Finance Act, 2015 (No. 20 of 2015) (w.e.f. 14-5-2015);
5. Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (No. 22 of 2015) (w.e.f. 1-4-2016);
6. Finance Act, 2016 (No. 28 of 2016) (w.e.f. 01-6-2016);
7. Finance Act, 2018 (No. 13 of 2018) (w.e.f. 19-4-2018);
8. Prevention of Corruption (Amendment) Act, 2018 (No. 16 of 2018) (w.e.f. 26-7-2018).

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