Prevention of Money Laundering Act, 2002
The PMLA Rules Framework
The PMLA states its powers in general terms and leaves the machinery to rules under Section 73 and regulations under Section 73A. The Central Government framed a set of rules in 2005 when the Act came into force, and has added and amended them since. They prescribe the forms of orders, the manner of forwarding reasons and material to the Adjudicating Authority, retention periods, the management of confiscated property, appeals, and restoration. The Maintenance of Records Rules, the best known, have their own note. This note surveys the rest.
The PMLA rulebook shelf, what the rules do, and how to use them
1. The Rule-Making Powers
i. Section 73: rules. The Central Government may make rules on the many matters the Act leaves to be prescribed.
ii. Section 73A: regulations. The authorities concerned may make regulations consistent with the Act and rules.
iii. Section 74: parliamentary control. Rules and regulations are laid before each House of Parliament, which may modify or annul them.
2. The Principal Rule Sets
Rule set (short name) | What it governs |
|---|---|
Maintenance of Records Rules, 2005 | Client due diligence, beneficial ownership, record-keeping and reporting by reporting entities (see the separate note) |
Search, seizure and freezing rules, 2005 | Forms for authorisation and orders; the manner of forwarding reasons and material to the Adjudicating Authority; impounding and custody of records; retention periods |
Provisional attachment and survey rules, 2005 | Forms and manner of forwarding a provisional attachment order, and reasons for a survey, with the material, to the Adjudicating Authority; retention |
Arrest rules, 2005 | Manner of forwarding the order of arrest and material to the Adjudicating Authority, and its retention |
Retention of seized property rules, 2005 | Manner of forwarding orders of retention of seized property and material, and the period of retention |
Confiscated property rules, 2005 | Receipt, custody, management and disposal of confiscated property by the Administrator |
Appeal rules, 2005 | Form, fees and procedure for appeals to the Appellate Tribunal |
Restoration rules, 2019 | Procedure for claims to restoration of confiscated property under s. 8(8) |
§ A caution on titles The names above are short forms. Each set of rules has a long formal title describing its subject in detail, and several have been amended since 2005. Check the current text. Before citing a rule number or form, verify it against the consolidated version published by the Department of Revenue or FIU-IND. |
3. What the Rules Do
§ From power to procedure • Forms. They prescribe the forms in which authorisations, orders, reasons and inventories are recorded. • Sealed forwarding. They fix how, and how quickly, material supporting attachment, search, survey and arrest reaches the Adjudicating Authority, which is the Act's principal safeguard of independent oversight. • Retention. They set the periods for which the Adjudicating Authority retains the material forwarded to it. • Custody and disposal. They govern the custody of seized records and the management and disposal of confiscated property. • Remedies. They lay down appeal and restoration procedures. |
4. Why the Rules Matter in Practice
i. Procedure is protection. Where the Act or rules prescribe a mandatory procedure, breach can vitiate the action, as the Supreme Court held for freezing in Opto Circuit India v. Axis Bank (2021).
ii. Evidence of compliance. Forms and records created under the rules are the evidence that the statutory safeguards were observed.
iii. Supplemented elsewhere. For reporting entities, the directions of sectoral regulators and FIU-IND's guidelines add further detail.
5. Frequently Asked Questions
Under which section are PMLA rules made?
Section 73, with regulations under Section 73A; both are laid before Parliament under Section 74.
Which rules govern forwarding material to the Adjudicating Authority?
The 2005 rules on provisional attachment and survey, search and seizure, arrest, and retention of seized property.
Are there rules on restoration of confiscated property?
Yes. Rules framed in 2019 govern claims to restoration under Section 8(8).