• Prevention of Corruption Act, 1988 provides for penalties in relation to corruption by public servants and also for those who are involved in the abetment of an act of corruption.

• Amendment of 2018 criminalized both bribe-taking by public servants as well as bribe-giving by any person.
• The Prevention of Money Laundering Act, 2002 aims to prevent instances of money laundering and prohibits use of the ‘proceeds of crime’ in India.
• The offence of money laundering prescribes strict punishment, including imprisonment of up to 10 years and the attachment of property of accused persons (even at a preliminary stage of investigation and not necessarily after conviction).
• The law was enacted to combat money laundering in India and has three main objectives :

1. To prevent and control money laundering.
2. To provide for confiscation and seizure of property obtained from laundered money.
3. To deal with any other issue connected with money-laundering in India.

• Under the PMLA Act, the Enforcement Directorate is empowered to conduct a Money Laundering investigation.
• Apart from the provisions of PMLA, there are other specialized provisions such as RBI/SEBI/IRDA anti-money laundering regulations
• Enforcement Directorate
• Directorate of Enforcement is a specialized financial investigation agency under the Department of Revenue, Ministry of Finance, Government of India.
• On 1 May 1956, an ‘Enforcement Unit’ was formed, in the Department of Economic Affairs, for handling Exchange Control Laws violations under Foreign Exchange Regulation Act, 1947.
• In the year 1957, this Unit was renamed as ‘Enforcement Directorate’.
• ED enforces the following laws:

1. Foreign Exchange Management Act,1999 (FEMA)
2. Prevention of Money Laundering Act, 2002 (PMLA)

Recent Amendments in PMLA

• Clarification about the Position of Proceeds of Crime: Proceeds of the Crime not only includes the property derived from scheduled offence but would also include any other property derived or obtained indulging into any criminal activity relateable or similar to the scheduled offence.
• Money Laundering Redefined: Money Laundering was not an independent crime rather depended on another crime, known as the predicate offence or scheduled offence.
• The amendment seeks to treat money laundering as a stand-alone crime.
• Under Section 3 of PMLA, the person shall be accused of money laundering if in any manner that person is directly or indirectly involved in the proceeds of the crime.
• Concealment
• Possession
• Acquisition
• Use or projecting as untainted property
• Claiming as untainted property
• Continuing Nature of Offence: This amendment further mentioned that the person will be considered to be involved in the offence of money laundering till the time that person is getting the fruits of activities related to money laundering as this offence is of a continuing nature.
• The Companies Act, 2013 provides for corporate governance and prevention of corruption and fraud in the corporate sector. The term ‘fraud’ has been given a broad definition and is a criminal offence under the Companies Act.
• In cases involving fraud specifically, the Serious Frauds Investigation Office (SFIO) has been set up under the Ministry of Corporate Affairs, which is responsible for dealing with white collar crimes and offences in companies.
• The SFIO conducts investigation under the provisions of the Companies Act.
• The Indian Penal Code, 1860 sets out provisions which can be interpreted to cover bribery and fraud matters, including offences relating to criminal breach of trust and cheating.
• The Foreign Contribution (Regulation) Act, 2010 regulates the acceptance and use of foreign contributions and hospitality by individuals and corporations.
• Prior registration or prior approval of the Ministry of Home Affairs is required for receipt of foreign contributions and in the absence of such registration or approval, receipt of foreign contributions may be considered illegal.

Regulatory Framework:

• The Lokpal and Lokayuktas Act, 2013 provides for an establishment of an ombudsman for the central and state governments (Lokpal and Lokayuktas, respectively).
• These bodies are required to act independently from the government and have been empowered to investigate allegations of corruption against public servants, which include the prime minister and other ministers.
• It established the institution of the Lokpal at the Center and the Lokayukta at State level.

      Lokpal

• Lokpal is headed by the Chief Justice of India or a retired judge.
• The Lokpal Jurisdictions cover the Prime Minister, Ministers, Members of Parliament and Groups A, B, C and D officers and officials of the Central Government.
• The Lokpal will have the administrative power over any investigating agency, including the CBI, for cases transferred to them by the Lokpal.
• It enhances maximum punishment under the Prevention of Corruption Act from seven years to ten years.
• Institutions which are financed fully or partly by Government are under the jurisdiction of Lokpal, but institutions aided by Government are excluded.
• Receiving donations of more than ₹10 lakhs a year from foreign sources under Foreign Contribution Regulation Act (FCRA) are brought under the jurisdiction of Lokpal.
• Mandatory for States to set up Lokayukta through enactment of a law within a period of 365 days from the date of enactment of this Act.
• The Act provides freedom to the states to decide about the structure and functioning of the Lokayukta in their respective states.

Lokayuktas:

• When the Lokpal and Lokayuktas Act 2013 were enacted, at that time, 21 states and 1 Union Territory (Delhi) already had a functional institution of Lokayuktas.
• The Lokayuktas are the state equivalents of the central Lokpal.
• States have to establish the Lokayukta to deal with complaints on corruption against certain public functionaries in the states.
• In some states, Lokayuktas were already functioning when the 2013 Act was passed.
• The Lokayukta law was enacted to inquire into cases of corruption of Public officials, Ministers, legislators, etc.
• The Central Vigilance Commission, though created in 1964, became an independent statutory body only in 2003 by an Act of Parliament.
• Its mandate is to oversee the vigilance administration and to advise and assist the executive in matters relating to corruption.
• Functions of CVC
• The CVC receives complaints on corruption or misuse of office and recommends appropriate action. Following institutions, bodies, or a person can approach to CVC:
• Central government
• Lokpal
• Whistle blowers
• It is not an investigating agency. The CVC either gets the investigation done through the CBI or through chief vigilance officers (CVO) in government offices.
• It is empowered to inquire into offences alleged to have been committed under the Prevention of Corruption Act, 1988 by certain categories of public servants.
• Its annual report gives the details of the work done by the commission and points to systemic failures which lead to corruption in government departments.
• Improvements and preventive measures are also suggested in the report.

ACB status in Karnataka

• High Court of Karnataka set aside the constitution of a separate Anti-Corruption Bureau (ACB), under the direct control of the Chief Minister, in 2016 by withdrawing the powers vested with the Karnataka Lokayukta police wing to probe all cases under the Prevention of Corruption Act, 1988 against public servants.
• Why the court gave this order: The executive used its power arbitrarily under Article 162 and no convincing reason was given by the government for the creation of a separate ACB.Also, it was not clear who will act against the case against CM, Ministers and other officials. ACB could also be used for political vendetta against rivals.

Court recommendation: If really the government intended to curb corruption, favoritism and indiscipline in the administrative machinery the ACB should have been allowed to work under the control of Lokayukta instead of the Chief Minister.