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Money laundering is the process of changing large amounts of money obtained from crimes, into origination from a legitimate source. It is a crime in many jurisdictions with varying definitions. It is a key operation of the underground economy. Money laundering is an illegal practice in which people carry out financial transactions to hide the fraudulent origins of their money.
Money laundering is the illegal process of making large amounts of money generated by a criminal activity, such as doing trafficking or terrorist funding, appear to have come from a legitimate source.
Money Laundering includes the word launders which means and used in the sense of: The money from the criminal activity is considered as “Dirty”, and the process “launders” it to make it look clean.
People launder their dirty money in order to invest in another crime or to hide to use later or to make use of the same or spend it now or to invest in high value real estate or to buy gold & diamonds. Also, the tax evaders launder money so that they can lie about where money and assets came from in order to evade tax.
Prevention of Money Laundering Act 2002 (PMLA) was enacted by the Parliament to look into the laundering activities of the individuals. This Act was enacted in the year 2002 to prevent money laundering and to provide for the confiscation of property derived from, or involved in, money laundering and for matters connected therewith.
A valuer is involved in Money Laundering Act when the Enforcement Directorate has reason to believe that any person is in possession of any proceeds of crime, it may attach a property. In that case the property has to be valued by a competent person (a registered valuer of CBDT) who is knowledgeable, honest and known for his integrity and capable of defending his report when questioned.
The Valuation under PMLA is made in order to 1. To estimate the cost invested in the building or land or property, 2. To estimate the fair market value of the property for “as is where is” condition, 3. To certify the auction value if directed by the enforcement directorate. The exact purpose depends upon the specific requirement as directed by the ED.
Standard format for valuation: There is no specific format. The valuer can design his own valuation format and prepare valuation report. But the report should be self explanatory so that the ED can understand the matters easily. Some valuers follow the format prescribed by CBDT.
Black Money and Imposition of Tax Rules, 2015: In order to curb black money, (or undisclosed foreign assets & income) and impose tax and penalty on such income, the government enacted an act called as Black money and Imposition of Tax Act, 2015.
Black money is the money on which tax is not paid to the government. Black money affects the economic growth of the country. The government loses revenue.
The money earned from the above illegal activities is black money.
The valuation of undisclosed assets will be done as per Rule 3 of Black Money and Imposition of Tax Rules, 2015.
Any assessee who is entitled or required to attend before any tax authority or the Appellate Tribunal, in connection with any matter relating to the valuation of any asset, may attend through a valuer approved by the Principal Commissioner or the Commissioner in accordance with such rules as may be prescribed.