Definition – Authorised Officer
A definition inserted defining various under Section 2 of the FEMA 1999 a new sub clause (cc) been inserted defining “Authorised Officer” means an officer of the Directorate of Enforcement authorised by Central Government u/s. 37A. Under previous Act no such officer was defined but the new provisions makes an insertion enplaning the scope of authorised person.
S. 6 Capital Account Transactions
Sub-section (2) sub-cl (a) has been replaced with a new clause (a), under previous clause “any class or classes of capital account transaction which are permissible” now this “any class or classes of capital account transaction involves debt instrument, which are permissible.” As per the new insertion “debt instrument” has been inserted.
A new sub-clause (c) has been inserted after sub clause (b) of sub-section (2) of Sec. (6) stating “any conditions which may be placed on such transaction“. This clause explains any conditions can be placed on capital account transactions for any person who may sell or draw foreign exchange to or from authorised person.
An amendment has been made to the proviso after sub-section (2) sub-cl (b) by inserting “Central Government” as earlier proviso only includes Reserve Bank of India in not imposing any restrictions on drawal of foreign exchange for payments due on account of amortisation of loans or for depreciation of direct investments in the ordinary course of business which now also includes Central Government.
A new clause (2A) has been inserted which states
The Central Government may in consultation with the Reserve Bank of India, prescribe –
(a) Any class or classes of capital account transactions, not involving debt instrument, which are permissible ;
(b) The limit to which foreign exchange shall be admissible for such transactions; and
(c) Any conditions which may be placed on such transactions.
Section 6 sub-section (3) has been omitted which explains the list of regulations prohibit, restricts or regulate by RBI.
A new sub section (7) has been inserted which defines “debt instrument” which means any instruments as may be determined by the Central Government in consultation with the RBI.
Under Section 18, the word adjudicating Authorities” has been replaced by “Competent Authority”.
A new section 37A deals with Special Provisions relating to assets held outside India in contravention to Section, has been inserted for all the assets being hold outside in India in contravention to Section 4 of the Act after Section 37 of the Foreign Exchange Act, 1999 which states that
1) Authrorise Officer who has reason to believe that any property situated outside India contravene section 4 of the Act may by writing, order, seize value equivalent of foreign exchange in India of the immovable property but such seizure cannot be made in a case where the aggregate value of such foreign exchange, foreign security or any immovable property, situated outside India, is less than the value.
2) The order of seizure to be placed before the Competent Authority, appointed by the Central Government not below the rank of Joint Secretary to the Government of India within thirty days from the date of such seizure.
3) The Competent Authority within one hundred and eighty days from the date of seizure after giving an opportunity to be head shall dispose of the petition.
An explanation is inserted explaining the computing of one hundred eighty days, the period of stay granted by court shall be excluded and a further period of at least thirty days shall be granted from the date of communication of vacation of such stay order.’
S.46.Power to make Rules for Central Government by notification to carry out the provisions of the act.
A new sub clause (aa) has been inserted under sub section 2 which also covers debt instrument covered by sub section 7 of section 6.
Also a sub clause (ab) been inserted that includes the the permissible classes of capital account transactions in accordance with sub-section (2A) of section 6 and the limits of admissibility of foreign exchange, and the prohibition, restriction or regulation of such transactions
Also after sub clause (g) a new sub clause (gg) has been inserted which states the aggregate value of foreign exchange referred to in sub-section (1) of section 37A;’’.
S. 47. deals Power to make regulation by Reserve Bank of India to carry out the provisions of the Act as well as the rules under this sub section 2 sub clause (a) has been replaced by including debt instruments as the permissible classes of capital account transactions under sub- section (7) of Section (6) the limits of admissibility of foreign exchange for such transactions, and the prohibition, restriction or regulation of such capital account transactions under section 6
A new sub clause (ga) has been inserted after sub clause (g), which includes export, import or holding of currency or currency notes.
Under Section 47 a new sub section (3) has been inserted which includes ll regulations made by the Reserve Bank before the date on which the provisions of this section are notified under section 6 and section 47 of this Act on capital account transactions, the regulation making power in respect of which now vests with the Central Government, shall continue to be valid, until amended or rescinded by the Central Government.
Prevention of Money Laundering Act, 2002
Under section 2 Sub section (1) sub cl (u) which has been extended by including the value of property within India in case of property situated outside India, define “Proceeds of crime” means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of such property or where such property is taken or held outside the country, then the property equivalent in value held within country.
Clause (y) defined schedule Offence , in sub-clause (ii), for the words “thirty lakh rupees”, the words “one crore rupees” been substituted.
S.5 Attachment of Property involved in Money-laundering, in sub-section (1), in the second proviso, for the word, brackets and letter “clause (b)”, the words “first proviso” shall be substituted.
S. 8 :Adjudication
sub-section (3), in clause (b), for the words “Adjudicating Authority”, the words “Special Court” shall be substituted;
a new sub section (8) has been inserted which stated that Where a property confiscated to the Central Government under sub-section (5) which deals with attachment of property involved in Money Laundering, the Special Court may direct the Central Government to restore such confiscated property or part thereof of a claimant with a legitimate interest in the property, who may have suffered a quantifiable loss as a result of the offence of money laundering:
Provided that the Special Court shall not consider such claim unless it is satisfied that the claimant has acted in good faith and has suffered the loss despite having taken all reasonable precautions and is not involved in the offence of money laundering.
S.20: Retention of Property:
sub-section (5), for the words “the Court or the Adjudicating Authority, as the case may be”, the words “Special Court” shall be substituted;
Sub section 6 instead of the word “Court”, the words “Special Court” shall be substituted; further the clause amended that the Directors or any officers authroised by him n thus behalf has reason may withhold the release of any such property instead of the words “ninety days from the date of”, the words “receipt of” shall be inserted.
S. 21 : Retention of Records:
sub-section (5), deals with after passing of an order of confiscation “under sub-section (5) or sub-section (7) of section 8” has been replaced with “or release under sub-section (5) or subsection (6) or sub-section (7) of section 8 or section 58B or sub-section (2A) of section 60” shall be substituted;
Sub-section (6), –– (a) for the words, brackets, figures and letters “under sub-section (6) of section 8 or by the Adjudicating Authority under section 58B or sub-section (2A) of section 60”, the words, brackets and figures “Adjudicating Authority under sub-section (5) of section 21” shall be substituted;
S.60 Attachment, seizure and confiscation, etc of property in contracting state or India in sub-section (2A), for the words “Adjudicating Authority”, the words “Special Court” shall be substituted.
Sujeet S. Karkala,