New Delhi: Toughening its stand against money laundering, laundering, the Centre has decided to cover casinos, full-fledged money changers (FFMCs), money transfer service providers (MTSPs) such as the Western Union, and even international credit card franchises like Visa and MasterCard, under the ambit of Indian money laundering laws.

The cabinet has approved an amendment to the Prevention of Money Laundering Act (PMLA) which will make it mandatory for the aforementioned financial intermediaries to report all suspected transactions involving international transfers.

Money laundering is referred to the process of converting monetary proceeds derived from criminal activity into legitimate earnings, by way of 'laundering' or running the funds through various channels so as to conceal their original source.

What is significant about the amendment is that international payment networks such as Western Union, Visa, and MasterCard have also been brought under the perview of the Indian money laundering laws, and will be required to report suspicious transactions to the government.

In addition, the amendment will have an impact on the amount of black money circulating in the economy, and also provide countermeasures against the financing of terrorism activities. Casinos too would be under the ambit of Prevention of Money Laundering (PML) Act, 2002, in its widened scope.

The Act makes it mandatory for banks, financial institutions and other intermediaries to verify the antecedents of their customers, maintain records, and furnish information to the Financial Intelligence Unit-India (FIU-IND). It also governs the attachment, seizure and confiscation of proceeds of crime obtained directly or indirectly from money laundering.

The amendment was initiated following reports of fund transfers using through credit cards by those with a criminal background, and, the under-invoicing of export bills by traders.

Also included in the amendment is a new category of offences that will have cross-border implications that are aimed at preventing the transfer of funds related to international crime. Sources say that after the amendment, the flow of funds by persons linked to terrorist activities would be plugged and unscrupulous traders engaged in under-invoicing export bills will also find themselves in a bind.

According to information and broadcasting minister Priyaranjan Dasmunsi, the amendment bill will allow the government to meet certain domestic needs and international obligations.

In its present form, the act mandates only banks and other financial institutions to report suspicious transactions to the financial intelligent unit (FIU) that is set up under the finance ministry, which scrutinizes these transactions and forwards them to enforcement agencies for action.

Estimates of money laundered range between two and five per cent of the global gross domestic product (GDP). Estimates peg the figure for money laundered within the US alone at around $100 billion.