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Proposed Act labels money laundering a terrorist activity

August 24, 2012 12:17 IST

The Unlawful Activities (Prevention) Act proposes jail term of five years for any person associated with money laundering or counterfeiting in addition to the existing seven years under the Indian Penal Code. Vicky Nanjappa reports

The Cabinet nod to expand the Unlawful Activities (Prevention) Act to give broader dimensions to the terrorist act is a shot in the arm for investigators probing cases pertaining to economic security.

While giving the nod, it also sought an opinion from the state governments on how to make this act more powerful, as the states have a big role to play. While some state governments had delayed the approval of the bill as they sought more consultation, many others are in favour of the proposal which will now be placed before the Parliament for a final clearance.

The most important aspect of this proposal is that the jail term for any person associated with money laundering or counterfeiting would go up from the existing two years to five years under this act. This is apart from the seven years that the Indian Penal Code already provides. More importantly, any act of counterfeiting will directly fall under the definition of a terrorist act. It is also proposed to empower the courts dealing with such cases to attach property of those persons involved in such acts.

While terrorist organisations continue to fund themselves with the sale of counterfeit currency, an advantage of this act would be that it would bring small-timers and local gangsters too under the ambit of a terrorist. Whether or not there is an association with any terror group, a person indulging in such an act -- small or big -- would still be defined as a terrorist as his actions would be seen as a threat to the economic stability of the country.

The state governments in their feedback have said that in most of cases they have found local gangsters involved in circulating fake currency. The source of the funds is not tracked and very often the culprits get away with minor punishments.

Police sources say that the proposal will act as a deterrent, as it will create a fear that any such activity would directly be classified as an act of terror. It is one thing to be called a criminal and completely different to be labelled terrorist, the police point out.

The agencies were having a tough time dealing with this menace. It was clear that they were unable to stem the flow of fake currency since it is present in large numbers. The manner in which the fake currency was being made and its authenticity was next to impossible to track. The only way they were able to find out was that there was circulation of more notes than what was already printed by India.

The RBI was only able to stem the flow by banning the 2aq and 8ac series of notes. It was a desperate attempt by the Indian agencies to stem the flow, since even genuine notes in this series were ordered to be kept out of circulation -- the major inflow of notes into the Indian market were with these serial numbers.

However, police officials say that it is not very difficult for terror groups to pump in notes with the new series and they will do it for sure. But there will be fear at the local-level because if local gangsters are caught doing so they would be termed as terrorists.

The Cabinet nod is expected to strengthen the existing laws a great deal. Under the Indian Penal Code, Section 476 states, 'Whoever counterfeits upon, or in the substance of, any material, any device or mark used for the purpose of authenticating, intending that such device or mark shall be used for the purpose of giving the appearance of authenticity to any document then forged or thereafter to be forged on such material, or who, with such intent, has in his possession any material upon or in the substance of which any such device or mark has been counterfeited, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.' Moreover, it is also a non cognisable/non bailable offence triable by a magistrate of the first class.

Investigating agencies are hopeful that while the act gives them more teeth while investigating, it would also help them get more convictions. In cities like Delhi, Bangalore, Chennai, Hyderabad and Lucknow, there is an average of 10 cases of counterfeiting registered every day. The conviction rate of all these cities put together is just about 7 per cent. While officials have managed to detect the crime, they are finding it hard to obtain a conviction.

While the new act gives the police blanket power to term a person with counterfeit currency a terrorist, they would want to be careful while dealing with a genuine victim.

These notes often come out of banks and ATMs, and more often than not people do not even realise it is fake. The unfortunate part is that if a person does realise that a note is counterfeit and reports it to the bank, the only option before him is destruction of that note.

Police officials, however, say that they will be careful and can tell between a genuine victim and an accused. An accused is often found in possession of many notes. If people find fake notes on them and come and report the matter to us, we will be sympathetic towards their cause.

However, it is mandatory that any person who is found in possession of a fake note having the series banned by the RBI must report the matter to the bank or to the police station. The police say that it would go a long way if people come forward and alert them when they find such a note. This way the bank from where they got the note could be alerted and they would be more careful. More often than not, it is found that people with fake notes never report the matter and try to pass it off at a crowded shop or a petrol bunk. The police feel that the banks too must do more and if a person is found in possession of one or two notes, he should be compensated.
Vicky Nanjappa in Bangalore