Section 1 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 1 gives the Act its name, says where it applies and leaves the start date to a notification. Section 2(1) then defines the terms used throughout the Act, and a first group of those definitions simply points the reader to the section that creates the authority or court concerned. This article covers section 1, the pointer definitions in section 2(1) and the rule in section 2(2).
The text consulted is the consolidated text of the Act, as per the consolidated text of the Act consulted (amendments shown up to 1 August 2019). Amendments, notifications and rules made after that date should be checked separately; this article says nothing about them.
The Act is called the Prevention of Money-laundering Act, 2002 and extends to the whole of India. It came into force by notification: the footnote to section 1(3) in the text consulted prints "1st July, 2005, vide notification No. G.S.R. 436(E), dated 1st July, 2005". Different dates could be appointed for different provisions. In section 2(1), terms such as Adjudicating Authority, Appellate Tribunal, Special Court, Director and Deputy Director are defined only by pointing to the section that creates them.
What section 1 says
Section 1 has three sub-sections.
| Sub-section | What it provides |
|---|---|
| 1(1) | Short title: "the Prevention of Money-laundering Act, 2002" |
| 1(2) | The Act "extends to the whole of India" |
| 1(3) | The Act comes into force on a date the Central Government appoints by notification in the Official Gazette; different dates may be appointed for different provisions; a reference in any provision to the commencement of the Act is read as a reference to that provision coming into force |
The extent clause is short. The Act as printed is not limited to any State or class of person; it extends to the whole of India. Who is actually caught by a particular duty or offence depends on the section concerned, not on section 1.
Commencement by notification
Sub-section (3) did not fix a date. It authorised the Central Government to appoint one. Footnote 1 to the sub-section in the text consulted prints the date as "1st July, 2005, vide notification No. G.S.R. 436(E), dated 1st July, 2005", with a reference to the Gazette of India, Extraordinary, Part II, section 3(i). That is the only commencement information the text carries. Because sub-section (3) allowed different dates for different provisions, and because the text consulted shows later amendments with their own effective dates, the date a particular provision began to operate should be read from the footnote attached to that provision.
If you want a plain-language overview before the section-by-section reading, see our guide Introduction to PMLA 2002. If you are trying to work out whether a transaction, a client file or a notice falls under this Act at all, a legal consultation can help you map the facts to the provisions.
Section 2(1): the authority and officer terms
Section 2(1) opens "In this Act, unless the context otherwise requires". The clauses covered here are mostly one-line pointers. They matter because the powers in later chapters are given to these named bodies, and a reader needs to know which section creates each.
| Clause | Term | Meaning as printed |
|---|---|---|
| (a) | Adjudicating Authority | An Adjudicating Authority appointed under sub-section (1) of section 6 |
| (b) | Appellate Tribunal | The Appellate Tribunal referred to in section 25 |
| (c) | Assistant Director | An Assistant Director appointed under sub-section (1) of section 49 |
| (f) | Bench | A Bench of the Appellate Tribunal |
| (g) | Chairperson | The Chairperson of the Appellate Tribunal |
| (j) | Deputy Director | A Deputy Director appointed under sub-section (1) of section 49 |
| (k) | Director, Additional Director, Joint Director | A Director, Additional Director or Joint Director, as the case may be, appointed under sub-section (1) of section 49 |
| (o) | Member | A Member of the Appellate Tribunal, including the Chairperson |
| (z) | Special Court | A Court of Session designated as Special Court under sub-section (1) of section 43 |
The definitions of the Adjudicating Authority, the Appellate Tribunal and the Special Court are explained in our articles on sections 6 and 7 and section 26. For the officers named in clauses (c), (j) and (k), the appointing provision is section 49(1); see the text of that section when you need to know who the officer is and what jurisdiction the officer has.
A footnote on clause (b)
In clause (b) the words "referred to in" are printed in square brackets. Footnote 2 says they were substituted for "established under" by Act 28 of 2016, section 232 (w.e.f. 1-6-2016). That is a history note only: the clause as it now reads in the text consulted points to the Tribunal referred to in section 25.
Clause (ja) is omitted
Between clauses (j) and (k) the text prints a row of asterisks. Footnote 2 on that page records that clause (ja) was omitted by Act 2 of 2013 (w.e.f. 15-2-2013). Nothing is lost in reading: the clause letters simply run (j), (k).
Section 2(1): the other pointer terms
Three more clauses in this group are definitional shortcuts.
| Clause | Term | Meaning as printed |
|---|---|---|
| (r) | notification | A notification published in the Official Gazette |
| (t) | prescribed | Prescribed by rules made under this Act |
| (x) | Schedule | The Schedule to this Act |
The word "prescribed" is important to the reader. Wherever a section of the Act says something is "as may be prescribed", this clause tells you the detail sits in rules made under the Act, not in the Act itself. The Act's own rule-making power is a separate provision, dealt with in our article on sections 73 to 75. This article does not give any form, fee or time limit that the Act does not print.
Section 2(2): enactments not in force in an area
Section 2(2) deals with references to other laws. Any reference, in the Act or the Schedule, to an enactment or a provision of it is, for an area where that enactment or provision is not in force, read as a reference to "the corresponding law or the relevant provisions of the corresponding law, if any, in force in that area".
In practice this means the Act's cross-references do not fail merely because the named enactment is not in force in some area. Where such a situation arises, the corresponding law of that area, if there is one, is the law to which the reference is read as pointing. The text says nothing more about how the corresponding law is identified. The Act also defines "corresponding law" in section 2(1)(ia) in a different sense, for foreign laws; that clause is covered in our article on the key definitions of proceeds of crime and property.
Other laws named in section 2 are quoted in this series as printed. The reader should check the current procedural, penal or other law for the corresponding provision of any enactment named.
A worked example
Suppose Meridian Foods LLP receives a notice that cites an order of an "Adjudicating Authority" and a "Special Court". The finance head, Ms Anita Rao, wants to know who they are. Reading section 2(1)(a), she finds that the Adjudicating Authority is the one appointed under section 6(1), and reading section 2(1)(z), that the Special Court is a Court of Session designated under section 43(1). The two bodies sit at different stages of the Act, so she then reads the sections that create them. The definitions did not tell her what either body can do; they told her where to look.
Need help with applying the Act to your facts?
Definitions decide who gets a notice, which body hears the matter and which section governs the next step. If you are unsure which provision applies to a client, a transaction or an order you have received, our team can review the documents with you through legal consultation.
Key takeaways
- The Act is the Prevention of Money-laundering Act, 2002 and extends to the whole of India (section 1(1) and (2)).
- It came into force by notification; the footnote to section 1(3) prints 1st July, 2005, vide notification No. G.S.R. 436(E).
- Different dates could be appointed for different provisions, so check the footnote to the provision you are reading.
- The clauses covered here define each authority or officer by pointing to the section that creates it: sections 6(1), 25, 43(1) and 49(1).
- "Prescribed" means prescribed by rules made under the Act, and "notification" means one published in the Official Gazette.
- Section 2(2) reads a reference to an enactment as a reference to the corresponding law where the enactment is not in force in an area.
Read next
- Reporting entity, financial institution, intermediary and beneficial owner defined
- Proceeds of crime, property, scheduled offence and other key terms
- Adjudicating Authority: composition, powers and staff
- Key Definitions Under PMLA: Money Laundering, Proceeds of Crime
Disclaimer: Based on the consolidated text of the Prevention of Money-laundering Act, 2002 published by the Enforcement Directorate, showing amendments up to Act 23 of 2019 (1 August 2019), and on the Department of Revenue consolidated copy of the Prevention of Money-laundering (Maintenance of Records) Rules, 2005 listing amendments up to 19 July 2024, as consulted on 2 October 2026. Later amendments, notifications, other rules and regulator directions should be checked. This article is general information, not legal advice; check the official text before acting.