Section 16 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 16 gives an authority the power to enter a place where an act constituting an offence under section 3 is being carried on, and to require the people there to afford facilities to inspect records, to check or verify proceeds of crime and to furnish information. The authority must first have reason to believe, on material in his possession, that the offence has been committed, and must record the reasons in writing.
This article reads the section from the consolidated text of the Act consulted (amendments shown up to 1 August 2019). Later amendments, rules and notifications should be checked; nothing after that date is stated here.
An authority with recorded reasons to believe that an offence under section 3 has been committed may enter a place within his area, or one he is authorised to enter, where an act constituting the offence is carried on, and require facilities to inspect records, check proceeds of crime and furnish information. After the survey he must immediately forward the reasons and material to the Adjudicating Authority in a sealed envelope. The section is a power of survey; it does not mention search or seizure, which are in section 17.
Sub-section (1): the power to enter and require facilities
Section 16(1) opens "Notwithstanding anything contained in any other provisions of this Act". It then sets out the conditions and the powers.
| Element | As printed |
|---|---|
| Who | "An authority" |
| Condition | On the basis of material in his possession, has reason to believe (the reasons for such belief to be recorded in writing) that an offence under section 3 has been committed |
| Where | Any place (i) within the limits of the area assigned to him, or (ii) in respect of which he is authorised for the purposes of the section by such other authority who is assigned the area within which the place is situated |
| Which place | A place at which any act constituting the commission of the offence is carried on |
| Whom he may require | Any proprietor, employee or any other person who may at that time and place be attending in any manner to, or helping in, such act |
The text uses "an authority" and not the Director. The authorities under the Act, their appointment and their jurisdiction are dealt with in Chapter VIII of the Act and in our article on sections 48 to 53. The offence referred to is the offence of money-laundering in section 3.
If you have been told that a survey is being conducted at your premises, or you want to understand what the authority can require, legal dispute resolution support can help you read the position against the text. Our general guide on the powers of the Enforcement Directorate under PMLA gives a wider overview.
What the persons present can be required to do
The authority may require such a person to:
- afford him the necessary facility to inspect such records as he may require and which may be available at the place;
- afford him the necessary facility to check or verify the proceeds of crime or any transaction related to proceeds of crime which may be found there; and
- furnish such information as he may require as to any matter which may be useful for, or relevant to, any proceedings under the Act.
The three limbs are joined by "and", and each is limited by a phrase: "such records as he may require and which may be available at such place"; "which may be found therein"; and "useful for, or relevant to, any proceedings under this Act". The text does not give a power to take records away in this section; that is a matter for section 17, explained in our article on search, seizure and freezing.
The Explanation: a place where records are kept
The Explanation says that a place where an act constituting the offence is carried on "shall also include any other place, whether any activity is carried on therein or not, in which the person carrying on such activity states that any of his records or any part of his property relating to such act are or is kept".
So the place is not confined to the premises where the activity takes place. If the person carrying on the activity states that records or property relating to the act are kept at another place, that other place is also within the sub-section, whether or not any activity is carried on there. The Explanation turns on what the person "states". The text does not say in what form the statement is made.
Sub-section (2): the sealed envelope
The authority "shall, after entering any place referred to in that sub-section immediately after completion of survey, forward a copy of the reasons so recorded along with material in his possession, referred to in that sub-section, to the Adjudicating Authority in a sealed envelope, in the manner as may be prescribed", and the Adjudicating Authority "shall keep such reasons and material for such period as may be prescribed".
| Feature | Detail |
|---|---|
| What is sent | A copy of the reasons recorded, with the material in his possession |
| To whom | The Adjudicating Authority |
| How | In a sealed envelope, in the manner as may be prescribed |
| When | Immediately after completion of survey |
| How long kept | For such period as may be prescribed |
The manner and the period are left to rules. The text consulted gives neither, and this article names none. The Adjudicating Authority is explained in our article on sections 6 and 7. The same sealed-envelope step appears in section 5(2) for provisional attachment; see our article on section 5.
The sub-section reads awkwardly: "after entering any place ... immediately after completion of survey". It is quoted as printed. The duty to forward falls immediately after the survey is completed.
Sub-section (3): marks, inventory and statements
An authority acting under the section may:
- (i) place marks of identification on the records inspected by him and make or cause to be made extracts or copies from them;
- (ii) make an inventory of any property checked or verified by him; and
- (iii) record the statement of any person present in the place which may be useful for, or relevant to, any proceeding under the Act.
These three powers are what the authority may do with the material encountered. They are "may" powers, and the text does not describe how the statement is recorded or what use it has. Whether a statement can be used in a proceeding is a question for the other provisions of the Act and the general law, and this article does not say.
How a survey differs from a search
Section 16 deals with a survey at a place where an offence is being carried on, and its tools are inspection, checking and verification, extracts, an inventory and statements. Section 17, by contrast, deals with search and seizure and with freezing, and requires its own recorded belief by the Director or an authorised officer. A reader dealing with a visit should check, from the document served and the power cited, which section is being used. The Act as consulted contains no rule on how a survey converts into a search.
An illustration
The names are invented. An authority assigned the area where Summit Trading Co. operates records in writing that, on the basis of material in his possession, he has reason to believe that an offence under section 3 is being committed there. He enters the office, asks the proprietor, Mr Gopal Rastogi, for facilities to inspect the ledgers, checks a cash deposit register, puts identification marks on the ledgers he inspects, makes an inventory of the cash he has verified and records the statement of an employee present. Immediately after completing the survey, he sends a copy of his recorded reasons and the material to the Adjudicating Authority in a sealed envelope.
Need help with a survey at your premises?
A survey turns on the recorded belief, the place and the powers cited. We can review the papers served on you and your records with you through legal dispute resolution.
Key takeaways
- An authority may enter a place where an act constituting an offence under section 3 is carried on, if he has recorded reasons to believe the offence has been committed.
- The place must be within his assigned area or one he is authorised to enter by the authority assigned that area.
- The Explanation extends the place to any other place where the person says his records or property relating to the act are kept.
- Persons present can be required to afford facilities to inspect records, check or verify proceeds of crime and furnish information.
- The authority may mark records, make extracts or copies, make an inventory and record statements.
- A copy of the reasons and the material goes to the Adjudicating Authority in a sealed envelope immediately after the survey.
Read next
- Section 17: search, seizure and freezing of property
- Section 3: offence of money-laundering
- Section 5: provisional attachment of property
- Enforcement Directorate (ED): Powers Under PMLA
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.