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The CPM is a political organization registered in accordance with Section 29A of The Representation of the People Act, 1951.

In this section, registration as a political party can only be applied for by an association or group of individuals.

The ED has charged CPM as an accused in the money laundering case under section 70 of the Prevention of Money Laundering Act, pertaining to corporate offences.

As stated in the section, a 'company' refers to any corporate entity and encompasses a partnership or other group of individuals.

The ED contended that since the CPM is recognized as a group of individuals according to the Representation of the People Act, it meets the criteria of a ‘company’ as defined by the PMLA.

What does Money Laundering mean?

Money laundering is the unlawful activity of transforming substantial sums of money obtained from criminal acts, like drug trafficking or financing terrorism, to seem as if they originated from a legitimate source.

In funding terrorism, the money was utilized to acquire weapons and ammunition, as well as to train the members of the violent extremist group, among other uses.

The funds generated from illegal activities are deemed illicit, and the process “cleanses” them to appear legitimate.

Effects of Money Laundering

Decreases Tax Income: When illegal money is concealed from officials, governments experience considerable declines in tax revenue, undermining their capacity to provide public services.

Generates Asset Bubbles: Cleaned money is frequently poured into real estate, gold, or high-end items, resulting in false inflation and economic inequalities.

Investment is Hindered: The ambiguity and opacity stemming from money laundering discourage both foreign and local investment.

Facilitates Criminal Organizations: Money laundering underpins organized crime, such as drug trafficking, terrorism, and human trafficking.

Actions implemented by India

Main Initiatives:

Jan Dhan-Aadhaar-Mobile (JAM): Improving financial clarity.

GST E-Invoices and E-Bills: Enhances clarity within the supply chain.

Indian Cyber Crime Coordination Centre: Enhances cybercrime enforcement efforts.

Central KYC Records Registry (CKYCR): Storage for KYC information and client records.

Task Forces and Committees: Established to tackle corruption, illicit funds, drug smuggling, and counterfeit currency.

Investigative Agencies: The National Investigation Agency (NIA) and the Enforcement Directorate (ED) efficiently carried out investigations.

Financial Intelligence Unit-India (FIU-IND): The FIU-IND serves as the primary national organization tasked with receiving, processing, analyzing, and distributing information regarding suspicious financial activities.

It acts as the central agency for orchestrating efforts against money laundering and associated crimes.

Path Forward

Establish explicit legal guidelines to govern the financial activities of political parties while preserving their democratic roles.

Establish an independent entity or enhance the Election Commission’s authority to assess and oversee the finances of political parties and ensure adherence.

Make sure that agencies such as the ED operate transparently, autonomously, and fairly, preserving public confidence and preventing any appearance of partiality.