Benami Transactions Act of 1988 was amended in 2015. These amendments are predominately anti money laundering measures and its purpose is to seize benami property and prosecute the Benamidars who indulge in such activities.
Amendments to Benami Transactions Act’ 1988
The Act which was passed in 1988, defined a Benami Transaction as a transaction where a property is held by or transferred to a person, but has been provided for or paid by another person.
The amended Act of 2015, widens the definition of Benami Transactions. This definition now adds other transactions which qualify as benami, such as property transactions where:
- The transaction is made in a fictitious name,
- The owner is not aware of or denies knowledge of the ownership of property, or
- The person providing the consideration for the property is not traceable.
The amendments define various authorities such as Initiating Officers, Approving Authorities, Administrators, Adjudicating Authorities. It also defines their roles under the amended Benami Transactions Act’2015.
According to the original act of 1988, the penalty for entering into benami transactions is imprisonment up to three years, or a fine, or both.
The Bill seeks to change this penalty to rigorous imprisonment from one year to up to seven years, and a fine which may extend to 25% of the fair market value of the Benami property.
Beating the Legal Provisions
Section 58, of Benami Transactions Act clearly states that the properties owned by the charitable or religious organisations may be exempted from the rules of this act, with the prior permission of the government. This keeps the loophole open for the launderers. Create a charitable trust and get the same registered or approved from the government. One can still hold the properties under the guise of the trust, you just need to know the techniques to twist the government machinery.