Prevention of Money Laundering Act 2002 Section 4: Punishment for Money Laundering (2026)
What Section 4 of the Prevention of Money Laundering Act, 2002 does: it fixes the punishment for money laundering at rigorous imprisonment of three to seven years with a fine, rising to ten years for drug-linked proceeds. Last verified October 2026.
Explainer · Criminal Law · PMLA
Section 4 of the Prevention of Money Laundering Act, 2002 (PMLA) fixes the punishment for money laundering. The offence itself is defined in Section 3; Section 4 says what happens on conviction. The sentence is rigorous imprisonment of not less than three years, which may extend to seven years, together with a fine. Where the proceeds of crime relate to certain drug offences, the maximum goes up to ten years. This explainer sets out the sentence, the enhanced term, the fine, and how it works alongside the rest of the Act. Last verified October 2026.
- What it is: Section 4 fixes the punishment for money laundering defined in Section 3.
- Imprisonment: rigorous, three to seven years, with a fixed three-year minimum.
- Drug-linked proceeds: the maximum rises to ten years where the proceeds relate to NDPS offences.
- Fine: in addition to jail, with no statutory ceiling after the 2013 amendment.
01The short point
Section 4 is short but heavy. It says that whoever commits the offence of money laundering, as defined in Section 3, shall be punished with rigorous imprisonment of three to seven years and shall also be liable to a fine.
There is one special category. Where the proceeds of crime involved relate to the offences listed in paragraph 2 of Part A of the Schedule, which are offences under the Narcotic Drugs and Psychotropic Substances Act, the words "which may extend to seven years" are read as "which may extend to ten years". So the drug-linked cases carry a higher ceiling.
02What Section 4 says
Section 4 provides that a person guilty of money laundering under Section 3 shall be punished with:
- Rigorous imprisonment for a term that is not less than three years and may extend to seven years; and
- a fine, in addition to the imprisonment.
The idea in one line
There is a minimum of three years of rigorous imprisonment, and a fine on top of the jail term, for every money laundering conviction.
The three-year floor is fixed. A court cannot go below it on conviction. The enhanced ceiling of ten years applies only to the drug-linked category.
03The sentence at a glance
| Point | Position under Section 4 |
|---|---|
| Type of imprisonment | Rigorous |
| Minimum term | Three years |
| Maximum term (general) | Seven years |
| Maximum term (drug-linked proceeds) | Ten years |
| Fine | In addition to imprisonment |
Rigorous imprisonment means imprisonment with hard labour, as against simple imprisonment. The enhanced ten-year ceiling is tied to proceeds that relate to offences in paragraph 2 of Part A of the Schedule, which covers the NDPS Act.
04The fine and the 2013 change
When the PMLA was first enacted, the fine under Section 4 was capped at five lakh rupees. That cap was removed by the 2013 amendment to the Act. After that amendment, Section 4 simply says the convict shall be liable to a fine, with no stated upper limit.
So in a current case there is no statutory ceiling on the fine. The court decides the amount, which can be substantial given the scale of many money laundering matters.
05How the punishment is applied
Section 4 is the sentencing provision, but a money laundering case involves much more than the final sentence. The attachment of property runs in parallel under Section 5, confirmed under Section 8. Arrest is under Section 19, and bail is governed by the strict twin conditions in Section 45. The trial takes place before a Special Court under Section 44.
In practice, the long gap between arrest and conviction, and the hard bail test, mean that Section 4 is often reached only at the end of a long road. To see how the stages fit together, see how a PMLA case works in practice.
06A practical note
Three points are worth keeping in mind:
- The three-year floor is fixed. On conviction, the court cannot sentence below three years of rigorous imprisonment.
- The drug-linked ceiling is higher. Where the proceeds relate to NDPS offences, the maximum rises to ten years.
- The fine has no cap now. Since 2013 there is no statutory upper limit, so the court can impose a large fine.
This explainer is general information, not legal advice. Sentencing turns on the facts and the law as it stands, so take advice from counsel before you act.
07Where Claw fits
Claw is an all-in-one legaltech platform for Indian advocates, law firms, and corporate legal teams, combining AI-based case search, an AI legal assistant (Legal GPT), case management, and compliance automation across all Indian courts and tribunals.
Sentencing under Section 4, and how courts have treated the fine and the enhanced term, are best understood from how similar cases have actually been decided. Claw lets you search more than 30 crore judgments on Section 4 sentencing and related PMLA questions, with Supreme Court rulings from 1950 and High Court rulings from 1990, and results in under 5 seconds. You can also track a live PMLA matter, with its orders and hearings, by party or advocate name across 9,102 courts, benches and forums, from the Special Court to the High Court.
Your case papers are never used to train the AI models behind Claw, so a sensitive brief can be researched in confidence. Create a free Claw account to find Section 4 rulings and track a pending matter, and use case search across Indian courts for the wider law.
08Sources and further reading
- India Code (official text of the PMLA, 2002): indiacode.nic.in
- Enforcement Directorate (official): enforcementdirectorate.gov.in
- Section 4, PMLA (bare text): courtbook.in
- Claw: clawlaw.in
This explainer is general information, not legal advice. PMLA law is fast moving, so check the current provisions and the latest rulings, and take advice from counsel before you act.
09Frequently asked questions
What is the punishment for money laundering under the PMLA?
Section 4 prescribes rigorous imprisonment of not less than three years, which may extend to seven years, along with a fine. Where the proceeds of crime relate to certain drug offences, the maximum rises to ten years.
Is there a minimum jail term for money laundering?
Yes. Section 4 sets a minimum of three years of rigorous imprisonment on conviction. The court cannot go below that floor.
When does the ten-year maximum apply?
The ten-year ceiling applies where the proceeds of crime involved relate to the offences in paragraph 2 of Part A of the Schedule, which are offences under the Narcotic Drugs and Psychotropic Substances Act.
Is there a limit on the fine under Section 4?
No. The earlier cap of five lakh rupees was removed by the 2013 amendment. The court now decides the fine, with no statutory upper limit.
Does Section 4 define the offence?
No. The offence of money laundering is defined in Section 3. Section 4 only prescribes the punishment that follows on conviction.
Can I research Section 4 sentencing in Claw?
Yes. Claw lets you search more than 30 crore judgments on Section 4 sentencing and related PMLA questions, in under 5 seconds, and track a live matter by party or advocate across 9,102 courts, benches and forums. It researches and tracks the matter but does not give legal advice.