The Centre has decided to amend the Prevention of Money Laundering Act (PMLA) making it mandatory on these financial intermediaries to report all suspected transactions involving international transfers.

The decision to amend the PMLA was taken by the Union Cabinet presided over by Prime Minister Manmohan Singh.

The new category of offences of cross border implication is also being added to prevent the fund transfer related to an international crime.

"The Amendment Bill will enable the Government of India to meet certain domestic needs and international obligations," Information and Broadcasting Minister Priyaranjan Dasmunsi told reporters after the Cabinet meeting.

The government has decided to amend the PMLA following reports of transfer of funds through credit cards by a number of persons with criminal background, which are currently not under the ambit of the Act, the sources said.

At present only the banks and other financial institutions have to report suspicious transactions to the financial intelligent unit (FIU), set up under the finance ministry, on a regular basis.

After scrutiny, these cases are forwarded by the FIU to enforcement agencies for action.

Through money laundering, the launderer transforms the monetary proceeds derived from criminal activity into funds with an apparently legal source.

The sources said the amendment is aimed at containing the flow of funds by persons linked with terror activities apart from certain traders engaged in under-voicing of export bills.

According to estimates, money which is laundered by criminals globally is estimated to be the equivalent to 2-5 per cent of the world's GDP. An estimated $100 billion is laundered yearly in the US alone, said official sources.

They pointed out that the amendment in the Act will also enable the government to contain the transfer of funds raised through smuggling of antique items from the country apart from wildlife resources.

Sources said the finance ministry had favoured the amendment as banking regulator Reserve Bank of India has control only over the banks, while money transfer service providers are in operation without any control.