Context

The Supreme Court has upheld the constitutional validity of the provisions of the Prevention of Money Laundering Act (PMLA), calling it a “unique and special legislation” and underlining the powers of the Directorate of Enforcement (ED) to hold inquiries, arrest people and attach property.

Prevention of Money Laundering Act (PMLA)

• PMLA, 2002 is an Act of the Parliament of India enacted by the NDA government to prevent money laundering and to provide for confiscation of property derived from money laundering.
• It was enacted in response to India’s global commitment (including the Vienna Convention) to combat the menace of money laundering.
• PMLA and the Rules notified there under came into force with effect from July 1, 2005.
• The act was amended in the year 2005, 2009 and 2012.

Objectives of PMLA

The PMLA seeks to combat money laundering in India and has three main objectives:

• To prevent and control money laundering.
• To confiscate and seize the property obtained from the laundered money; and
• To deal with any other issue connected with money laundering in India.

Issues with the PMLA

• Opacity: The Enforcement Case Report (the analogue of an FIR) is not shared with the accused.
• Nor are the full grounds of arrest shared with you.
• Bail cannot be granted without hearing the prosecution and you are required to prove your innocence to get bail.
• Lack of clarity in definition: The definition of crime under this Act is elastic.
• The sovereign has immense latitude to define what counts as the relevant crime.
• It can also in a classic instance of rule by law change the presumption of innocence.
• Lack of safeguard: The list of crimes included overrides similar crimes in other parts of the law.
• The code has an exceptional procedure of its own that can trump the safeguards of the Criminal Code of Procedure.
• In theory, the law provides safeguards against attaching properties, but those safeguards are weak and do not allow for even reasonable exceptions that might be necessary for your dignity or continuing with your business or livelihood.
• Mere possession of the proceeds of a crime, without any surrounding consideration of how one came to be in possession of the proceeds, makes it an offence.
• That the state officials are not classed as police. But they, in some respects, have even more power than the police.
• Use of Money Bill route: The law itself has been enacted by using the controversial Money Bill route.
• Low conviction rate: The conviction rate under this law is very low, less than 0.5 per cent.
• Misuse of law: The stringent provisions and vagueness in definitions in the law make it susceptible to misuse against a political opponenet.
• International context: Post 9/11, there was concern with terrorist financing and arguably many international treaties actually weakened, rather than strengthened, individual rights protections.
• The goal of international treaties is laudable.
• But the rhetoric of international treaties is often used to override domestic rights safeguards.

Conclusion

There is a need for a review of the various provision and definitions in the law and their utility.

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