Corruption Challenges – Lokpal, POCA, etc

Adjudication Process under the Prevention of Money Laundering Act (PMLA)

Prelims Only | Polity | Mains Paper 2:
Note4Students

From UPSC perspective, the following things are important :

Prelims level: PMLA, 2002; Adjudication Process under PMLA, ED, FIU

Mains level: NA

Why in the news?

  • The Adjudicating Authority under the Prevention of Money Laundering Act, 2002 (PMLA) has confirmed the attachment of assets worth Rs 751.9 crore linked to a politician family.
  • The Enforcement Directorate (ED) had provisionally attached these properties in PMLA case.

About Prevention of Money Laundering Act (PMLA), 2002

Details
Precursor Enacted to fulfill India’s global commitments to combat money laundering, aligning with international conventions such as:

  1. UN Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic; Substances 1988;
  2. Basle Statement of Principles, 1989;
  3. Financial Action Task Force’s Forty Recommendations, 1990;
  4. UN General Assembly’s Political Declaration and Global Program of Action, 1990.
What is it?
  • Criminal law targeting money laundering and property confiscation from illicit activities.
  • Central to India’s anti-money laundering legal framework.
  • Applicable to financial institutions, banks (including RBI), mutual funds, insurance companies, and their intermediaries.
Amendments Amended in the year 2005, 2009 and 2012.
Objectives
  • Confiscate proceeds of crime involved in money laundering.
  • Establish legal mechanisms to prevent money laundering and terrorist financing.
  • Strengthen investigation and prosecution of money laundering offenses.
  • Enhance international cooperation in combating money laundering.
Regulating Authorities
  1. Directorate of Enforcement (ED) enforces PMLA provisions and investigates money laundering cases.
  2. Financial Intelligence Unit (FIU) receives, processes, analyses and disseminates information related to suspect financial transactions.
Salient Features
  • Punishment and Jail Term: Provides rigorous imprisonment from 3 to 7 years for money laundering, extendable up to 10 years.
  • Powers of Attachment: Director or officer above Deputy Director rank can provisionally attach suspected “proceeds of crime” property.
  • Adjudicating Authority: Appointed by the central government to determine involvement of attached or seized property in money laundering.
  • Presumption in Inter-Connected Transactions: Transactions are presumed interconnected in money laundering cases.
  • Burden of Proof: Accused must prove alleged proceeds of crime are lawful.
  • Appellate Tribunal: Empowered to hear appeals against Adjudicating Authority and other orders under the Act.
  • Special Court Establishment: Ensures expedited trials.

 

In news: Adjudicating Authority under PMLA

  • The ED, empowered by Section 5 of the PMLA, provisionally attaches assets suspected to be acquired through criminal proceeds.
  • These provisional orders, valid for 180 days, require confirmation by the Adjudicating Authority within the stipulated period to maintain legal validity.
  1. Role of the Adjudicating Authority:
  • The Adjudicating Authority, appointed by the central government, reviews the attachment orders to ensure compliance with legal standards and procedural requirements.
  • Failure to confirm the attachment within the prescribed timeline results in automatic release of the attached property.
  1. Legal Ramifications Post-Confirmation:
  • Once confirmed, the accused retains the right to challenge the order within 45 days at the PMLA’s Appellate Tribunal.
  • If the order is upheld, the accused may pursue further legal avenues, while the attached property remains inaccessible until the conclusion of legal proceedings.
  1. Impact on Property Owners and Enforcement Agencies:
  • Confirmed attachments may lead to the ED taking possession of residential properties, compelling owners to evacuate.
  • Attached properties, including vehicles, may deteriorate over time as legal battles prolong, with significant financial implications for both parties.

PYQ:

 

[2013] Money laundering poses a serious security threat to a country’s economic sovereignty. What is its significance for India and what steps are required to be taken to control this menace?

 

[2019] Consider the following statements:

1.    The United Nations Convention against Corruption (UNCAC) has a ‘Protocol against the Smuggling of Migrants by Land, Sea and Air’.

2.    The UNCAC is the ever-first legally binding global anti-corruption instrument.

3.    A highlight of the United Nations Convention against Transnational Organized Crime (UNTOC) is the inclusion of a specific chapter aimed at returning assets to their rightful owners from whom they had been taken illicitly.

4.    The United Nations Office on Drugs and Crime (UNODC) is mandated by its member States to assist in the implementation of both UNCAC and UNTOC.

Which of the statements given above are correct?

(a) 1 and 3 only

(b) 2, 3 and 4 only

(c) 2 and 4 only

(d) 1, 2, 3, and 4

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