The Supreme Court has ruled that sickness and infirmity are valid grounds for bail under the Prevention of Money Laundering Act (PMLA). A three-judge bench led by Chief Justice D.Y.
Money Laundering
Money laundering is the process of disguising the origins of illegally obtained money to make it appear legitimate.
Stages:
- Placement: Introducing illicit funds into the financial system.
- Layering: Obscuring the funds’ origin through complex transactions.
- Integration: Reintroducing funds as legitimate through investments or purchases.
Methods:
- Structuring: Breaking large sums into smaller deposits.
- Trade-Based Laundering: Using trade transactions to conceal funds.
- Shell Companies: Using fake businesses to funnel money.
- Real Estate: Buying and selling property to legitimize funds.
PMLA
The Prevention of Money Laundering Act, 2002 (PMLA), is an Indian law aimed at preventing money laundering and confiscating property derived from illegal activities like drug trafficking, smuggling, and terrorism financing.
Key Provisions of PMLA:
- Offences & Penalties: Defines money laundering offences, with imprisonment and fines.
- Attachment & Confiscation: Allows property involved in laundering to be seized, overseen by an Adjudicating Authority.
- Reporting Requirements: Banks and financial institutions must record and report suspicious transactions to the FIU.
- Authorities & Appeals: Establishes a Designated Authority for investigation and an Appellate Tribunal for appeals.
Objectives of PMLA:
- Prevention: Implements measures to prevent money laundering.
- Detection: Enables investigation of laundering cases.
- Confiscation: Seizes properties from money laundering to deter crime.
- International Cooperation: Supports global efforts to combat laundering and terrorism financing.
Recent Amendments:
- Proceeds of Crime: Expanded to include all properties linked to criminal activity.
- Redefining Money Laundering: Treated as an independent crime, not only dependent on a predicate offence.
Concerns with PMLA, 2002:
- Broad Definition of Proceeds of Crime: Critics argue it could target lawful transactions, involving individuals indirectly linked to laundered funds.
- Extensive List of Offences: Includes many offences unrelated to the primary aim of combating drug-related money laundering.
- Burden of Proof on Accused: Shifts proof responsibility to the accused, complicating fair trials.
- Potential Overreach: Excessive powers granted to officers risk misuse, impacting individual rights.
- Strict Bail Conditions: Bail under PMLA requires proof of innocence, reversing the presumption of innocence.
- Arrests Without Written Grounds: Arrests often rely on verbal communication, violating constitutional rights.
Suggested Reforms:
- Clarify “Proceeds of Crime”: Narrow the definition to reduce ambiguity.
- Reevaluate Burden of Proof: Balance it between prosecution and accused.
- Prevent Officer Overreach: Set checks, guidelines, and independent oversight.
- Review Bail Conditions: Align bail criteria with other financial crimes.
- Periodic Review: Update PMLA to meet current challenges and standards.
- Increase ED Independence: Ensure ED actions are transparent and apolitical.
- Public Awareness: Educate citizens on PMLA’s purpose and protections.
- Consultative Reforms: Engage stakeholders for well-rounded reform inputs.
The Prevention of Money Laundering Act, 2002, is a pivotal law combating money laundering, but its broad definitions, strict bail conditions, and potential misuse necessitate balanced reforms to ensure both effective enforcement and protection of individual rights. Strengthening safeguards and promoting transparency will enhance its role in deterring financial crimes while upholding constitutional principles.
