Amendment to Prevention of Money Laundering Act

JUL 26

Preliminary   > Security   >   Money laundering   >   Black money

Why in news?

  • The Supreme Court has upheld the validity of several key provisions of the Prevention of Money Laundering Act (PMLA) which gives the Enforcement Directorate wider powers of arrest, seizure and makes it difficult to obtain bail.

More about News:

  • A number of petitions were filed in the Supreme Court challenging the amendments that were introduced to the PMLA Act by way of Finance Acts.
  • The petitioners claimed that these amendments would violate personal liberty, procedures of law and the constitutional mandate. They claimed that the process itself was the punishment.
  • The Supreme Court has upheld the amendments made to the PMLA Act. These amendments give ED wider powers of arrest, seizure and make it difficult to obtain bail.

Key provisions upheld by the Supreme Court:

  • EDs Power of Arrest:
    • The petitioners had argued that the ED could arrest a person even without informing him of the charges. This power was violative of the right to ‘due processes enshrined in Article 21 of the Constitution.
  • On not providing ECIR to the accused:
    • SC held that it was not mandatory for the ED to provide a copy of the Enforcement Case Information Report (ECIR) to the accused. The court was of the view that it is enough if the ED disclosed the grounds of arrest at the time of the arrest.
    • ECIR is an ED document which is widely seen as similar to the police first information report (FIR).
  • Twin Conditions of Bail:
    • The court ??upheld the stringent twin bail conditions required under the law for granting bail to an accused. The two conditions require a court to hear the public prosecutor against the bail plea and reach a satisfaction that there are reasonable grounds to believe that the accused is not guilty of the offense and that he is not likely to commit any offence while on bail.
  • Issue of the burden of proof rests heavily on the shoulders of the accused:
    • The court upheld this provision and said that this provision did not suffer from the “vice of arbitrariness or unreasonableness”.
  • Introduction of the amendments through Money Bills:
    • The SC held that this issue would be separately examined by a larger Bench of the apex court.

About Prevention of Money Laundering Act (PMLA) 2002:

  • It was enacted in January 2003 and the Act along with the Rules framed thereunder has come into force with effect from 1st July 2005.
  • The Parliament enacted the PMLA as a result of international commitment to sternly deal with the menace of money laundering of proceeds of a crime having transnational consequences and on the financial systems of the countries.

PRACTICE QUESTION:

Which of the following statements are correct regarding ‘Prevention of Money Laundering Act 2002 (PMLA)’?

1. Enforcement Directorate (ED) is responsible for investigating offences under the PMLA

2. The Act enables government authorities to confiscate property earned through money laundering.

Select the correct answer using the code given below:

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Answer