News Highlights
Recently, the Supreme Court (SC) in the case of Vijay Madanlal Chaudhary vs The Union, the SC upheld the provisions of the Prevention of Money Laundering Act (PMLA), 2002.
Key Takeaways
- In the Vijay Madanlal Choudhary vs The Union of India case, which relates to the power of arrest, attachment, search and seizure conferred on the Enforcement Directorate
Prevention of Money Laundering Act 2002
- The conversion or misrepresentation of money that has been gained unlawfully through criminal means and sources are known as money laundering.
- The Prevention of Money Laundering Act (PMLA) was enacted by the Indian Parliament in 2002 to prevent money laundering in India.
- There are mainly 3 objectives of PMLA:
- To prevent and control money laundering, the process of converting black money into white
- To confiscate and seize the property obtained from the laundered money.
- To deal with any other issue connected with money laundering in India
Supreme Court’s latest judgment
- changes to Section 45(1) of the PMLA, including the addition of the twin criteria for bail for all PMLA offences.
The criteria under Section 45(1) of the PMLA
- The Act provides for a higher threshold for the grant of bail.
- Section 45(1) of the PMLA requires that before a person is released on bail or bond,
- The public prosecutor must initially be given an opportunity to oppose the application
- Secondly when the application is opposed, the court must be satisfied that there are reasonable grounds for believing that the accused is not guilty of the offence
Implications of the recent judgement.
- In the recent Vijay Madanlal case, the SC upheld the twin conditions under Section 45(1) of the PMLA.
- Hence, the SC has made the provisions of getting bail under PMLA very difficult and almost impossible.
- This provision overruled the conventional principles of “presumption of innocence”, which says that an “undertrial is to be considered innocent until proven guilty”.
Enforcement Directorate
- The origin of this Directorate goes back to 1956 when an ‘Enforcement Unit’ was formed, in the Department of Economic Affairs, for handling Exchange Control Laws violations under the Foreign Exchange Regulation Act, 1947 (FERA ’47).
- In the year 1957, this unit was renamed ‘Enforcement Directorate.
- Presently, it is part of the Department of Revenue, Ministry of Finance.
- The Directorate has quasi-judicial powers under the Foreign Exchange Management Act (FEMA) to investigate alleged violations of the Exchange Control Laws and Regulations and has the authority to impose fines on guilty individuals.
- The officers of the Directorate are authorised under the PMLA to undertake inquiries to find, provisionally attach/confiscate assets acquired from Scheduled Offences, and arrest and prosecute money launderers.
Functions of the Enforcement Directorate under various Acts
- The Prevention of Money Laundering Act, 2002:
- The Directorate is empowered to investigate offences of money laundering and to take action/to prosecute people in cases where it is proved.
- These actions are taken against the proceeds of crime derived from the Scheduled Offences listed under PMLA.
- A total of 156 offences under 28 statutes have been listed as scheduled offences under PMLA.
- It has the additional responsibility of extending cooperation to foreign countries for investigations regarding money laundering and for recovering the proceeds of crime held in foreign countries.
- The Foreign Exchange Management Act, 1999:
- The Directorate is empowered to investigate violations of the provisions of the Foreign Exchange Management Act (FEMA).
- Designated authorities of the ED adjudicate these violations, and they are empowered to impose penalties of up to three times the sum involved in the contravention.
- Fugitive Economic Offenders Act, 2018:
- Processing cases of fugitive/s from India.
- The Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974:
- Sponsor cases of preventive detention w.r.t contraventions of FEMA
Key Powers of the ED under the Prevention of Money Laundering Act
- Power of Investigation
- Under Sections 48 & 49 of the PMLA, officers of the Directorate of Enforcement have been given powers to investigate cases of money laundering.
- The officers have also been authorised to initiate proceedings for attachment of property and to launch prosecution in the designated Special Court for the offence of money laundering.
- Powers of ED during the survey.
- In section 16 of the PMLA, the investigating authority during the survey may place marks of identification on the records inspected by him and make or cause to be made extracts or copies therefrom.
- Make an inventory of any property checked or verified by him.
- Record the statement of any person present in the place which may be useful for, or relevant to, any proceeding under this Act.
- Powers of ED during Search and Seizure
- Section 17 of the PMLA defines the power of search and seizure by the authorised officer.
- Power to issue Summons
- Section 50, the ED has the power to summon any person whose attendance he considers necessary.
- Attachment of Property
- Section 5, Director or any other officer not below the rank of Deputy Director authorised by the Director has reasons to believe (the reason for such belief to be recorded in writing), based on material in his possession.
Pic Courtesy: moneycrashers
Content Source: The Hindu