The Prevention of Money Laundering Act (PMLA), 2002 vested a cadre of officers under the Directorate of Enforcement (ED) with powers to prevent money laundering, attach proceeds of crime, and confiscate assets. However, over the last few years, the ED has assumed powers akin to that of a policing agency and has often been accused of turning its gaze against political opponents of the Union government. These concerns were bolstered when the Union government granted ED Director Sanjay Kumar Mishra a third extension, which the Supreme Court struck down.
Prevention of Money Laundering Act (PMLA), 2002
The Prevention of Money Laundering Act (PMLA) is an Indian legislation enacted in 2002 to prevent money laundering and combat illicit financial activities. Money laundering refers to the process of concealing the origins of illegally obtained funds to make them appear legitimate. The PMLA aims to establish measures for the identification, tracing, seizure, and confiscation of proceeds derived from illicit activities.
Key features and provisions of the Prevention of Money Laundering Act, 2002:
Money Laundering Offense:
The PMLA defines the offense of money laundering and prohibits individuals from knowingly engaging in activities that involve proceeds of crime. It covers a wide range of predicate offenses, including terrorism, drug trafficking, human trafficking, organized crime, corruption, and tax evasion.
Attachment and Confiscation:
The Act empowers various authorities, such as the Enforcement Directorate (ED), to attach and confiscate properties derived from money laundering activities. It provides provisions for provisional attachment of properties during the investigation and subsequent confiscation after a conviction or determination of guilt.
Money Laundering Offenses Overseas:
The PMLA also allows for the investigation and prosecution of money laundering offenses committed outside India, provided the offense is considered a crime in both the foreign country and India.
Obligations on Reporting Entities:
The Act imposes obligations on reporting entities, such as banks, financial institutions, intermediaries, and professionals like chartered accountants and lawyers, to maintain records of transactions and report suspicious activities to the authorities. These reporting entities are required to comply with the Know Your Customer (KYC) norms to verify the identity of their customers.
The PMLA establishes special courts to deal with money laundering offenses. These courts are designated to expedite the trial process and ensure effective adjudication of cases.
Investigation and Enforcement:
The Enforcement Directorate (ED), under the Ministry of Finance, is the primary enforcement agency responsible for investigating and enforcing provisions of the PMLA. It has powers to conduct searches, seize assets, freeze bank accounts, and gather evidence during the investigation.
The Act facilitates international cooperation and coordination in combating money laundering and related offenses. It allows for the exchange of information and mutual legal assistance with foreign countries to investigate and prosecute money laundering cases of cross-border nature.
Penalties and Punishments:
The PMLA prescribes stringent penalties and punishments for offenses related to money laundering. It includes imprisonment, fines, confiscation of proceeds of crime, and forfeiture of properties involved in money laundering activities.
The Prevention of Money Laundering Act, 2002, has undergone amendments over the years to strengthen its provisions and enhance the effectiveness of anti-money laundering measures in India. The legislation plays a crucial role in deterring money laundering, protecting the integrity of the financial system, and combating illicit financial activities.