PREVENTION OF MONEY LAUNDERING ACT

  • In a recent hearing, the Supreme Court of India upheld the constitutional validity of the Prevention of Money Laundering Act, 2002.
  • The court underlined that the principle of innocence of the accused/offender is regarded as a human right but that presumption can be interdicted by a law made by the Parliament/Legislature.
  • Enforcement Case Information Report (ECIR) cannot be equated with an FIR.
  • Supplying an ECIR in every case to the person concerned is not mandatory and “it is enough if the Enforcement Directorate (ED), at the time of arrest, discloses the grounds of such arrest”.
  • The ECIR is an internal document of the ED and the fact that FIR in respect of scheduled offence has not been recorded, does not come in the way of ED authorities to commence inquiry/investigation

Section 3 of PMLA Act:

  • Section 3 of the PMLA Act 2002 has a wider reach and captures that offence of money laundering is an independent offence regarding the process or activity connected with the proceeds of crime which had been derived or obtained as a result of criminal activity relating to or in relation to a scheduled offence.
  • Offence under Section 3 “is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence”.
  • The Authorities under the 2002 Act cannot prosecute any person on notional basis or on the assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional police and pending enquiry including by way of criminal complaint before the competent forum.

Enforcement Directorate:

  • The bench upheld the ED’s power under Section 5 of the Act (order provisional attachment of any proceeds of crime).
  • The Court stated that Section 5 provides for a balancing arrangement to secure the interests of the person and also ensures that the proceeds of crime remain available to be dealt with in the manner provided by the 2002 Act.
  • It rejected the argument that ED authorities are police officers and, hence, a statement recorded by them under Section 50 of the Act would be hit by Article 20(3) of the Constitution which says no person accused of an offence shall be compelled to be a witness against himself.
  • It is a criminal law enacted to prevent money laundering and to provide for confiscation of property derived from, or involved in, money-laundering and related matters.
  • It forms the core of the legal framework put in place by India to combat Money Laundering.

SOURCE: THE HINDU,THE ECONOMIC TIMES,MINT

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