Arvind
“There is a world of difference in the conquered adopting the institutions of the conqueror and the same people adopting the institutions of the Conquered and the difference is these adopted institutions tend to be used to the conditions which they were never intended to provide for….”
The Prevention of Money Laundering Act (PMLA) 2002 is enacted by the Indian Parliament with an apparent intention to combat money laundering and related activities. The Act aims to prevent and control money laundering, confiscate property derived from or involved in money laundering, and address other related issues. It imposes obligations on banking companies, financial institutions, and intermediaries to verify the identity of clients, maintain records, and furnish information to the Financial Intelligence Unit – India (FIU-IND). The PMLA has been amended several times to strengthen its provisions and ensure effective implementation. Still there could some more shortcomings, if improved can give become more effective.
- To Section- 3: – “Omission of mere Possession of the proceeds of crime from the offence of money laundering”
The inclusion of mere possession of the proceeds of crime although is discouraging of the crime but in view of the fact that all crimes are not committed with the motive of procuring some proceeds therefrom and the proceeds thereof are a mere happenstance, to punish the mere possession of the proceeds of the crime exposes the accused to the stringent provisions of money laundering.
Techno-legally speaking, Money laundering from its etymological sense calls for the undertaking of actions aimed at portraying the proceeds as clean and mere possession devoid of any such portrayal does not fit in the definition.
Suggestion
The possession of the Proceeds may be made a separate offence in itself (equivalent to that of possession of stolen property) and need not be brought under the definition of money laundering.
- The Necessitation of the Supply of the ECIR (Enforcement Case Information Report)
The accused must be supplied the ECIR at least to the limited extent of indicating as to which of his property is suspected as proceeds of a crime and from which offence they are alleged to have been proceeded f
To Sections 5, 8 & 11 “The Procedures of Attachment (Provisional, Confirmation & Finality) Whereas the Attachment of property follows the usual course of:
Thus, there is a Duality of Adjudication with one adjudicator (The A.A) merely giving judicial color to the arbitrary executive action as has been detailed hereinunder: –
Suggestions
- Elimination of this Duality in Adjudication or Expansion of its role in Provisional Attachment: –
It is submitted that the role of the A.A in under the current scheme is just to confer a perfunctory judicial approval of the Provisional attachment undertaken by the E.D already and since, the Confirmation order of the A.A is itself temporary the Adjudicating authority is an otiose as such the same may be eliminated and the Special Courts may be allowed to subsume the role of the A.A.
Or,
To better the overall functioning of the act with sufficient judicial interference the A.A may be made an active participant in the provisional attachment carried out by the E.D itself under Section-5.
i.e., Instead of permitting the E.D to do a Pre-attachment (Provisional attachment followed by the Confirmation by the A.A). The A.A may be kept in the loop from the commencement of the Investigation itself and the attachment be made with the prior approval of the A.A instead of the post approval. This System of Attachment washes the blemish on the E.D of being draconian and acting on its utter discretion as the decisions of its are undertaken with prior judicial approval (Approval of the A.A).
- Addition of the word “PERUSE” before the words “Keep such order”
Whereas the Section 5(2) employs the words –
“The Director or any other officer not below the rank of Deputy director, shall, immediately after attachment under subsection, to the A.A in a sealed envelope, in the manner as may be prescribed and such A.A Shall Keep such order and material for such period as may be prescribed”. The following suggestion is made therefor-
Suggestion-
The A.A should not only Keep the Materials of investigation but must be allowed to PERUSE the same.
NOTE- Letting the A.A in on the investigation ever since its inception until it continues caters propriety to the investigation and saves the genuine need of the E.D to attach a property apprehending its possible disposal from being perceived as an excuse to attach the property as it is approved by a judicial (an independent & impartial) authority.
- To- Section- 13 – “The power of Directo to impose fines on Reporting entities must be subject to Prior Sanction by the E.D”
There is a need to expand the operation of the A.A and not just limit its role to conferring confirmation to the Provisionally attached property and The A.A may be made to act as approver of every action of the E.D which is of a Judicial Nature.
- To Chapter – V – “The Pre-approvals to Survey, Seizures & Arrests”
The powers od surveys, seizures and Arrests must be priorly sanctioned by the A.A and as aforesaid in order to facilitate the same there is a need to revisit and expand the role assigned to the A.A and make it the supervisory cum participative agent in the processes of investigation of which the Survey, Seizures & Arrests etc. form a part of.
Whereas the Section 16(2), 17(2), 18(2), 19(2), 20(2) employs the words
“The Director or any other officer not below the rank of Deputy director, shall, immediately after attachment under subsection, to the A.A in a sealed envelope, in the manner as may be prescribed and such A.A Shall Keep such order and material for such period as may be prescribed”. The following suggestion is made therefor-
Suggestion-
The A.A should not only Keep the Materials of investigation but must be allowed to PERUSE the same.
NOTE- “The introduction of the afore-stated measures does away with the Post- Action application (for Judicial confirmation of the actions already taken by the ED) and puts in its place a System of Pre- judicial confirmation which in turn accords propriety and integrity to the ED’s actions saving it from the nefarious name of being an abuser and harasser.
- To Section- 19(1) – “The incorporation of the Pankaj Bansal mandate which held that – The Mode of communication of arrest must be in writing.
Whereas the Section -19(1) merely employs the words “inform him of the grounds for such arrest”. The words “in writing” to be employed after the word arrest.
- To Section-24- “The rule of minimum discharge of burden of proof as envisaged for the invocation of the presumption under the NDPS Act,1985 must be observed”.
The reverse burden clauses in NDPS act,1985 may be invoked only after the prosecution lays down the foundation which is fertile enough for the growth of the Presumption.
The rule as afforested must be followed with even more stringency in light of the fact that the accused is not even supplied the minimum documents necessary for him to put an effective defense which is not the case under any other acts embodying the reverse onus clauses.
- Addition to Chapter -VIII – “Recommending body for appointment of the Authorities of the E.D”.
To ensure the independence and impartiality of the E.D the appointment of the E.D officials to be made from out of the names of officials selected in a merit-based manner by a body consisting of – “Prime minister, Home minister, Chief Justice of India, Leader of opposition in both Lok Sabha, The Speaker of Lok Sabha”.
- To Section- 50(3) & (4)– “Involvement of the A.A in the process”
Whereas the existing PMLA,2002 mandates the compulsory statement of the truth upon examination and the same has been accorded the status of a judicial proceeding. Therefore, to do justice to the same and to save the E.D from the criticism of the amasser of powers it is only fit that the A.A be made a party to such examinations.
THE CONUNDRUM OF “PROCEEDINGS OF THE SCHEDULED OFFENCE” & “THE PROCEEDING OF MONEY LAUNDERING”
Problem
The proceedings under the PMLA act,2002 envisages the commission of a Scheduled offence, yet, the attachment(provisional) is made just after the Section-173 (final report) is made or a complaint is made in respect of a scheduled offence . So, even before the trial for the scheduled offence has begun the parallel proceedings under the PMLA act begins.
What if the Proceeding under the PMLA act (Attachment proceedings) is carried out and the Special court finds the accused guilty of money laundering but, the Trial of the Scheduled offence (The predicate offence) found that the accused is innocent.
Suggestion
To avoid such as possibility the PMLA proceeding must be allowed to incept only upon the conclusion of the Trial of the Scheduled offence or must at least be stayed awaiting the result of the Trial of the Scheduled offence. It is high time that the Supreme Court consider these respects whensoever it decides upon the – “Reviewing the – Vijay Madanlal Choudhry case”.
The views and opinions expressed by the author in this article are his personal opinions and do not represent the views of PureSociology. You can contact the author/s at [email protected]. The details of the author:
Mr. Arvind is a Law student (BALLB) at Chandigarh University (CU), Punjab (India).
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