Prevention of Money Laundering Act,2002

The Prevention of Money Laundering Act,2002, came into force on July 1, 2005. As stated in the Preamble of the Act, the main objective was to prevent money-laundering, provide for confiscation of property derived from or involved in money laundering, and punish those engaged in the commission of the offence of money-laundering. The Government of India proposed the Prevention of Money Laundering Bill 1998in Parliament on August 4, 1998, and the Bill received permission from the President on January 17, 2003. Hence, the specific statute to deal and tackle money laundering cases, i.e., the Prevention of Money Laundering Act, 2002, was introduced. 

Objectives :

The Prevention of Money Laundering Act seeks to combat money laundering in India and has three main objectives:

To prevent and control money laundering.

To confiscate and seize the property obtained from the laundered money; and

To deal with any other issue connected with money laundering in India.

Prevention of Money Laundering  Act challenged in various case laws

Since the inception of the Act, the provisions have been categorized as complex and contentious. They have been in the limelight for their conflicting interests with different Acts. The constitutionality of various provisions of the Prevention of Money Laundering Act has been challenged in the courts time and again in various case laws. 

Section 45(1) Prevention of Money Laundering  Act

Section 45(1) of the, 20 Prevention of Money Laundering Act 2002, dealt with bail conditions. This draconian provision was held to be unconstitutional. It was in contravention with Article 14 and Article 21 of the Constitution of India in the landmark judgment of Nikesh Tarachand Shah v. Union of India (2017). The violation of Articles 14 and 21 as the principle guiding the criminal justice system is ‘Bail, not jail ’based on Article 21 of the Constitution.

Section 2, 8, 23 of the Prevention of Money Laundering  Act

In the case of B Rama Raju v. Union of India and Ors (2019). the constitutional validity of Sections 2(1)(u), 8, and 23  were challenged.

 The Court decided upon this matter after considering these provisions and the object of the PMLA,2002 and PMLA, 2005. As the Parliament has the power to retrospectively apply any Act and the presumption under Section 23 is a rebuttable presumption, and the accused has a chance to disprove his guilt. So the Court stated that these provisions do not infringe any fundamental rights enshrined in the Constitution and upheld the validity of these provisions.

Section 5(1) Prevention of Money Laundering  Act

Several writ petitions have been filed under Article 226 of the Constitution of India to declare the second proviso to Section 5(1) of Prevention of Money Laundering Act, 2002 as ultra vires, unconstitutional as it is a violation of Article 14,19(1)(g),  21, 300A of the Constitution. Section 5(1) deals with the property’s attachment in money-laundering. Its second provision confers the power over the Enforcement Directorate to provisionally attach the properties allegedly bought from proceeds of the crime.

So through these series of judgments over the years, it can be derived can state that the second proviso to Section 5 (1) does not infringe the rights as articulated under Article 14, Article19 (1)(g), Article 21, and Article 300-A of the Constitution of India.

Section 17,18 Prevention of Money Laundering  Act

After the Amendment of 2019, the provisions of Section 17(1) and 18(1) have been deleted. As a result, the scope of powers of the officers of the Enforcement Directorate (ED) widened. Now ED can initiate search procedures against the accused or search premises without any report being forwarded to the magistrate under Section 157 of CrPC,1973. This power will surely increase the sufferance of the accused at the whims of the officer. The constitutional validity of these provisions is to be decided by the Court.

Sections 19(1) and 24 of the Prevention of Money Laundering  Act 

Section 19 of the Act deals with the powers of arrest, and Section 24 of the Prevention of Money Laundering Act,2002 deals with the burden of proof. These provisions were challenged in the case of Rajbhushan Omprakash Dixit v. Union Of India & Anr (2018)

The Court relied on the judgment of Moin Akhtar Qureshi v. the Union of India (2017). It said that the provision of Section 19(1) does not comply with the principles of the Constitution and thus is to be reconsidered by a larger bench.

Section 44 (1) (a) and Section 44 (1)(b) Prevention of Money Laundering  Act

A Petition has been filed challenging Section 44(1)(a) and 44(1)(b) because:

Section 44(1)(a) deprives the accused of rights enunciated under CrPC,1973 like the right to be tried by the magistrate of first-class, right of the first appeal as per Section 374(3) of CrPC, Right of Revision to the High Court (as per section 401 CrPC). Thus, it is pleaded to be against Article 21 of the Constitution.

Section 44(1)(b) is considered against Articles 14 and 21 of the Constitution as the petitioner contends that the grounds on which the authority can transfer the case to the Special Court are not explicitly mentioned, thus conferring wide unfettered powers.

The Divisional Bench comprising Justice S. Abdul Nazeer and Justice Aniruddha Bose has been listed for further hearing.

Conclusion

Several pending court cases challenge the legality of the Prevention of Money Laundering Act (PMLA). Since its inception, this Act has had many drawbacks and non-compliance with the Act’s provisions due to its prevalence. Undoubtedly the amendments were made to strengthen the existing gaps, but they could not achieve the purpose for which they were installed and instead raised several questions.

In my view, the Prevention of Money Laundering Act sometimes takes drastic measures and gives the authorities too much power to combat the issue of black people’s money in the country. We hope you have attained the clarity you wanted.