SC Upheld Amendments Made to PMLA

Why in the News?

Recently, Supreme Court upheld core amendments made to the Prevention of Money Laundering Act (PMLA).

Key Points:

Background: 

• Parliament enacted the PMLA as a result of international commitment to deal with the menace of laundering.
• The verdict came on an extensive challenge raised against the amendments introduced to the 2002 Act through Finance Acts.
• The petitioners claimed that amendments would violate personal liberty, the constitutional mandate and procedures of law and .
• These amendments provided the government and the ED virtually unbridled powers which included the power of raids, arrest, and summons.
• Additionaly, It also made bail nearly impossible while shifting the burden of proof of innocence on to the accused rather than the prosecution.
• They asserted that the process itself was the punishment.

Key Highlights of the Judgment

• Scourge of Money Laundering: 
  • The court held that, it is not a hatchet wielded against rival politicians and dissenters
  • This is a sui generis (unique) legislation.
• The court noted that Money laundering is an offence against the sovereignty and integrity of the country.
• Power to Seize, arrest: it clarified that ED can go ahead with arrests, search, seizures without waiting for FIR by police.
  • It should inform the police for lodging FIR on the basis of which money laundering can be probed by ED.
• Disclosing ECIR: The court highlighted that since an Enforcement Case Information Report, unline an FIR, is an integral ED document, a directive to share it with the accused cannot be issued.
• Reverse burden of proof for bail: the bench upheld two conditions for bail in PMLA cases – 
  • Prima facia satisfaction that the accused is not guilty and is not likely to commit an offence while on bail.
  • Burden of reverse proof applies, meaning unlike what happens in regular cases, a court will presume an accused to be involved in money laundering unless proved innocent.
• Self-incrimination: SC held that ED officers aren’t police officers. Implying that if an ED officers records an incriminating statement, it can serve as evidence in court and won’t be thrown out on the ground of being self-incriminatory.
• Money Bill: The Bench said the method of introduction of the amendments through Money Bills would be separately reviewd by a larger Bench of the apex court.

Prevention of Money Laundering Act:

• About: Money laundering is an offence against the sovereignty and integrity of the country. It is an Act to prevent money laundering and to provide for confiscation of property.
• Offence of Money Laundering: 
  • A person is guilty of money laundering if he or she “directly or indirectly attempts to indulge or knowingly connected with the “proceeds of crime”,including its concealment, possession, acquisition or use, projecting or claiming it as untainted property.
• Punishment: Imprisonment for a term not to be less than three years, which may extend to seven years.