Ron Borah.
The Prevention of Money Laundering Act, 2002 (PMLA) was established to combat money laundering, enable the attachment and confiscation of related properties, prosecute individuals involved in criminal proceeds, and address associated concerns.
Enacted by the Parliament, the PMLA aligns with India’s international obligations under conventions like the Vienna (1988) and Palermo (2000) Conventions, as well as the 40 Recommendations of the Financial Action Task Force (FATF) to tackle money laundering effectively. Over time, the PMLA has undergone amendments to enhance its mechanisms.
Despite being lauded as a crucial measure in India's fight against financial crimes, closer scrutiny exposes significant flaws and deficiencies in its provisions and implementation. Challenges to the constitutionality of various PMLA provisions were brought before the Supreme Court, citing disproportionately stringent bail conditions, wide powers granted to the Enforcement Directorate (ED), and lack of procedural safeguards. However, the apex court, in its July 27, 2022 judgment in Vijay Madanlal Choudhury vs Union of India, upheld the PMLA, prioritizing India's commitment to combat money laundering over fundamental rights considerations.
Expansive interpretations by the Supreme Court have broadened the PMLA's scope, curtailed the rights of accused individuals, and intensified its severity. Despite a pending review petition against the judgment, the current stance reinforces stringent application of the PMLA.
Key provisions such as the registration of an Enforcement Case Information Report (ECIR) by the ED, analogous to an FIR, highlight the absence of mandatory provision for supplying a copy to the accused, infringing upon their right to be informed of allegations under Article 21 of the Constitution. Additionally, Section 50's empowerment to summon "any person," including the accused, violates the right against self-incrimination (Article 20(3)).
Section 45's conditions for bail, shifting the burden of proof onto the accused, contradict the presumption of innocence until proven guilty, a fundamental principle recognized by the FATF. The broad criteria for invoking the PMLA, based solely on the alleged commission of a scheduled offence, lack clear guidelines, leading to selective and arbitrary enforcement. Moreover, the inclusion of minor offences in the schedule has expanded the PMLA's reach, further complicating matters.
The accused will not be granted bail by any level of the court system, as Section 45 of the PMLA states that a judge can only grant bail if they are convinced of the accused's innocence. No judge would be willing to take such a chance, resulting in the person being imprisoned for an extended period without a trial.
The PMLA has inherently stricter provisions. One such provision is Section 24, which places the burden of proof on the accused to demonstrate their innocence. Until this burden is met, the court will presume the accused is guilty. However, this does not prevent courts from granting bail to the accused.
Further, the PMLA's post-2019 amendments have blurred the distinction between money laundering and scheduled offences, allowing the ED to investigate both without prior state consent. This infringes upon federalism, a constitutional basic structure.
Overall, while the PMLA serves noble intentions, its impact on personal liberty and compliance with fundamental rights necessitate amendments to align with constitutional principles and due process.
