Prevention of Money Laundering Act (PMLA)

Money Laundering

Money laundering is the process of conversion of the money which is illegally obtained so as to make it appear to originate from a legitimate source. In simple words, it is the process of making dirty money to look like clean money. Under section 3 of the PMLA, it has been defined as under:-

“Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime, including its concealment, possession, acquisition or use or projecting or claiming it as untainted property shall be guilty of offence of money laundering.”

The PMLA was enacted by the parliament in the year 2002 and it came into force on 1/7/2005. This Act is applicable to the whole of India. It has been amended in the year 2005, 2009, 2012 and then in 2019.

The objective of the Act is to prevent money laundering and to provide for confiscation of property derived from or involved in money laundering and for matters connected.

Authorities and Attachment Procedure

The proceedings under PMLA starts with the registration of the Enforcement Case Information report (ECIR) which is the first step of the initiation of the proceedings under the PMLA.After registration of the ECIR the Investigating Officer (I.O.)investigates the matter under PMLA to ascertain the proceeds of crime generated from the predicate offence booked by the Law Enforcement Agency. In case a prima facie case of generation of proceeds of crime and laundering is made out, PMLA provides for seizure and attachment of laundered properties. Sub-section (1) of section 5 of PMLA, provides that the director or any other officer not below the rank of Deputy Director authorised by Director has reason to believe on the basis of material in his possession that(a)any person is in possession of any proceeds of crime and (b)such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in any proceedings relating to confiscation of such proceeds of crime under this chapter,he may by order in writing provisionally attach such property for a period not exceeding 180 days from the order. Further director or any other officer who attaches any property under sub-section(1) of section 5 of PMLA shall file an Original Complaint (OC) stating the facts of such attachment before the Adjudicating authority (PMLA) within a period of 30 days from such attachment .

After the filing of Original Complaint under sub-section(5) of section 5,or applications made under sub-section(4) of section 17 or under sub-section(10) of section 18, If the Adjudicating Authority has reason to believe that any person has committed an offence under section 3 or is in possession of proceeds of crime, it may serve a notice of not less than 30 days on such person calling upon him to indicate the source of his income, earning or assets, out of which or by means of which he has acquired a property attached, the evidence on which he relies and other relevant informations and particulars and to show cause why all or any of such properties should not be declared to be the properties involved in money laundering and confiscated by the Central Government. Adjudicating Authority also serves the notice to the person who held the properties on behalf of any other person and if the property is held jointly by more than one person than serves the notice to all the persons. Thereafter the adjudicating authority after considering the reply ,hearing the aggrieved person and Directorate of Enforcement(E.D.) and taking into account all relevant materials placed on record before him, by an order record a finding whether all or any of the properties referred to in the notice issued under sub-section(1) of section 8 are involved in money laundering. Where the Adjudicating Authority decides under sub section (2) of section 8 that the property is involved in money laundering then passes the order under sub-section (3) of section 8 in writing to confirm the attachment of the property made under subsection (1) of section 5 or retention of property or record shall continue during investigation for a period not exceeding 365 days.

Appellate Tribunal and High Court

Any party aggrieved by the order passed by the Adjudicating Authority may approach to the Appellate Tribunal by filing an appeal under section 26 of the PMLA within 45 days from the date on which a copy of order made by the Adjudicating Authority is received and the Appellate Tribunal after giving an opportunity of being heard, to the parties in appeal pass such orders thereon as it thinks fit confirming, modifying or setting aside the Order appealed against.

If any person is aggrieved by any decision or order of the appellate tribunal he may file an appeal to the High Court within 60 days from the date of communication of the decision or order of the Appellate Tribunal to him on any question of law or fact arising out of such order.

Prosecution under PMLA

In addition to this the department also initiates the prosecution proceedings against the persons who have been alleged under section 3 of the PMLA by filing the complaint under section 45 of the PMLA, 2002 before the designated Special Court. If the special court finds that the persons have committed the offence of money laundering then the court punishes them as per section 4 of the Act with imprisonment for a term which shall not be less than three years but which may extend to ten years and also shall be liable to fine.

If any party is aggrieved with the judgement/order, they may approach to the jurisdictional High Court by filing an Appeal and Revision under Chapter XXIX and XXX of the Code of Criminal Procedure ,1973 respectively.

The NN Legal Partners guide its clients on each and every steps of the proceedings initiated by the Investigation Officer (I.O.) under the PML Act and help them to file a proper and effective reply dealing with the legal and technical issues therein to the SCN issued by the Authorities and provide help to the litigants to conduct the cases on their behalf before Authority, Tribunal and Courts.