PMLA’s Draconian Provisions

Source-This post on PMLA’s Draconian Provisions has been created based on the article “Bail for K Kavitha: Time to review PMLA’s draconian provisions” published in “The Indian Express” on 29 August 2024.

UPSC Syllabus-GS Paper-3- Money-Laundering and its prevention.

Context– Recent Supreme Court rulings emphasize that “bail is the rule, and jail is the exception” should apply to special laws like UAPA and PMLA. This was highlighted in the case of K Kavitha, where the court noted that undertrial detention should not be punitive.

Recently, the ED’s activity has surged, with cases rising from 1,797 (2005-2014) to 5,155 (2014-2023) and asset attachments increasing from Rs 5,086 crore to Rs 1.2 lakh crore. Yet only 25 cases have reached court, with 24 leading to convictions.

How Have the PMLA Provisions Evolved?

A) 2012 Amendment- Expanded the definition of money laundering to cover activities related to the concealment, acquisition, possession, and use of criminal proceeds.

B) 2015 Amendment- Extended the definition of “proceeds of crime” to include assets located in India, even if laundering occurred abroad.

C) 2018 Amendment- Reinforced the twin conditions for bail under Section 45, requiring courts to confirm the commission of a crime or the unlikelihood of the accused fleeing.

D) 2019 Amendment- The ED’s powers were expanded to include broad authority for summons, arrests, raids, and property seizures. Money laundering was defined as a standalone offense, allowing property searches with just a simple warrant, without needing an FIR or chargesheet.

Read More- Money Laundering

What are the issues with the Enforcement Directorate?

1) Selective Prosecution- Politicians constitute only 3% of ED cases, yet over 90% of these cases involve members of the Opposition. Cases often get sidelined when politicians switch to the ruling party.

2) Prolonged Trials and Bail Conditions- Strict bail conditions and lengthy court processes have caused many accused individuals to remain in detention for extended periods. In over 21 years, only 25 cases have been resolved, partly because wealthy offenders use tactics to delay trials.

3) Capacity and Resource Constraints- The ED, with a current staff of 2,067, has asked to triple its workforce and open offices in each state capital. It is struggling with over 11,000 foreign exchange violation cases, making it difficult to prioritize and manage them all effectively.

4) Abuse of Law-The PMLA’s strict provisions-such as allowing arrests without an ECIR, using statements made by the accused, and lacking magisterial oversight, raise concerns about potential misuse.

Conclusion – The Supreme Court’s upcoming review of PMLA’s strict provisions is important. If the Court does not address these issues, it will be up to the public to push for changes in Parliament to ensure the Act is fair and upholds democratic principles.

Question for practice

What are the issues with the Enforcement Directorate?