The relationship between money and crime is not a secret. Simply put, when money is involved, people commit crimes; they do it to benefit financially. Money laundering is one of these offences.
Money laundering is the process by which an unlawful fund, or "black money," obtained through illicit means is covered up with legal funds and then presented as "white money." This is accomplished by distributing the monies through a number of channels (the procedure is briefly detailed below). The money is then transferred via a number of conversion and transfer stages to produce a phoney legality before finally arriving at a legitimate entity, like a bank, for example.
Development of PML
The PML (revised) Act, 2012 was introduced after the Act was revised in 2012. The change increased the meaning of money laundering. The term now includes possession, acquisition, and concealment of laundered money as crimes under its ambit. Before, only cases of money laundering involving Rs. 30 lakh or more were investigated, with the exception of extreme cases like terrorism. The barrier was eliminated with the modification. All money laundering offenses—small or large—will now be the subject of an investigation.
The PMLA was previously revised in 2005 and 2009. The 2012 amendment became effective in February 2013 after receiving consent in January 2013. As India joined the Financial Action Task Force in 2010, and FATF had only recommended a few changes to the statute, the government claimed that it was required to update the Act.
The 2002 Prevention of Money Laundering Act's goals
To address the problem of money laundering, the Prevention of Money Laundering Act, 2002, was approved. Following are a few of its goals:
to stop and manage the problem of money laundering.
confiscate or take into custody any assets that are probably linked to or involved in money laundering cases.
to punish those who violate the law by engaging in money laundering.
for designating the deciding body and appeals court to handle problems pertaining to money laundering.
the requirement that intermediaries, such as banks, are required to keep records or documentation pertaining to financial transactions.
to deal with any more money laundering-related difficulties.
Any person who violates Section 4 of the PMLA and is found guilty of money laundering is subject to a sentence of rigorous imprisonment for up to three years, which may be increased to seven years, as well as a fine.
It should be emphasised that the punishment may be increased from 7 years to a harsh 10 years in jail if the offence in question is connected to any of the offences specifically stated in the Narcotic Drugs and Psychotropic Substances Act, 1985.
Applicable limitations period for the PMLA
Since there is no special statute of limitations for money laundering-related cases, the standard rules of criminal process will apply. There is no statute of limitations for any offence that carries a sentence of more than three years, according to Section 468 of the Criminal Procedure Code, hence there is none for any wrongdoing committed in violation of the PMLA. Therefore, the ED has the power to start a proceeding after a certain amount of time. Furthermore, even the Financial Intelligence Unit (FIU-IND) is exempt from the PML Act's limitations period when filing an enforcement action for failing to follow the guidelines established by Reporting Entities.
Criticism on the 2002 Prevention of Money Laundering Act
On the outset, it is acknowledged that some clauses of the PMLA, 2002, are highly troublesome and contentious. Given their competing interests with various performers, they have frequently been in the headlines or the spotlight. Several PMLA clauses have been called into question by the courts on multiple times as being unconstitutional.
Authorities hold a great deal of power
The constitutionality of the PMLA, 2002 has been contested in a number of legal cases. Since its creation, the Act has had various flaws and discrepancies. Without a doubt, a number of adjustments were made to narrow the gaps, but the endeavour was unsuccessful. The Act, in some instances, adopts severe measures and gives the government extensive power to combat the problem of black money in the country; however, the provisions thus enacted should be made in the public's interest rather than for its own benefit, so the opinions of the courts on this matter will be eagerly awaited.
Under the PML Act, there is a lack of openness in the ED. Even the ECIR, or Enforcement Case Information Report, which is the FIR's equivalent, is described as a "internal document" and not given to the accused. Instead of adhering to the rules and procedures outlined by the criminal procedure law, the ECIR might be filed according to the whims and fancy of the ED.
In accordance with the Act's Section 45(1), the bail conditions were handled. This harsh clause was declared illegal in the landmark case of Nikesh Tarachand Shah v. Union of India (2017) because it contravened Articles 14 and 21 of the Indian Constitution as well as the principle of "bail, not jail" because a similar provision was included in the CrPC, 1973. As a result, if a person was sentenced to more than three years in jail under Part A of the Schedule, another provision had to be addressed. Section 45(1) was subsequently deemed to be unconstitutional and repealed as a result.
Attachment of goods
The constitutionality of sections 2(1)(u), 8, and 23 was contested in B. Rama Raju v. Union of India and Others (2019). The argument was founded on the claim that property owned by someone else who is not the person accused under this Act may also be confiscated and included to the case. Additionally, the court has the power to seize assets that were acquired illegally before the Act went into effect. The presumption under Section 23 was declared to be against the presumption of innocent in favour of the person accused of committing such an offence.
In light of this, the Court determined that the aforementioned provisions do not violate any of the Constitution's fundamental rights and therefore deemed the sections to be lawful after carefully examining the Act's provisions and its intended purpose.
Being applied to common offences
The PMLA is believed to have been involved in the investigation of routine crimes, and the authorities are also said to have taken control of the assets of innocent victims.
Various measures have been put into place by countries over the years to address the problem of money laundering. Both financial institutions and the governments of these countries have been steadfastly looking for novel ways to combat money launderers. Occasionally, amendments have been made to prevent the abuse of legal gaps. Additionally, changes have been made to stop government employees from abusing the PMLA. The PMLA can be seen of as a dynamic Act that will continue to alter over time in light of societal changes and a rise in citizen awareness.
It is vital that banks, financial institutions, and other intermediaries have the right training and direction on how to identify and combat the crime of money laundering because they play a significant part in the world of economic crimes. Every employee of a bank or other financial institution typically takes money laundering training. Additionally, it is required by law for banks to disclose any activity, transaction, or sequence of transactions that raise suspicion. Furthermore, businesses and groups may easily undertake customer research and ensure that no shady activity is taking place with the help of technology, such as specialised compliance platforms.