Money laundering is something like involving “proceeds of crime” in any matter that appears as untainted money. It’s bedlam. Concealing a false transaction to create a legitimate treasury. The law catches money laundering. Thus, money laundering is a “parasitic” act and therefore cannot arise if there is no crime listed and/or if there are no proceeds of crime. He added that it is only when proceeds of crime are sought to be presented as clean money that a separate money laundering offense arises.
The Supreme Court ruling upholding all the controversial provisions of the Prevention of Money Laundering Act (PMLA) falls short of judicial standards of review of legislative actions. Every aspect of its analysis is underpinned by the belief that India’s commitment to the international community to strengthen the domestic legal framework to combat money laundering is inviolable to the extent that potential violations of fundamental rights can be downplayed. The ruling repeatedly cites the “international commitment” behind Parliament’s enactment of a law to reduce the risk of laundering proceeds of crime, which it asserts has transnational consequences such as negatively affecting financial systems and even the sovereignty of countries. There is undoubtedly widespread international concern about the harmful effects of organized crime that fuels the international drug trade and terrorism. Much of these activities are financed through illicit funds generated by crime, which are laundered to appear legitimate and channeled into the financial bloodstream of global and local economies. A strict framework, with an appropriate departure from routine standards of criminal procedure, may be justified in some circumstances. However, experience suggests that money laundering in the Indian context is associated with or viewed as a by-product of a range of serious and routine crimes attached to the law as a schedule. These “prescribed” or “predicate” crimes should ideally be limited to serious crimes such as terrorism, drug trafficking, corruption and serious forms of tax and duty evasion. However, in practice, the list contains crimes such as fraud, forgery, cheating, kidnapping, and even copyright and trademark infringement. The Law Enforcement Administration has also been clearly selective in opening money laundering investigations, making any citizen vulnerable to search, seizure, and arrest at the whim of the executive branch. The PMLA is not a strict liability offence, as is the case with drug lords etc where the possession is the same.
- ECIR cannot be linked to the FIR under the CRPC in view of the special mechanism provided for in the Money Laundering Prevention Act 2002.
- Section 45 of the Financial Crimes Act deals with identifiable and non-bailable offences, and is fair and non-arbitrary.
- The challenge to the constitutional validity of Article 19 of the 2002 Law was also rejected. Strict safeguards were provided in Article 19. Nothing in this provision falls under the scope of arbitrariness.
- Under Section 5 of the Act, seizure of property of persons involved in money laundering is constitutionally valid.
- Article 24 of the Anti-Money Laundering Law gives due consideration to the objectives to be achieved under the law and cannot be considered unconstitutional.
- Article 162 of the Code of Criminal Procedure states that every person is obliged to answer truthfully all questions asked by a police officer.
- Data recorded by officers under the 2002 Act is not affected by Section 20(3) or Section 21 of the Constitution.
- According to Article 20 (3) no person accused of any crime shall be compelled to be a witness against himself, and Article 21 deals with the protection of life and personal liberty.
- Corrective measures need to be taken by the Executive in relation to vacancies in the Court of Appeal under the Anti-Money Laundering Act 2002.
- Article 63 of the law, which deals with punishment in relation to false information or failure to provide information, is in no way arbitrary.
- There appears to be no basis for appeal against Article 44, which deals with offenses tried by special courts, which are considered arbitrary or unconstitutional.
The provisions of the Anti-Corruption Law must stand the test of due process under Article 21; Section 50 of the Anti-Money Laundering Act establishes the right to liberty of persons summoned under the law and violates the right not to incriminate oneself; Section 44 (1) (d) of the Anti-Terrorism Act creates an irreversible bias on the part of the accused with regard to the trial adjudicating the predicate offence; The PMLA creates a broad crime without any limitation on investigative powers; The schedule of crimes renders many bailable crimes unbailable; The provisions of the Anti-Corruption Law related to seizure conflict with the provisions contained in the laws containing the predicate offence; Judicial paralysis of the Court of Appeal.
There was a complete misunderstanding of Article 50 of the Anti-Money Laundering Law. There is a discrepancy between procedure and investigation. Article 50(4) is only about follow-up, not exploration. This issue has not been dealt with by the other side, nor has it been answered by the other side. Under section 63(2)(b) of the Anti-Corruption Act, if he refuses to sign any statement made by him during any proceedings under this Act, he will be liable to fine. This applies to the procedures provided for in Articles 5 (Annex), 8 (Determination of the Case) and 13 (Manager’s Power to Impose a Fine). An investigation cannot be a judicial proceeding. The person is not required to sign this declaration under Section 50(2). The AML scheme has enabled the seizure of assets, the petitioner’s special procedure and Section 50 inspections, a six-year pre-trial procedure in both the predicate offense and the money laundering offense, a limited right to participate as defendants and the poor reversal of the burden of proof it imposes Philippine Emancipation Act”. (Vijay Madanlal Chaudhary and Others v. Union of India & Ors) Article 50 of the Anti-Corruption Law deprives the accused person of his only two “friends” during the investigation – the Constitution and the Criminal Procedure Law of 1973. The Criminal Procedure Law sets out procedures to protect the accused’s constitutional right against self-incrimination. Section 50 empowers the PSD to compel defendants to testify against themselves while in detention for fear of fines and imprisonment if they lie. Evidence obtained in this way can be used against the accused in court.
Also, the most horrific cases of terrorism, such as: Mohammed. Ajmal Amir Kasab vs State of Maharashtra (2019), It has been argued that the Supreme Court has affirmed that deprivation of liberty in criminal law should only be effected through due process. By enabling the Emergency Directorate to forcibly extract signed confessions from defendants and making the ECIR list containing evidence against the defendants unavailable during crucial stages of the trial, the anti-corruption law ignores due process. The emergency department enables the forced extraction of signed confessions from defendants, makes the ECIR containing evidence against the accused unavailable during crucial stages of the trial, and the anti-corruption law ignores due process.
It is disappointing that the court did not find a provision requiring a person summoned by the Public Security Directorate to be compelled to disclose and submit documents, and then sign them on pain of prosecution, as a violation of the constitutional prohibition on coerced testimony. Nor has it been impressed by the argument that search and seizure sentences lack judicial oversight and are driven exclusively by emergency department officers. Provisions allowing money laundering to be prosecuted even without proof of the listed offense and amendments deleting collateral were accepted by the bench, only on the grounds that these were intended to remove loopholes that the international assessors had pointed out regarding the effectiveness of the law. Except for the curious comment that the Special Court can examine documents to decide on continued detention, there is nothing in the ruling that would mitigate the strictness of the law. It refuses to petition that emergency department officers who record statements be treated as police officers, thus protecting the admissibility of their evidence. At a time when the Executive Directorate selectively targets opponents of the regime, this ruling must be remembered for its failure to protect personal freedom from executive frills.
Despite the Executive Directorate’s proactive approach to money laundering matters, determining the trajectory of funds in these cases has been a monumental task. To date, the emergency department is investigating 4,700 cases. The number of cases investigated each year in the past five years ranges from 111 in 2015-2016 to 981 in 2020-21. These numbers have become a point of concern as only 313 people have been arrested so far since 2002, the year the Anti-Money Laundering Act was passed. Over the past 20 years, there have been more than 200 pending petitions under the DEA Act. The statistics become even more alarming when compared to other jurisdictions where the annual registration of cases under their money laundering legislation is much higher; Especially in the United Kingdom (7900), the United States (1532), China (4691), Austria (1036), Hong Kong (1823), Belgium (1862) and Russia (2764).
The difficulty in sentencing offenders in money laundering cases is primarily due to the offenders’ remoteness from criminal activity and the proceeds of crime. Criminals often weave an intricate web of connections and transactions to commit a financial crime such as the one shown so that the act can go unnoticed in the ordinary course of things. Even after suspicious activity has been detected, the sheer complexity of criminal activity makes it very difficult, if not outright impossible, to trace the crime back to the masterminds. The average time lag between when frauds occurred and when they were discovered was 23 months for reported frauds in 2020-21. For large frauds worth Rs 100 crore and above, the average delay was 57 months for 2020-21. Even the Hon’ble Supreme Court emphasized the need for a speedy investigation because “money travels faster than light.” The plight is so severe that the Indian judicial system suffers from a slow pace of resolving cases, and there is an endless backlog that stands in the way of timely disposal of matters.
Until 2019, it was discovered that at least 38 economic offenders had fled the country to avoid prosecution. Besides actions by law enforcement agencies, it may be futile and publicly unacceptable to seek prosecution at the expense of department resources if punishment is nearly impossible. India has, in the recent past, adopted measures to prevent businessmen from obtaining loans fraudulently and fleeing the country to avoid prosecution, including the implementation of the Fugitive Economic Offenders Act 2018. This legislation authorizes the government to seize all assets (including assets acquired from the proceeds of Crime) for a person against whom an arrest warrant has been issued for a listed offense where the value exceeds INR 100 crore (approximately US$ 13 million). In furtherance of this, the 2018 amendment to the Prevention of Corruption Act 1988 (PCA) criminalized the act of “giving bribes” in addition to the act of “accepting bribes”. This amendment also includes provisions relating to the attachment and management of property obtained through an offense under the Prevention and Management of Corruption Act, which did not exist in this Act before. Another example is the inclusion of corporate fraud (as understood under the Companies Act 2013), as a scheduled offense under the Anti-Money Laundering Act which tightens restrictions on companies and their employees.
Views are personal.