Money Laundering and its prevention: India

From Indpaedia
Jump to: navigation, search

Hindi English French German Italian Portuguese Russian Spanish

This is a collection of articles archived for the excellence of their content.
Additional information may please be sent as messages to the Facebook
community, All information used will be gratefully
acknowledged in your name.



How the law was enacted and became so draconian and pervasive

Sunil Baghel, May 14, 2024: The Times of India

The reference is to the Prevention of Money Laundering Act (PMLA), the mere mention of which sends shivers down the spines of politicians, especially those opposed to the ruling dispensation. Just ask Hemant Soren, Arvind Kejriwal, Manish Sisodia and K Kavitha. But apart from answering the question asked above, this piece will raise another – does a law like PMLA have a place in a democratic country like India?

Prevention of Money Laundering Act (PMLA) – responsible for putting a serving chief minister (Arvind Kejriwal) in jail in the run-up to a general election and pushing another to resign before going to jail (Hemant Soren) – is as much a poll issue in 2024 as perhaps inflation, jobs, law and order, and mandir-masjid.

Apart from the two chief ministers, several ministers are in jail, including almost the entire top leadership of Kejriwal’s Aam Aadmi Party (AAP). Daughter of former Telangana chief minister K Chandrashekar Rao is in jail too and there are many other ministers and legislators – most belonging to opposition parties – who are facing action under PMLA.

Supreme Court’s rulings

2022: SC upholds the validity of the Act

AmitAnand Choudhary, July 30, 2022: The Times of India

New Delhi: The Supreme Court upheld the validity of the stringent Prevention of Money Laundering Act (PMLA) and the vast powers enjoyed by the Enforcement Directorate (ED). It gave the agency the go-ahead to arrest people and conduct search and seizure even when no complaint has been filed, making statements given before it admissible in court and also putting the burden on the accused to prove their innocence.

“Money laundering cannot be said to be less heinous than the offence of terrorism,” the court said.

In a 545-page verdict penned by Justice AM Khanwilkar, the SC examined thread- bare all the controversial provisions of PMLA that were challenged by petitioners, and found all of those to be valid.

Can grant bail in PMLA cases if trial delayed: SC. 2024

AmitAnand Choudhary, March 21, 2024: The Times of India

New Delhi: Observing that stringent bail provisions under Prevention of Money Laundering Act cannot take away the power of courts to protect right to life and liberty of the accused, Supreme Court said bail can be granted on the ground of delay in trial in cases relating to money laundering as a person cannot be kept in jail indefinitely.

While hearing the bail plea of a person who has been in custody for 18 months in an illegal sand mining case in Jharkhand, a bench of Justices Sanjiv Khanna and Dipankar Datta said Section 45 of PMLA, which says that no person shall be granted bail without hearing the public prosecutor and if there are reasonable grounds for believing that he is guilty of such offence, “could not take away the power of courts to grant bail in case of delay in trial”.

“It is related to Article 12 of the Constitution. I have al- ready held this in the Manish Sisodia case that if there is undue incarceration, then court can grant bail and Section 45 (of PMLA) does not come in the way,” Justice Khanna observed.
The court, however, allowed govt time to respond to the questions raised before deciding the matter.

Banks penalised

PNB fined for rule violation/ 2019

August 3, 2019: The Times of India

PNB fined for anti-money laundering rule violation


In one of the steepest ever penalties for violation of anti-money laundering rules by a bank, the Financial Intelligence Unit (FIU) has slapped a penalty of over Rs 15 crore on state-run Punjab National Bank (PNB).

Bank sources said that the lapses were not serious and were largely procedural. “We have 7,000 branches and open some 20,000 accounts every day. We are sensitising our offices,” said an executive, adding that the bank will appeal against the order.

Separately, the Reserve Bank of India (RBI) has imposed penalties in the Rs 1-2 crore range on eight public sector lenders for violations related to opening and operating current accounts, discounting of bills, cyber security framework and frauds classification and reporting by commercial banks.

“A scrutiny was carried out by RBI in the accounts of the companies of a group and it was observed that the banks had failed to comply with provisions of one or more of the directions issued by RBI as mentioned above,” the regulator said in a statement.

The list names Allahabad Bank, Bank of Baroda, Bank of India, Bank of Maharashtra, Corporation Bank, Indian Overseas Bank, Oriental Bank of Commerce and Union Bank of India.

Enforcement Directorate’s powers

ED can’t arrest accused after special court takes cognisance of complaint: SC

May 17, 2024: The Indian Express

The bench of Justices A S Oka and Ujjal Bhuyan, which was hearing Tarsem Lal vs Directorate of Enforcement, Jalandhar Zonal Office, said, “After cognisance is taken of the offence punishable under Section 4 of the PMLA based on a complaint under Section 44, the ED and its officers are powerless to exercise powers under Section 19 to arrest a person shown as accused in the complaint. If the ED wants custody of the accused who appears after service of summons for conducting further investigation in the same offence, ED will have to seek custody of the accused by applying to the special court.”

“If the accused appears before the special court pursuant to a summons, he shall not be treated as if he is in custody. Therefore, it is not necessary for him to apply for bail. However, the special court can direct the accused to furnish bonds in terms of Section 88 of the Code of Criminal Procedure (CrPC),” it said.

The question before the Supreme Court was whether an accused, once he appears before the Special Court in response to a summons, will still be required to apply for bail in terms of Section 437 of the CrPC and if he has to, whether it will be governed by the twin conditions imposed by Section 45 of the PMLA.

In the case pursued by the ED Jalandhar Zonal Office, a bond executed by a PMLA case accused under Section 88 of CrPC was treated as a bail proceeding notwithstanding that he appeared before the court in compliance with the summons issued to him. As a consequence, he had to seek bail. He then approached the High Court for grant of anticipatory bail. Denying him relief, the High Court said he had not satisfied the second condition under Section 45 of PMLA.

The relief this ruling provides

The Supreme Court’s ruling extends protection against arrest by the ED when an accused is actively participating in the investigation without being evasive. The relief is significant as the bar for grant of bail, once arrested, is very high in ED cases.

The bench said the special court “after hearing the accused… must pass an order on the application after recording brief reasons. While hearing such an application, the court may permit custody only if it is satisfied that custodial interrogation at that stage is required even though the accused was never arrested under Section 19”.

“However, when ED wants to conduct further investigation concerning the same offence, it may arrest a person not shown as an accused in the complaint already filed, provided the requirements of Section 19 are fulfilled,” it said.

“If the accused was not arrested by the ED till the filing of the complaint by taking cognisance of a complaint under Section 44 as a normal rule, the court should issue a summons to the accused and not a warrant. Even in the case where the accused is on bail, a summons must be issued,” it said.

The bench said that special courts can even grant exemption from appearance in a case where the accused shows sufficient cause.

“If the accused does not appear, the special court can issue a warrant in terms of Section 70 CrPC. The special court must issue first a bailable warrant. If it is not possible to effect service of bailable warrant, then recourse can be taken to non-bailable warrants,” it said.

It said “a bond furnished according to Section 88 CrPC is only an undertaking by an accused who is not in custody to appear before the court on the date fixed”. Therefore, an order accepting bonds under Section 88 from the accused does not amount to a grant of bail, it said.

If a warrant is issued on account of non-appearance, the court has the power to cancel the warrant and it is not necessary to apply for bail, the bench clarified.


2021: 122 sitting, ex-legislators facing laundering cases

Dhananjay Mahapatra, August 10, 2021: The Times of India

Opposition MP names on ED's list, as in August 2021
From: Dhananjay Mahapatra, August 10, 2021: The Times of India

The Enforcement Directorate has filed in the Supreme Court a list of 122 sitting and former MPs and MLAs facing money laundering cases for years with highprofile names from across the political spectrum, including several opposition figures, though the list also includes prominent names from BJP.

The list starts with A Raja and K Kanimozhi, who faced the PMLA cases because of the CBI chargesheet in the 2G spectrum scam in 2010. Both have been acquitted and the CBI appeal is pending in the Delhi HC. Following them are the father-son duo of P Chidambaram and Karti, who, according to ED's report in the SC, are facing two cases each — first lodged in 2012 with regard to the Aircel-Maxis deal irregularities, and the second in 2017 regarding clearance to FDI in media.

Ex-CMs named are BJP’s B S Yediyurappa, Congress’s B S Hooda, Virbhadra Singh (since deceased), O Ibobi Singh, JDS's Gegong Apang, Congress’s Nabam Tuki, INLD’s O P Chautala (trial completed), NCP’s Churchill Alemao and Congress’s Digambar Kamat & Ashok Chavan.

See also

Demonetisation of high value currency- 2016: India

INX money laundering case

Money Laundering and its prevention: India

Money Laundering: South Asia

Prevention of Money Laundering Act

Personal tools