Supreme Court puts its stamp on Kafka’s law

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Supreme Court puts its stamp on Kafka’s law

  • The Supreme Court upheld the constitutional validity of the Prevention of Money Laundering Act, 2002, as amended from time to time, including those dealing with the powers of the Enforcement Directorate (ED) regarding arrest, search, attachment, and seizure in money laundering offences.

What is Money Laundering?

  • Money laundering is commonly referred to as Hawala transactions in India.
  • It rose to prominence in the early 1990s, when several politicians were trapped in its web.
  • Hawala is a remittance alternative or parallel system. The Hawala Mechanism permitted the conversion of black money into white money.

Prevention of Money Laundering Act

  • An Act established in 2002 to prohibit money laundering and to provide for the confiscation of money-laundering-derived property.
  • PMLA's three major goals are to prevent money laundering in India:
  • Preventing and controlling money laundering.
  • Confiscate and seize property earned via money laundering; and
  • To address any additional issues related to money laundering in India.

What are the PLMA Offenses?

  • Offenses listed in Parts A and C of the Schedule to this Act will be subject to its provisions.
  • Part A contains the following activities as offences:
  • Antiquities and Art Treasures Act, Trademark Act, Wildlife Protection Act, Copyright Act, and Information Technology Act.
  • Part B contains offences described in Part A but with a monetary value of Rs 1 crore or higher.
  • Part C covers trans-national offences.

Problems with Prevention of Money Laundering Act:

  • Abuse Of Central Agencies: The Enforcement Directorate is drawing the PMLA into the investigation of even minor offences.
  • Asset Seizure: Genuine victims' assets have been attached. The ED might stroll into anyone's home.
  • Politically Driven Raids: Throughout this, the PMLA's primary goal of investigating the conversion of "illegitimate money into legitimate money" was lost.
  • Charges Are Withheld: Petitioners pointed out that even the Enforcement Case Information Report (ECIR), which is identical to the FIR, is deemed an "internal document" and is not provided to the accused.
  • Uncertainty About Evidence: The accused is asked to make remarks that are considered as acceptable in evidence.
  • Harassment: The ED begins summoning accused people and requests information on all of their financial transactions and family members.
  • Against Individual Liberty: The commencement of an inquiry by the ED has the potential to restrict a person's liberty.

The PMLA (Amendment) Act of 2012:

  • Adds the notion of ‘reporting entity,' which includes a bank, financial institution, middleman, and so on.
  • The PMLA, 2002 imposed a punishment of up to Rs 5 lakh, however the amending legislation eliminated this cap.
  • It has authorised for the interim attachment and seizure of any person engaging in such actions' property.