Prevention of Money Laundering Act, 2002 (PMLA) Critical Review of Key Provisions

Abstract

The Prevention of Money Laundering Act, 2002 (PMLA) stands as a pivotal legislative tool in India, designed to combat money laundering and allied financial crimes, having a fundamental objective to thwart money laundering and facilitate the confiscation of property derived from or implicated in money laundering. Money laundering, as per the act, is expansively defined to encompass any process or activity attempting to legitimize illegally obtained proceeds, such as those arising from criminal activities. The act criminalizes money laundering activities, imposing stringent penalties that include imprisonment and fines for individuals found guilty of such offenses. Enforcement of the PMLA is orchestrated by various authorities, with the Enforcement Directorate (ED) at the forefront. The ED is entrusted with investigating and prosecuting offenses under the act. Embarking on an exploration of the intricate domain outlined by the Prevention of Money Laundering Act (PMLA) leads us to a realm where the intersections of financial regulations, criminal justice principles, and ethical considerations converge. By examining a series of pertinent adjudications related to the PMLA, we enter a reservoir of legal knowledge that significantly shapes the understanding and application of this crucial legislation. These legal determinations not only clarify the intricacies surrounding money laundering and its consequences but also offer invaluable guidance for legal practitioners, scholars, and policymakers striving to strike a balance between prosecuting financial offenses and safeguarding individual liberties. Within this compilation, we engage in an intellectual journey, mapping the continually evolving terrain of PMLA legal interpretations and presenting a comprehensive perspective on its development and significance within the framework of precedent law in the pursuit of justice. While serving as a significant tool in the battle against money laundering, the PMLA has faced criticisms, particularly concerning certain provisions such as the broad definition of "proceeds of crime", about the burden of proof placed on the accused, usual overreach, bail provisions etc. which become issues for critical analysis specially in preview of latest judgements of Hon. Supreme Court of India. Pending the review of the controversial judgment in 2022, specifically in the cases of Vijay Madanlal Choudhary v. Union of India, the Directorate of Enforcement (ED) seems to have gained significant momentum. The Supreme Court's scrutiny and criticism of the ED's actions, particularly in the unlawful arrest of two individuals in a money laundering case, have underscored the imperative for a comprehensive re-evaluation of the key provisions of the Prevention of Money Laundering Act (PMLA), while in Pankaj Bansal v. Union of India, in which it came down heavily on the ED for the illegal arrest of two accused in a money laundering case has necessitated the critical review of key provisions of PMLA. The methodology of study of Critical review of key provisions of Prevention of Money Laundering Act, 2002 involves librarian research in which books, articles and recent case laws of Hon. Supreme Court of India are referred.