Treatise on PMLA (Prevention of Money-Laundering Act, 2002) Law & Practice

Year: Sept 2023

Author: Akhilesh S. Dubey

The Prevention of Money Laundering Act, 2002 (PMLA) is a crucial piece of legislation enacted by the Parliament of India to prevent money-laundering and confiscate property acquired from money laundering. The PMLA came into effect on 1st July, 2005 with the primary objective of preventing money- laundering, providing for the confiscation of property derived from or involved in money laundering, and punishing those engaged in the commission of the offence of money laundering.

 Since its enactment, the PMLA has been amended several times, in 2005, 2009, 2012, and most recently in 2019 through the Finance (No. 2) Act, 2019. These amendments have introduced new concepts and made changes to existing provisions. For instance, the 2019 amendment added the concept of a ‘reporting entity’ which includes a banking company, financial institution, intermediary, etc. The amendment also removed the upper limit of the fine that can be levied under PMLA, 2002. It provided for provisional attachment and confiscation of property of any person involved in such activities. Moreover, the scope and ambit of the Act have also been enhanced by refining the definition of the offence of money laundering by Finance (No. 2) Act, 2019 making it more stringent by including an indirect attempt to indulge in activities such as concealing, possession, acquisition, use, projecting or even claiming proceeds of crime as untainted property as punishable offense under the Act.

While these amendments have aimed to strengthen the PMLA and make it more effective in curbing money laundering, some may argue that they have also made the subject more complex. For example, the conundrum surrounding the twin conditions under Section 45(1) created many diverse opinions between law practitioners as well as the judiciary. The Supreme Court in Nikesh Tarachand Shah v. Union of India declared that Section 45(1) of the Prevention of Money- Laundering Act, 2002, insofar as it imposes two further conditions for release on bail, to be unconstitutional as it violates Articles 14 and 21 of the Constitution of India.

Similarly, many changes in the provisions relating to attachment, investigations, arrest and bail were introduced by the legislature in PMLA and interpreted by the courts across India. The introduction of new concepts and changes to existing provisions requires legal professionals and others to constantly update their knowledge and understanding of the PMLA. There are very limited sources/commentaries available with respect to the provisions of PMLA. Even Government websites have not updated changes in Rules and have only uploaded published gazettes on their websites.

This book aims to compile all information related to case laws, rules, notifications and concepts of law in one place to assist legal professionals. It provides a comprehensive overview of PMLA and its amendments over time while also discussing key cases and their implications on the interpretation and application of PMLA. This book serves as an invaluable resource for legal professionals seeking to deepen their understanding of PMLA.

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