GS Paper 2
Syllabus: Important aspects of governance/ Internal Security
Source: Indian Express
Direction: If you are giving Mains this time, be thorough with the provisions of PMLA, has it been able to curb money laundering? What changes are required?
Context: SC has agreed to reconsider its verdict upholding two key provisions of the Prevention of Money Laundering Act:
- Not sharing a copy of the Enforcement Case Information Report (ECIR) with the accused
- Stringent bail provisions that reverse the presumption of innocence of an accused
ECIR is the first official document recorded by the Enforcement Directorate (ED) before beginning its investigation, similar to what FIR is with police. SC in its last month’s judgement had said that ECIR cannot be equated with an FIR.
Background: The review petition, filed by parliamentarian Karti Chidambaram questioned the findings of the Supreme Court bench in its July 27 (last month) verdict.
- Last month’s verdict had given the government and the ED enforcement Directorate unbridled powers of summons, arrest, and raids and made bail nearly impossible.
- It has also shifted the burden of proof of innocence onto the accused rather than the prosecution.
About the Prevention of Money Laundering Act (PMLA):
PMLA was enacted in 2002 and it came into force in 2005 as a response to India’s global commitment (including the Vienna Convention) to:
- Curb the menace of money laundering (the process of converting black money into white)
- To provide for confiscation and seizure of property derived from money laundering.
- To deal with any other issue connected with money laundering in India.
PMLA (Amendment) Act, 2012:
- Adds the concept of ‘reporting entity’ which would include a banking company, financial institution, intermediary etc.
- PMLA, 2002 levied a fine up to Rs 5 lakh, but the amendment act has removed this upper limit.
- It has provided for provisional attachment and confiscation of property of any person involved in such activities.
PMLA (Amendment) Act, 2019:
- It provided extensive power to ED for summons, arrests and raids, and makes bail provisions difficult while shifting the burden of proof of innocence onto the accused rather than prosecution. (see infographics)
Money laundering is the process of concealing the origin of money, obtained from illicit activities such as drug trafficking, corruption, embezzlement, etc.
Money laundering is the process of concealing the origin of money, obtained from illicit activities such as drug trafficking, corruption, embezzlement, etc.
IntraLinks:
Mains Link:
Q. Critically examine the efficacy of the Prevention of Money Laundering Act (PMLA) in holding those engaging in money laundering activities accountable before the law.
Prelims Link:
Linkt it with provisions of PMLA, what are International conventions related to it, know about Vienna convention, FATF.
