Supreme Court Judgment on PMLA
Context:
The Supreme Court ruled that a person summoned by a designated special court under the PMLA is presumed not to be in custody and does not need to apply for bail under the stringent conditions of the law.
Relevance:
GS-02 (Polity)
Key highlights:
- Limitation on ED’s Arrest Powers: The judgment restricts the Directorate of Enforcement’s (ED) power to arrest an individual after the special court has taken cognizance of a case. The ED must separately apply for custody and provide specific grounds for custodial interrogation.
- Bond Requirement: The special court can direct the accused to furnish bonds under Section 88 of the Code of Criminal Procedure. This undertaking is not equivalent to granting bail, so the twin conditions of Section 45 of the PMLA do not apply.
- Exemption from Personal Appearance: The judgment allows an accused who appears in the special court to be potentially exempted from future personal appearances, providing additional relief.
- Procedures for Non-appearance: If an accused fails to appear after being summoned, the special court may issue a bailable warrant followed by a non-bailable warrant.
- Separate Application for Further Investigation: The ED may arrest a person not named as an accused in the initial complaint for further investigation, provided the procedures under Section 19 of the PMLA are followed.
Prevention of Money Laundering Act (PMLA), 2002:
- Enacted in response to India’s global commitments, the PMLA aligns with international agreements like the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances 1988.
- It forms a crucial part of India’s legal framework to combat money laundering, applicable to various financial entities.
- Recent Amendments:
- Proceeds of Crime Clarification: The definition broadens to include not only property derived from scheduled offenses but also those from activities related or similar to scheduled offenses.
- Redefining Money Laundering: Formerly dependent on a predicate offense, money laundering is now treated as a standalone crime under Section 3 of PMLA.
- Expanded Offenses: The amendment includes actions like concealment, possession, acquisition, and projecting as untainted property, treating them as integral to the offense.
- Continuing Nature: Money laundering is recognized as a continuing offense until the individual benefits from its associated activities, emphasizing the prolonged accountability of offenders.
Enforcement Directorate (ED):
- The Enforcement Directorate (ED) is India’s law enforcement and economic intelligence agency, established to combat economic crimes and enforce economic laws.
- Initially formed to address Exchange Control Law violations, it operates under the Ministry of Finance’s Department of Revenue.
- It is headquartered in New Delhi, with regional offices across India.
- Recruitment: The recruitment is done directly and by drawing officers from other investigation agencies. The staff includes officers from various services like the Indian Revenue Service, Indian Police Service, and Indian Administrative Service.
- Tenure: Two years. However, the directors’ tenure can extend upto two to five years by giving three annual extensions.
- Under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA), the Enforcement Directorate has the authority to initiate cases of preventive detention related to violations of FEMA.
- It also enforces the Foreign Exchange Management Act, 1999 (FEMA), and the Prevention of Money Laundering Act, 2002 (PMLA).
- It investigates violations, adjudicates penalties, attaches assets, and processes cases of economic offenders, ensuring compliance and cooperation with international authorities.
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