The Supreme Court is reviewing its decision to uphold some key provisions of the Prevention of Money Laundering Act, 2002. Among the provisions being reviewed are those on the burden of proof, bail conditions and the scope of overreach by enforcement officers. These provisos have come in for sharp criticism right since the implementation of PMLA in 2005. The later amendments to the Act have made the situation more worrisome. A petition seeking review of some of the provisions was filed with the top court. In this case—Vijay Madanlal Choudhary vs Union of India—the court upheld all the provisions. However, the debate over their misuse intensified and a fresh review petition was filed immediately after the 2022 judgement.
Among the most controversial provisions is Section 50 of the Act, which empowers the Enforcement Directorate to summon any person and record his statement on oath that will be admissible in court, unlike statements given to the police. Another is the definition of the ‘proceeds of crime’ under Section 2(1)(u). It is exceptionally broad and requires rationalisation. This expansive definition allows the attachment of assets that may be far removed from the predicate offence and raises questions about the proportionality of enforcement actions.
The bail conditions under Section 45 are among the most debated. The tough requirements lead to prolonged incarceration of the accused, which is an infringement of the right to freedom. A law enacted to combat drug trade, money laundering and terror financing is alleged to have become a tool in the hands of the government to target opposition. There is a widespread demand to ensure a balance between empowering government agencies to tackle financial crimes and protecting the rights of individuals.
The enforcement of PMLA must adhere to constitutional principles and natural justice. It is a crucial piece of legislation that has emerged from the UN General Assembly’s call for such a law and is based on the recommendations of the Financial Action Task Force. Its thorough review is needed in order to remove the misgivings and ensure its effective implementation. The Supreme Court has already expressed its concerns over some of the provisions. The three-judge bench that is now taking a fresh look at the law must address the concerns.