Context : The Delhi Health Minister was recently arrested by the Enforcement Directorate (ED) for allegedly misleading investigations and transferring proceeds of crime, which is a serious offence under the Prevention of Money Laundering Act (PMLA).
The Prevention of Money Laundering Act (PMLA), 2002:
What Is PMLA 2002 ?
- It is an Act of the Parliament of India enacted to prevent money-laundering and to offer for confiscation of assets derived from money-laundering.
- The Act and Rules notified (both of these came into force with immediate effect from 2005) there under impose an obligation on banking companies, financial establishments and intermediaries to confirm identification of clients, keep data and provide data in prescribed format to Financial Intelligence Unit - India (FIU-IND).
Provisions in PMLA 2002:
Key Definition:
- Attachment: Prohibition of transfer, conversion, disposition or movement of assets through the appropriate legal order.
- Proceeds of crime: Any assets derived or obtained, directly or indirectly, through any individual due to criminal activity relating to a scheduled offence.
- Money-laundering: Whoever, directly or indirectly, tries to indulge or help some other individual, or who's simply involved in any activity related to criminal proceeds and portraying it as untainted assets.
- Payment system: A system that permits payment to be effected between a payer and a beneficiary. It consists of the structures permitting credit card, debit card, smart card, money transfer or comparable operations.
- Punishment for money-laundering: The Act prescribes that any individual found guilty of money-laundering will be punishable with rigorous imprisonment from 3-7 years.
- Where the proceeds of crime involved relate to any offence under the Offences under the Narcotic Drugs and Psychotropic Substance Act, 1985, the maximum punishment may also increase to ten years.
- Adjudicating authority:
- The Adjudicating Authority is the authority appointed by the central government thru notification to exercise jurisdiction, powers and authority conferred under PMLA.
- It decides whether or not any of the assets connected or seized is involved in money laundering.
- It shall now no longer be bound through the procedure laid down by the Code of Civil Procedure,1908, however it will be guided by the principles of natural justice and subject to the other provisions of PMLA.
- Appellate tribunal:
- It is the body appointed by the Government of India and given the power to hear appeals against the orders of the Adjudicating Authority and any other authority under the Act.
- Orders of the tribunal can be appealed in the concerned High Court (for that jurisdiction) and ultimately to the Supreme Court (SC) of India.
- Financial Intelligence Unit – India (FIU-IND):
- It was set up by the Government of India in 2004 because the central national agency is accountable for receiving, processing, analysing and disseminating information regarding suspect monetary transactions.
- FIU-IND is also accountable for coordinating and strengthening efforts of national and global intelligence, investigation and enforcement corporations in pursuing worldwide efforts against money laundering and related crimes.
- FIU-IND is an independent body reporting directly to the Economic Intelligence Council (EIC) headed by the Finance Minister.
Provisions regarding arrest of sitting MPs/MLAs/Ministers:
- According to the Code of Civil Procedure 1908 (Section 135A), the Union ministers and members of Parliament (MPs) enjoy immunity from arrest in the case of civil subjects and can not be arrested forty days before, during, or forty days after a Parliament session.
- However, there's nothing in the rule book that stops a minister's arrest in a criminal matter.
- The presiding officer of the House (of which the arrested individual is a member) needs to be informed upon his arrest. This information is then notified in the Parliament bulletin if the House isn't in session, or informed to the House, if it is in session.
- The only exception to the rule is when a member or minister has to be arrested from the premises of Parliament, the permission of the chair has to be sought.
- Under the Indian Constitution (Article 361), immunity from arrest in both civil and criminal subjects extend only to the President and governors, who can not be arrested even in criminal matters while they're in office.
- Any action, even in criminal subjects, can best be initiated once they demit office.
In Recent News :
- According to ED, the health minister had been allegedly laundering black money using Kolkata-based shell companies.
- In its attachment order of April 5, the agency had named Akinchan Developers Pvt Ltd, Indo Metal impex Pvt Ltd, Paryas Infosolutions Pvt Ltd, Mangalayatan Projects Pvt Ltd, J J Ideal Estate Pvt Ltd and close family members Swati Jain, Sushila Jain and Indu Jain as co-accused in the PMLA case.
- "Investigation by ED revealed that during 2015-16, when Satyendar Kumar Jain was a public servant, the above-mentioned companies beneficially owned and controlled by him received accommodation entries to the tune of Rs 4.81 crore from shell companies against cash transferred to Kolkata-based entry operators through hawala route," the ED had said in its attachment order.
- These amounts were utilised for direct purchase of land or for the repayment of loan taken for purchase of agricultural land in and around Delhi, the agency further claimed.
Way Forward:
- The evolving threats of money laundering supported through the emerging technology need to be addressed with the equally advanced Anti-Money Laundering mechanisms like big data and artificial intelligence.
- Both worldwide and domestic stakeholders need to come collectively through strengthening statistics sharing mechanisms among them to efficiently remove the problem of money laundering.
- In the recent case there is need for fair and on time trial and proper prosecution.
