In India, economic offences are at high growth nowadays. So many scams and frauds are being committed. Most recently the PNB scam had been committed. Apart from banking fraud so many other offences such as money laundering,insider trading, securities fraud, insurance fraud and bribery are also committed in India at a high rate. The government has always been worried to prevent these kind of economic offences as it affects society at a large number and hugely disturbs the economic setup of the country due to these offences. So many legislations have been enacted to prevent socio-economic offences so far, but they are still not been able to prevent them completely. Therefore, in 2002 the Prevention of Money Laundering Act was enacted to curb the offence of money laundering. Money laundering is a very heinous offence which includes a huge amount of money. The Prevention of Money Laundering Act, 2002 was enacted to prevent and punish money laundering in India. It is one of the legislations which are enacted to fight against money laundering in India.  It came into force on July 1, 2005. It was amended in the year 2005,2009 and 2012.

Preamble –

The preamble of this act mentions three main objectives:

1. To prevent and control money laundering;
2. To confiscate and seize the property obtained from the laundered money; and
3. To deal with any other issue connected with money laundering in India.

This Act has defined attachment, proceeds of crime, money laundering and payment systems. Money laundering has been defined under section 3 of The Prevention of Money Laundering Act, 2002 which defines it as “Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime including its concealment,possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of money laundering”. This definition is a very wide definition which includes concealment, possession, acquisition or use and this definition is not exhaustive.

The PMLA incorporates a list of offences which are categorized as “scheduled offences”. The Finance Amendment Act,2019 has introduced some amendments in the PMLA due to increase in financial crimes.These amendments provide stringent provisions for investigation, seizure, confiscation and adjudication. The amendments have been added by inserting an “ Explanation”.

Key Amendments :

The Finance act has incorporated amendments by inserting Section2(u),Explanation to Section 3. It has omitted of Proviso. Section 17(1) and 18(1). It has amended Section 44 of PMLA. It has inserted an Explanation to Section 45(2). So, these are the changes which have been made by The Finance Act,2019. Now, let us discuss about these amendments briefly one by one-

1.Explanation of Section 2(u)– This Explanation clarifies the position of “proceeds of crime”. Now,“proceeds of crime” will be understood as a part of any property that directly or indirectly derived or obtained through an activity relatable to scheduled offences.So, now money laundering is not an independent crime rather it is dependent upon another crime which is known as “scheduled crime”.

2. Explanation to Section 3-Section 3 of PMLA talks about the offence of money laundering. The Explanation of this section states that a person shall be guilty of money laundering if he is directly or indirectly involved or is knowingly a party to “proceeds of crime”.
3. Omission of Proviso to Section 17(1) and 18(1)—Now, the authorized officer has been given authority to enter any property for the sake of conducting search and seizure, and the search of any person, even in the absence of the reporting of a scheduled offence to a magistrate or any other competent authority by omitting provisoof section 17(1) and 18(1).
4. Amendment to Section 44 of the PMLA:-This section talks about the jurisdiction which is entertained by Special Court in this regard and trial is conducted by the special court only. The provisoinserted to section 4(1) that talks about the closure report which shall be submitted if the offence of money laundering is not determined after investigation.It insists on closing of cases when investigation is conducted and no offence is found.

An Explanation has been added to section 44(1)(d) which gives an exclusive jurisdiction to special court with respect to scheduled offences.

 

5. Explanation to Section 45(2) of PMLA:-This Explanation talks about the nature of money laundering offence. This explains that Money laundering is a cognizable and non-bailable offence. Accordingly, an authorized officer can arrest the accused without a warrant and due to non-bailable offence bail cannot be sought as a right, it is discretionary power of the court as per section 437 of Code of Criminal Procedure.

The Finance Act,2019 has made more clarity about money laundering offence by these amendments but it still requires more clarity which would definitely be carried out by judicial interpretation.

 

(By- ALANKAR UPADHYAY

Asst. Professor,Institute of Law, Nirma University Ahmedabad)