Abstract

The enactment of the Prevention of Money Laundering Act was a response to international programs that have aimed at fighting the menace of money laundering— which not only poses large risks to financial institutions but also tends to undermine the sovereignty and integrity of nations. The programme got further impetus when the UN convention against Illicit Drug Traffic came into being, which called for taking away funds and assets from drug-related organizations on a mandatory basis as well as putting into place mechanisms that would assist in combating money laundering. In a resolution adopted in February 1990, the UN General Assembly asked that member states enact legislation to outlaw money laundering and prevent financial institutions from being misused for illegal purposes. In light of this, the PMLA was approved in 2003 and enacted on July 1st, 2005. The PMLA’s primary objectives are to prevent money laundering, confiscate the proceeds of crime, and establish agencies and mechanisms to coordinate anti-money laundering measures. The Act defines money laundering as any process or activity connected to the proceeds of crime, including concealment, possession, acquisition, or use of such proceeds, projecting or claiming them as untainted property. The Act has been changed many times to ensure the quality of its provisions. The biggest amendments happened in 2012 and 2019 when the former changed the definition of money laundering under the Act to include individuals who aid, abet or participate in such crimes. In 2019, this amendment passed by the parliament sought to expand the powers of ED that provides for searching and attaching properties by the officers without going through a magistrate. Some have been concerned about abuse of power with them; the legality of its provisions has been questioned. In particular, the constitutionality on its section 45(1) which makes bail almost impossible and not providing accused with information in ECIR is in question. Yet landmark cases such as Nikesh Tarachand Shah v. Union of India highlight this delicate balance between upholding constitutional validity while meeting law enforcement objectives with safeguarding fundamental rights, including recent pronouncements by the Supreme Court of India. Recent rulings have underscored the importance of transparency and procedural safeguards. The Delhi High Court, in cases such as Neeraj Singal v. ED, has reinforced the necessity of providing written reasons for arrest to ensure fairness and due process. The ongoing judicial scrutiny highlights the need for rigorous oversight to prevent misuse of power and maintain public trust in the legal system.

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