Misuse of Prevention of Money Laundering Act (PMLA) – UPSC GS3

Context: SC is hearing a case related to misuse of PMLA.


Prevention of Money Laundering Act (PMLA), 2002:
  • PMLA enables the Government or the public authority to confiscate the property earned from the illegally gained proceeds.
  • Objectives:
    • To prevent money-laundering.
    • To provide for confiscation of property in money-laundering.
    • To punish those who commit the offense of money laundering.
  • Read more basics from Prelims Notes.
Issues with the Prevention of Money Laundering Act:
  • The Directorate of Enforcement(ED) is empowered to issue summons, record statements, make arrests, and search and seize property.
  • PMLA is pulled into the investigation of even “ordinary” crimes.
  • Despite having powers of investigation, the ED has not been classified as a ‘police agency’.
  • The Act takes away the presumption of innocence usually afforded to accused persons under criminal law.
  • To be granted bail, the accused must prove prima facie that they were not guilty, and satisfy the Court that they will not commit any further offense.
  • The offenses mentioned in the Act are extremely overbroad, and in several cases, have absolutely no relation to either narcotics or organized crime.
  • Besides, there is a lack of clarity about the ED’s selection of cases to investigate.
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