NEWS – PMLA Case Arrests: SC Tightens Rules

HIGHLIGHTS

Supreme Court Ruling on ED Arrests

• No Arrest After Cognisance: The Supreme Court ruled that the Enforcement Directorate (ED) cannot arrest an accused under Section 19 of the Prevention of Money Laundering Act (PMLA) after a special court has taken cognisance of the complaint.
• Custody Requires Court Approval: If the ED wants custody of an accused who appears in court after a summons, it must apply to that court for custody.

Details of the Judgment

• Non-Custodial Summons: An accused appearing on summons should not be treated as in custody and does not need to apply for bail. The special court may require a bond under Section 88 of the CrPC.
• Complaint-Based Cognisance: The court addressed scenarios where an accused is named in a complaint under Section 44(1)(b) of the PMLA but not arrested under Section 19 before the complaint was filed.
• Power Limitation: Once cognisance is taken based on a complaint, the ED cannot arrest the accused under Section 19. The ED must seek court permission for custody if further investigation is needed.
• Conditions for Further Investigation: The ED can arrest a person not named as an accused in the initial complaint if Section 19 requirements are met.

Court Directions on Summons and Warrants

• Issuing Summons: If the accused is not arrested by the ED before the complaint is filed, the court should issue a summons instead of a warrant.
• Handling Non-Appearance: In cases where the accused does not appear or is subject to proceedings under Sections 82 or 83 of the CrPC, a warrant of arrest is required, and the accused must apply for its cancellation.
• Bail Conditions: It is not mandatory to always direct the furnishing of bonds unless a warrant of arrest is issued due to non-appearance.

PREVENTION OF MONEY LAUNDERING ACT (PMLA), 2002

Objectives of PMLA

• Prevent Money Laundering
• Combat Illegal Channeling
• Confiscation of Property from or involved in money laundering.
• Penalize Offenders
• Establishes an adjudicating authority and appellate tribunal
• Covers all matters connected and incidental to the acts of money laundering.

Enforcement and Investigation

• Enforcement Directorate (ED): The ED, under the Department of Revenue, Ministry of Finance, is responsible for investigating money laundering offences under the PMLA.
• Financial Intelligence Unit-India (FIU-IND): FIU-IND, under the Department of Revenue, is the central national agency responsible for receiving, processing, analyzing, and disseminating information on suspect financial transactions.
• Scheduled Offences: These offences are investigated by specific agencies such as local police, CBI, customs departments, SEBI, or other investigative agencies as per their jurisdiction.

Actions Against Money Laundering Offenders

• Seizure and Freezing: Authorities can seize or freeze property and records, and attach property obtained with the proceeds of crime.
• Punishments:
  • Imprisonment: Offenders face rigorous imprisonment for a minimum term of three years, which may extend up to seven years.
  • Fines: Offenders can be fined without any limit.
• Obligations on Financial Entities:
  • Identity Verification: Banking companies, financial institutions, and intermediaries must verify clients’ identities.
  • Record Maintenance: They must maintain records and furnish information to FIU-IND.
  • Compliance: Entities must comply with the rules and regulations set forth under the PMLA and its notified rules.