Prevention of Money Laundering Act, 2002 (PMLA)

 The Prevention of Money Laundering Act, 2002 (PMLA) is India’s primary legal framework enacted to prevent money laundering, confiscate property derived from illicit activities, and meet India's global commitments under the Vienna Convention and the Financial Action Task Force (FATF).

Core Objectives

• Prevent and control money laundering activities.

• Confiscate and seize proceeds of crime derived from scheduled offences.

• Appoint adjudicating authorities and tribunals to handle laundering matters.

• Impose reporting obligations on financial institutions, banks, and intermediaries.

Key Provisions & Framework

• Definition of Money Laundering (Section 3): Any direct or indirect involvement in processes connected with the proceeds of crime—including concealment, possession, acquisition, use, or projecting/claiming it as untainted property.

• Proceeds of Crime (Section 2(1)(u)): Any property derived or obtained directly or indirectly by any person through criminal activity relating to a scheduled offence.

• Scheduled Offences: Split into Part A (heinous crimes, corruption, drug trafficking, counterfeiting), Part B (value-linked offences), and Part C (cross-border crimes). A predicate offence must exist for PMLA provisions to apply.

• Enforcement Agency: The Directorate of Enforcement (ED) under the Department of Revenue, Ministry of Finance, investigates and prosecutes offences.

• Stringent Bail Conditions (Section 45): Twin conditions require the court to be satisfied that there are reasonable grounds to believe the accused is not guilty and is not likely to commit any offence while on bail.

• Burden of Proof (Section 24): In the case of a person charged with money laundering, the authority presumes that proceeds of crime are involved, shifting the burden onto the accused to prove untainted origin.

Key Institutional Mechanisms

Authority / Body	Role
Financial Intelligence Unit – India (FIU-IND)	National agency responsible for receiving, processing, and analyzing Cash Transaction Reports (CTRs) and Suspicious Transaction Reports (STRs).
Adjudicating Authority	Confirms or sets aside provisional attachment orders issued by the ED within 180 days.
Appellate Tribunal (SAFEMA)	Hears appeals against the orders of the Adjudicating Authority.
Special Courts	Designated Sessions Courts that try offences punishable under Section 4 of PMLA.

Recent Judicial Developments (Vijay Madanlal Choudhary Case, 2022)

• Upheld the constitutional validity of core PMLA provisions, including the definition of "proceeds of crime", twin bail conditions, and search, seizure, and arrest powers.

• Held that the Enforcement Case Information Report (ECIR) is an internal document and not equivalent to an FIR; hence, providing a copy to the accused at the time of arrest is not mandatory, provided the grounds of arrest are informed.

• Clarified that if an accused is acquitted or discharged in the predicate (scheduled) offence, proceedings under PMLA cannot continue.