The Prevention of Money Laundering Act (PMLA), enacted in 2002, was born out of a critical global issue – the threat posed by drug money to the stability of economies and nations. The flourishing drug trade generated a vast amount of “black money,” and integrating it into legitimate financial systems was a looming danger.
This backdrop is crucial to understanding the PMLA’s original intent. In 1988, the United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances called for action against laundering drug proceeds. This was followed by the establishment of the Financial Action Task Force (FATF) in 1989, further emphasising the need to combat money laundering. Finally, the UN General Assembly’s 1990 resolution urged member countries to enact legislation specifically targeting drug money laundering.
Following this global push, India, adhering to the UN resolution and FATF recommendations, formulated the PMLA. The legislation, however, wasn’t brought into force until 2005.
A Law Initially Focused on Drug Money
The core objective of the PMLA, as reflected in the international resolutions and FATF’s recommendations, was to prevent the laundering of money derived from drug trafficking. The law targeted not only those directly involved in drug crimes but also those who facilitated the laundering process at later stages.
However, the PMLA’s character has evolved through amendments over time. The law now revolves around “crime proceeds,” encompassing a broader range of offences beyond drug trafficking. While this expansion aims to capture a wider spectrum of financial crimes, a key concern has emerged.
Beyond the Original Purpose: A Bloated Schedule
The PMLA’s schedule, which lists offences considered “prediction offences” for money laundering, has grown significantly. This expansion raises a critical question: Does the schedule stay true to the original purpose of combating drug money laundering?
Critics argue that the schedule now includes numerous offences listed elsewhere in the Indian Penal Code (IPC) or addressed by specific laws. This inclusion, they argue, deviates from the PMLA’s original intent and dilutes its focus on the most serious economic crime – drug money laundering.
Concerns Regarding Scope and Rigour
The PMLA’s enforcement raises concerns about its application. The Act was enacted under Article 253 of the Constitution, empowering Parliament to implement international conventions. Item 13 of the Union List in the Seventh Schedule further underscores this intent – the law, in this context, should primarily target drug money laundering.
The argument goes that including a plethora of offences, many already addressed by existing laws, stretches the PMLA’s mandate beyond its intended scope. Additionally, the Act’s stringent provisions, originally meant to tackle dangerous individuals involved in drug trafficking, are now being applied to a wider range of offences. This, critics argue, raises concerns about the proportionality of the punishment.
Moving Forward: A Need for Re-evaluation?
The PMLA has undoubtedly played a role in combating financial crimes in India. However, the concerns regarding the ever-expanding schedule and the application of stringent measures to a wider range of offences warrant a re-evaluation.
A critical discussion is needed to determine whether the PMLA’s current form effectively addresses the evolving nature of financial crimes while staying true to its original purpose of tackling drug money laundering. This evaluation could pave the way for potential amendments that ensure a more targeted and balanced approach to combating financial crimes in India.
.“A person is presumed innocent until proven guilty” is a fundamental principle that has been enshrined in the literature of Anglo-Saxon Jurisprudence. But the tables turns around when the talk is about PMLA, as under this law it is presumed that a accused is presumed to be guilty until proven innocent. This can be connoted as the harsh side of the PMLA. The ideal object, if we talk academically, is to curb the laundering of the drug money and not to violate the fundamental rights of the citizen. The problem which can be witnessed is that the PMLA is being used in routine and casual manner relating to money transactions which was never the object of the PMLA. It has also been witnessed that personal liberty is derived of the individual when the bail is refused, in certain cases, which is deprivation of fundamental rights enshrined under the Indian Constitution.
(The views are only academic, for information and education purposes).