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Prevention of Money Laundering Act

The article critically examines the Prevention of Money Laundering Act (PMLA). It highlights evolution from its original focus on combating drug money laundering to encompassing a broad range of offences.

Prevention of Money Laundering Act (PMLA):

The PMLA was  enacted in 2002 and brought into force in 2005. It was initially aimed at addressing the laundering of proceeds from drug trafficking. However, amendments over time expanded its scope to include various other offences beyond its original purpose.

Money laundering occurs when an individual directly or indirectly engages in or assists in any process related to the proceeds of crime. This includes concealing, possessing, acquiring, using, projecting, or claiming such proceeds as untainted property.

The PMLA’s Enactment:

Enacted under Article 253 of the Constitution, the PMLA was intended to implement international decisions on combating drug money laundering. However, subsequent amendments expanded its scope beyond its original purpose, incorporating various offences unrelated to drug trafficking.

Background of the Act:

The UN‘s concerns over the destabilizing impact of drug money laundering on the global economy led to the formulation of international conventions, urging member countries to enact legislation to combat this crime. India, in line with these conventions, enacted the PMLA to prevent drug money laundering.

Offences under the Act:

It was originally focused on crimes related to drug money laundering.  The PMLA now encompasses a wide range of offences listed in its schedule. These offences include those under the Indian Penal Code (IPC) and other special laws, deviating from the Act’s initial objective.

Fundamental Principles:

The PMLA targets individuals involved directly or indirectly in the laundering process, including those with no connection to the original crime. Despite its original focus on drug money laundering, the Act’s schedule now includes offences unrelated to its initial intent.

Bail Provisions:

Section 45 of the PMLA, concerning bail provisions, has drawn significant attention due to its stringent conditions. The provision presumes the accused guilty until proven innocent. It challenges the fundamental principle of ‘innocent until proven guilty’ in jurisprudence.

 Present Judicial Approach to Bail in PMLA:

The current judicial approach to bail in PMLA cases is perceived as highly technical. The judiciary’s perspective on bail, as articulated by Justice V.R. Krishna Iyer in 1978, underscores the importance of personal liberty recognized under Article 21 of the Constitution.

The bail provision under Section 45 of the PMLA Act has gained significant political attention in contemporary India. In 2018, a two-judge Bench of the Supreme Court ruled it unconstitutional in Nikesh Tarachand Shah vs Union of India. It cited violations of Article 14 and Article 21. However, Parliament swiftly reinstated the provision with amendments. This decision was upheld by a three-judge Bench led by Justice A.M. Khanwilkar in Vijay Madanlal Choudhary vs Union of India (2022), deeming the provision reasonable and aligned with the objectives of the PMLA Act.

The judiciary’s journey from Justice V.R. Krishna Iyer to Justice A.M. Khanwilkar reflects evolving interpretations of legal principles over time.

Implications:

The broadening scope of the PMLA and its stringent bail provisions raise concerns about fairness, individual rights, and the Act’s alignment with its original objectives. The Act’s application to offences unrelated to drug trafficking blurs its intended purpose and affects legal proceedings.

Suggestions:

There is a need for a reevaluation of the PMLA’s scope and its alignment with its original intent. Amendments should focus on refining the Act to target specific crimes related to drug money laundering while safeguarding individual rights and upholding fundamental principles of justice.

Conclusion:

The evolution of the Prevention of Money Laundering Act reflects a departure from its original purpose. It raises questions about its effectiveness and fairness. Reforms are necessary to realign the Act with its intended objectives and ensure justice is served while upholding fundamental rights.

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