The Supreme Court is looking into charges that the government and the Enforcement Directorate have been abusing the Prevention of Money Laundering Act 2002 (PMLA) (ED).
Even "regular" crimes have drawn PMLA's attention, and assets of legitimate victims have been attached.
The PMLA was implemented in response to India's worldwide commitment to combat money laundering (including the Vienna Convention). Instead of being "cribbed, cabined, and confined," rights have been "cribbed, cabined, and confined."
The PMLA was enacted to combat the problem of money laundering, particularly as it related to the drugs trade. Currently, the offences included in the Act's schedule are far too broad, and in many cases have nothing to do with drugs or organised crime.
Even the Enforcement Case Information Report (ECIR), which is akin to the FIR, is treated as an "internal document" and is not provided to the accused.
The ED regards itself as an outlier to these [criminal procedural law] principles and practices, deciding to register an ECIR on its own whims and fancies on its own file. There's also some ambiguity regarding how the ED chooses which cases to investigate. The commencement of an inquiry by the ED has ramifications that have the ability to limit an individual's liberty.
It is at the heart of India's legislative system for combating money laundering. All financial institutions, banks (including the RBI), mutual funds, insurance companies, and their financial intermediaries are subject to the terms of this act. Adds the idea of a "reporting entity," which might be a bank, a financial institution, or an intermediary, among other things. The PMLA of 2002 imposed a punishment of up to Rs 5 lakh, however the amended legislation eliminated this cap. It allows for the temporary attachment and seizure of the property of anybody who engages in such actions.
Money laundering is the practise of making substantial sums of money obtained via illicit activities such as drug trafficking or terrorist financing appear to have originated from a legitimate source.
Illegal arms sales, smuggling, drug trafficking, prostitution gangs, insider trading, bribery, and computer fraud schemes all generate substantial revenues.
As a result, it offers an incentive for money launderers to use money laundering to "legitimize" ill-gotten profits. The money created is referred to as "dirty money," and money laundering is the act of converting "dirty money" into "legal" money.
Bulk cash smuggling, cash-intensive businesses, trade-based laundering, shell companies and trusts, round-tripping, bank capture, gambling, real estate, black salaries, fictitious loans, hawala, and false invoicing.
The Directorate of Enforcement is a specialized financial investigative department within the Ministry of Finance's Department of Revenue. The Department of Economic Affairs established an 'Enforcement Unit' on May 1, 1956, to deal with infractions of the Foreign Exchange Regulation Act, 1947. This unit was renamed the 'Enforcement Directorate' in 1957.
The following laws are enforced by the ED:
The Foreign Exchange Management Act (FEMA) was passed in 1999, while the Prevention of Money. The Laundering Act was passed in 2002. (PMLA).
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