
Supreme Court Clarifies Detention Powers Under PMLA: A Deep Dive into the Implications
As per the recent Supreme Court ruling, the apex court has clarified that a detention order can be issued against an individual even if bail has been granted in a case under the Prevention of Money Laundering Act, 2002 (PMLA). The court noted that the provisions of PMLA do not preclude the authorities from exercising their powers of detention even after bail has been granted, as it is only a "limited curtailment of personal liberty". This judgement came in response to a plea by accused Jignesh Bhajiawala, who was granted bail by the Bombay High Court but was detained by Enforcement Directorate after recovering crucial evidence in connection with a money laundering case.
The Supreme Court invoked the principle of 'Doctrine of Merger' to emphasize that a bail order does not prohibit the exercise of power of detention by the enforcement authorities. The bench observed that such an approach will only defeat the purpose of the Prevention of Money Laundering Act, which is meant to combat the menace of money laundering and terror financing. Furthermore, the court also ruled that Section 45 of PMLA applies to cases where the accused has secured bail under Section 436 of the Code of Criminal Procedure.
In addition to this landmark ruling, the Supreme Court also clarified the scope of the bail provisions under Section 167(2) of the Code of Criminal Procedure in the context of PMLA cases. The court observed that PMLA being a special statute will always prevail over the provisions of the CrPC, regarding grant of bail. It further stated that the investigative agencies can invoke provisions of PMLA even at the stage of pre-cognizance in order to prevent the accused from fleeing the jurisdiction of the country.
In light of this judgement, it is important to understand the key provisions of PMLA and its implications on individuals facing proceedings under this Act. The Prevention of Money Laundering Act was enacted in 2002, with the objective of preventing money laundering and to provide for confiscation of property derived from, or involved in, money laundering. Money laundering is the process of concealing the true source of illegally obtained funds by converting them into legitimate assets. The purpose behind this is to make the laundered money look like legitimate income and avoid detection by authorities. This creates a serious economic impact, as it promotes crime and adversely affects the financial stability of the country.
PMLA has been designed as a comprehensive legislation to combat money laundering and is based on the recommendations of the Financial Action Task Force (FATF), an international body that sets standards and promotes effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats. PMLA has a wide coverage, as it not only includes traditional banking channels but also covers the non-formal financial channels and securities market. This acts as an effective deterrent against money laundering as it is easier for enforce
ment agencies to trace illegal funds.
The Act provides for three broad measures to tackle money laundering, namely: the offence of money laundering, the role of designated authorities arising out of two reports that are produced under PMLA – the Suspicious Transaction Report (STR) and the Cash Transaction Report (CTR), and the establishment of a special court to try offences under the Act. The Act also provides for the seizure and attachment of property obtained via money laundering. It has provisions to impose penalties on persons who violate the provisions of the Act.
Since its inception, PMLA has had a far-reaching effect on the Indian economy, as it combats and curbs the generation and circulation of illegal money. The Act also empowers the Indian government to enter into agreements with foreign governments or multilateral agencies for cooperation in investigation and prosecution of PMLA offences. This is important for tackling international money laundering, as criminals often use cross-border transactions to evade detection.
In conclusion, the Supreme Court judgement has cleared the air on the jurisdiction of authorities under PMLA, stressing on the importance of upholding the objective of this Act to fight and prevent money laundering and terror financing. Given the current state of the Indian economy and increasing financial frauds, the impact of PMLA is immense in promoting a healthy economic environment and preventing criminal activities. Its wide scope and stringent measures, paired with efficient investigation and prosecution, have helped the government to check the flow of illicit funds and strengthen the country's economy. It is evident that PMLA is a crucial legislation in the fight against money laundering and its continued enforcement is paramount to secure the integrity and prosperity of the nation.