A trial court in Delhi recently denied interim bail to Bharat Rashtra Samithi (BRS) leader K Kavitha in the ongoing Delhi Excise Scam, citing the stringent provisions of the Prevention of Money Laundering Act (PMLA). The case once again brings attention to the rigorous bail conditions and legal framework under this significant anti-money laundering legislation.
Strict Bail Conditions Under the Prevention of Money Laundering Act
Section 45 of the Prevention of Money Laundering Act lays down strict provisions regarding bail. It places the burden of proof on the accused to demonstrate that there is no prima facie case against them. This is similar to the Unlawful Activities (Prevention) Act, 1967 (UAPA), where bail is rarely granted unless specific conditions are satisfied.
Key Bail Provisions under Section 45:
- The Public Prosecutor must be given an opportunity to oppose the bail application.
- If opposed, the court must be satisfied that:
- The accused is not guilty of the offence.
- The accused is not likely to commit any offence while on bail.
Exception for Women, Minors, and the Infirm:
- The PMLA includes an exception clause allowing bail for:
- Women,
- Minors (under the age of 16),
- Sick or infirm individuals, if directed by the Special Court.
However, in Kavitha’s case, the court noted that she is a “well-educated and well-placed woman”, thus not qualifying as a vulnerable individual under this exemption.
Important Legal Precedent
- In Preeti Chandra vs Directorate of Enforcement, June 14, 2023, the court added a qualifier that the accused cannot be a flight risk or tamper witnesses to be eligible for bail.
- Flight risk corresponds to someone who has been accused of a crime and is considered likely to try to escape out of the country before their trial begins.
- Thus it requires the accused to not be a flight risk, likely to tamper with evidence, or likely to influence witnesses.
What is the Prevention of Money Laundering Act
- It was enacted in 2002 and the Act along with the Rules framed thereunder has come into force with effect from 1st July 2005.
- 3 of PMLA defines offence of money laundering as whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money-laundering.
- PMLA prescribes the obligation of banking companies, financial institutions and intermediaries for verification and maintenance of records of the identity of all its clients and also of all transactions and for furnishing information of such transactions in a prescribed form to the Financial Intelligence Unit-India (FIU-IND).
- PMLA empowers certain officers of the Directorate of Enforcement to carry out investigations in cases involving offence of money laundering and also to attach the property involved in money laundering.
- It empowers the Director of FIU-IND to impose fines on banking companies, financial institutions or intermediaries if they or any of its officers fails to comply with the provisions of the Act as indicated above.
- PMLA envisages setting up of an Adjudicating Authority to exercise jurisdiction, power and authority conferred by it essentially to confirm attachment or order confiscation of attached properties.
- It also envisages setting up of an Appellate Tribunal to hear appeals against the order of the Adjudicating Authority and the authorities like Director FIU-IND.
- It envisages designation of one or more courts of sessions as Special Court or Special Courts to try the offences punishable under PMLA and offences with which the accused may, under the Code of Criminal Procedure 1973, be charged at the same trial.
- It allows the Central Government to enter into an agreement with the Government of any country outside India for enforcing the provisions of the PMLA, exchange of information for the prevention of any offence under PMLA or under the corresponding law in force in that country or investigation of cases relating to any offence under PMLA
- The act was amended in the year 2005, 2009 and 2012
Key Features of the Prevention of Money Laundering Act
- The Director or officer above the rank of Deputy Director with the authority of the Director, can provisionally attach property believed to be “proceeds of crime”.
- It is the authority appointed by the central government which decides whether any of the property attached or seized is involved in money laundering.
- Where money laundering involves two or more inter-connected transactions. It is presumed that the remaining transactions form part of such inter-connected transactions.
- A person, who is accused of having committed the offense of money laundering, has to prove that alleged proceeds of crime are in fact lawful property.
- It is given the power to hear appeals against the orders of the Adjudicating Authority and any other authority under the Act. Its orders are not final and can be challenged.
Offences Covered Under the PMLA
- Offences mentioned under Part A and C of the Schedule of this Act will attract its provisions.
- Part A includes offences under acts namely:
- Indian Penal Code, Prevention of Corruption Act, Narcotics Drugs and Psychotropic Substances Act, Antiquities and Art Treasures Act, Trademark Act, Wildlife Protection Act, Copyright Act and Information Technology Act.
- Part B includes offences that are mentioned in Part A, but are of a value of Rs 1 crore or more.
- Part C includes trans-border crimes.
Penalties Under the Prevention of Money Laundering Act
- Freezing or seizing of property and records, and/or attachment of property obtained through crime proceeds.
- Money laundering is punishable with:
- Rigorous imprisonment for a minimum of 3 years and a maximum of 7 years.
- Fine.
- If the crime of money laundering is involved with the Narcotic Drugs and Psychotropic Substances Act, 1985, the punishment can go up to 10 years, along with fine.
Objectives of the Prevention of Money Laundering Act
The PML Act seeks to combat money laundering in India and has three main objectives:
- To prevent and control money laundering
- To confiscate and seize the property obtained from the laundered money; and
- To deal with any other issue connected with money laundering in India.
Conclusion
The denial of bail to K Kavitha under the Prevention of Money Laundering Act underscores the stringent legal standards the Act imposes. With growing financial crimes and complex money trails, the PMLA continues to be a cornerstone in India’s fight against corruption and illicit financial activities.
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