PREVENTION OF MONEY-LAUNDERING ACT, 2002
[17th January, 2003]
An Act to prevent money-laundering and to provide for confiscation of property derived from, or involved in, money-laundering and for matters connected therewith or incidental thereto.
WHEREAS the Political Declaration and Global Programme of Action, annexed to the resolution S-17/2 was adopted by the General Assembly of the United Nations at its seventeenth special session on the twenty-third day of February, 1990.
AND WHEREAS the Political Declaration adopted by the Special Session of the United Nations General Assembly held on 8th to 10th June, 1998 calls upon the Member States to adopt national money-laundering legislation and programme.
AND WHEREAS it is considered necessary to implement the aforesaid resolution and the Declaration.
BE it enacted by Parliament in the Fifty-third Year of the Republic of India as follows:
The Preliminary section of the Prevention of Money-Laundering Act, 2002 (PMLA) lays the foundational framework for the Act, defining its scope, objectives, and key terms. It sets the stage for understanding the substantive provisions related to the criminalization of money laundering and the mechanisms for confiscation and investigation.
The Preliminary section introduces the short title, extent, commencement, and definitions relevant to the Act. It emphasizes the Act’s purpose to prevent money laundering, provide for confiscation of property involved in such activities, and establish the legal framework for enforcement across India.
While the Preliminary section itself does not specify punishments, it underpins the substantive provisions (Sections 3 and 4) that prescribe rigorous imprisonment for a minimum of three years and fines for offenders .
Note: The references are drawn from the provided sources, emphasizing the foundational and procedural aspects of the Preliminary section of the PMLA, as well as its scope and objectives.
(1) This Act may be called the Prevention of Money-Laundering Act, 2002.
(2) It extends to the whole of India.
(3) It shall come into force on such date1 as the Central Government may, by notification in the Official Gazette, appoint and different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.
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1. 1st July, 2005, vide Notification No. G.S.R. 436(E), dated 1st July, 2005, see Gazette of India, Extraordinary, Part II, section 3(i).
(1) In this Act, unless the context otherwise requires:
(b) “Appellate Tribunal” means the Appellate Tribunal 1[referred to in] section 25.
(c) “Assistant Director” means an Assistant Director appointed under sub-section (1) of section 49.
(d) “attachment” means prohibition of transfer, conversion, disposition or movement of property by an order issued under Chapter III.
2(da) “authorised person” means an authorised person as defined in clause (c) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999).
(e) “banking company” means a banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies and includes any bank or banking institution referred to in
Section 2 of the Prevention of Money-Laundering Act, 2002 (PMLA) provides the definitions of key terms that underpin the entire legislative framework. It sets the foundation for understanding what constitutes proceeds of crime, property, scheduled offences, and related concepts, thereby shaping the scope and application of the Act.
Section 2 of PMLA contains multiple sub-sections that define essential terms:- Section 2(1)(u): Defines “proceeds of crime” as property derived or obtained, directly or indirectly, from criminal activity related to a scheduled offence.- Section 2(1)(v): Defines “property” broadly as assets of every description, movable or immovable, tangible or intangible.- Section 2(1)(y): Lists “scheduled offences” categorized under Parts A, B, and C of the Schedule, with specific monetary thresholds.- Other definitions: Include “property,” “transfer,” “value,” “investigation,” and others, which collectively delineate the scope of the Act.
Section 2 itself does not prescribe punishment; rather, it defines terms that are used in the substantive provisions of the Act. Penalties for money laundering are specified under Section 4, which mandates rigorous imprisonment (minimum 3 years, extendable up to 7 or more) and fines, depending on the offence.
This concise legal commentary aims to distill the key legal principles and scope of Section 2 of the Prevention of Money-Laundering Act, 2002, supported by authoritative sources.
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 1[proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming] it as untainted property shall be guilty of offence of money-laundering.
2Explanation: For the removal of doubts, it is hereby clarified that:
(i) a person shall be guilty of offence of money-laundering if such person is found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved in one or more of the following processes or activities connected with proceeds of crime, namely:
(b) possession.
(c) acquisition.
(d) use.
(e) projecting as unt
Whoever commits the offence of money-laundering shall be punishable with rigorous imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine 1***:
Provided that where the proceeds of crime involved in money-laundering relates to any offence specified under paragraph 2 of Part A of the Schedule, the provisions of this section shall have effect as if for the words “which may extend to seven years” the words “which may extend to ten years” had been substituted.
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1. The words “which may extend to five lakh rupees” omitted by Act 2 of 2013, s. 4 (w.e.f. 15-2-2013).
1(1) Where the Director or any other officer not below the rank of Deputy Director authorised by the Director for the purposes of this section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of material in his possession, that:
(a) any person is in possession of any proceeds of crime.
(b) such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter, he may, by order in writing, provisionally attach such property for a period not exceeding one hundred and eighty days from the date of the order, in such manner as may be prescribed:
Provided that no such order of attachment shall be made unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 173 of the Code
Section 5 of the Prevention of Money-Laundering Act (PMLA), 2002, confers upon the Director or authorized officers the power to provisionally attach property suspected of being proceeds of crime. This provision is critical in preventing the dissipation of assets that could otherwise be utilized to frustrate future confiscation proceedings under Section 44. However, the exercise of this power is subject to strict procedural safeguards and temporal limitations to balance the state's investigative needs with the fundamental rights of property owners.
Section 5(1) empowers the Director or an officer not below the rank of Deputy Director, who has a "reason to believe" based on material in their possession, to issue a provisional attachment order. The order must be recorded in writing. It authorizes the attachment of property for a period not exceeding 180 days from the date of the order. The section outlines the manner of attachment, which includes prohibiting the transfer, conversion, disposition, or movement of the property.
Based on the case law provided, the following elements are essential for a valid Section 5 order:* Reason to Believe: The authority must have a subjective satisfaction based on objective "material in their possession."* Conjunction of Predicates: There must be a "reason to believe" that a person is in possession of proceeds of crime AND that such property is likely to be concealed, transferred, or dealt with to frustrate confiscation proceedings. Both predicates must be established conjunctively.* Writing: The reason for such belief must be recorded in writing.* Time Limit: The order must remain in force for a maximum period of 180 days unless extended by a formal order.* Proximate Nexus: The formation of opinion must bear a proximate and live nexus to the purpose of protecting government revenue/investigation interests.
The scope of Section 5 extends to preventing the alienation of assets suspected to be tainted. However, judicial interpretations have refined its scope regarding who can be attached and the validity of the order:* Property Derived from Crime: Attachment applies only to property derived or obtained as a result of a scheduled offence.* Temporal Link: Properties acquired prior to the commission of the predicate offence cannot typically be attached as proceeds of crime. [Himachal Emta Power Limited VS Union of India]* Validity upon Predicate Quashing: If the predicate offence is quashed or the accused is finally discharged/acquitted, the provisional attachment order loses its foundation and must be set aside. [Manturi Shashi Kumar VS Director, Directorate of Enforcement, Department of Revenue]* Expiry of Order: The absolute blood timer of a provisional attachment order is generally 180 days; if not confirmed or extended within this window, it ceases to have effect. [Gobindo Das VS Union of India]
Section 5 itself is a procedural provision and does not prescribe a specific criminal punishment for violation of the attachment order. However, violating such an order (e.g., transferring attached property) constitutes an extended offence of money laundering under Section 4, punishable under Section 3 of the Act with rigorous imprisonment not less than three years but which may extend to seven years and a fine up to five lakh rupees. For specific scheduled offences like narcotics, the imprisonment term can extend to ten years.
(1) The Central Government shall, by notification, appoint 1[an Adjudicating Authority] to exercise jurisdiction, powers and authority conferred by or under this Act.
(2) An Adjudicating Authority shall consist of a Chairperson and two other Members:
Provided that one Member each shall be a person having experience in the field of law, administration, finance or accountancy.
(3) A person shall, however, not be qualified for appointment as Member of an Adjudicating Authority:
(i) is qualified for appointment as District Judge.
(ii) has been a member of the Indian Legal Service and has held a post in Grade I of that service.
(b) in the field of finance, accountancy or administration unless he possesses such qualifications, as may be prescribed.
(1) The Central Government shall provide each Adjudicating Authority with such officers and employees as that Government may think fit.
(2) The officers and employees of the Adjudicating Authority shall discharge their functions under the general superintendence of the Chairperson of the Adjudicating Authority.
(3) The salaries and allowances and other conditions of service of the officers and employees of the Adjudicating Authority shall be such as may be prescribed.
(1) On receipt of a complaint under sub-section (5) of section 5, or applications made under sub-section (4) of section 17 or under sub-section (10) of section 18, if the Adjudicating Authority has reason to believe that any person has committed an 1[offence under section 3 or is in possession of proceeds of crime] it may serve a notice of not less than thirty days on such person calling upon him to indicate the sources of his income, earning or assets, out of which or by means of which he has acquired the property attached under sub-section (1) of section 5, or, seized 2[or frozen] under section 17 or section 18, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties should not be declared to be the properties involved in money-laundering and confiscated by the Central Government:
Provided that where a notice under this sub-section specifies any p
Where an order of confiscation has been made under 1[sub-section (5) or sub-section (7) of section 8 or section 58B or sub-section (2A) of section 60] in respect of any property of a person, all the rights and title in such property shall vest absolutely in the Central Government free from all encumbrances:
Provided that where the 2[Special Court or the Adjudicating Authority, as the case may be] after giving an opportunity of being heard to any other person interested in the property attached under this Chapter, or seized 3[or frozen] under Chapter V, is of the opinion that any encumbrance on the property or lease-hold interest has been created with a view to defeat the provisions of this Chapter, it may, by order, declare such encumbrance or lease-hold interest to be void and thereupon the aforesaid property shall vest in the Central Government free from such encumbrances or lease-hold interest:
(1) The Central Government may, by order published in the Official Gazette, appoint as many of its officers (not below the rank of a Joint Secretary to the Government of India) as it thinks fit to perform the functions of an Administrator.
(2) The Administrator appointed under sub-section (1) shall receive and manage the property in relation to which an order has been made under 1[sub-section (5) or sub-section (6) or sub-section (7) of section 8 or section 58B or sub-section (2A) of section 60] in such manner and subject to such conditions as may be prescribed.
(3) The Administrator shall also take such measures, as the Central Government may direct, to dispose of the property which is vested in the Central Government under section 9.
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1. Subs. by s. 8, ibid, for “sub-section (6) of section 8” (w.e.f. 15-2-2013).
(1) The Adjudicating Authority shall, for the purposes of this Act, have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit in respect of the following matters, namely:
(b) enforcing the attendance of any person, including any officer of a banking company or a financial institution or a company, and examining him on oath.
(c) compelling the production of records.
(d) receiving evidence on affidavits.
(e) issuing commissions for examination of witnesses and documents.
(f) any other matter which may be prescribed.
(2) All the persons so summoned shall be bound to attend in person or through authorised agents, as the Adjudicating Authority may direct and shall be bound to state the truth upon any subject respectin
1(1) Every reporting entity shall:
(b) furnish to the Director within such time as may be prescribed, information relating to such transactions, whether attempted or executed, the nature and value of which may be prescribed.
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(e) maintain record of documents evidencing identity of its clients and beneficial owners as well as account files and business correspondence relating to its clients.
(2) Every information maintained, furnished or verified, save as otherwise provided under any law for the time being in force, shall be kept confidential.
(3) The records referred to in clause (a) of sub-section (1) shall be main
1(1) The Director may call for from any reporting entity any of the records referred to in 2[section 11A, sub-section (1) of section 12, sub-section (1) of section 12AA] and any additional information as he considers necessary for the purposes of this Act.
(2) Every reporting entity shall furnish to the Director such information as may be required by him under sub-section (1) within such time and in such manner as he may specify.
(3) Save as otherwise provided under any law for the time being in force, every information sought by the Director under sub-section (1), shall be kept confidential.
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1. Ins. by Act 2 of 2013, s. 10 (w.e.f. 15-2-2013).
2. Subs. by Act 23 of 2019, s. 194, for “sub-section (1) of section 12” (w.e.f. 1-8-2019).
(1) The Director may, either of his own motion or on an application made by any authority, officer or person 1[make such inquiry or cause such inquiry to be made, as he thinks fit to be necessary, with regard to the obligations of the reporting entity, under this Chapter].
2(1A) If at any stage of inquiry or any other proceedings before him, the Director having regard to the nature and complexity of the case, is of the opinion that it is necessary to do so, he may direct the concerned reporting entity to get its records, as may be specified, audited by an accountant from amongst a panel of accountants, maintained by the Central Government for this purpose.
(1B) The expenses of, and incidental to, any audit under sub-section (1A) shall be borne by the Central Government.
3(2) If the Director, in the course of any inquiry, finds that a reporting entity or its designated d
1Save as otherwise provided in section 13, the reporting entity, its directors and employees shall not be liable to any civil or criminal proceedings against them for furnishing information under clause (b) of sub-section (1) of section 12.
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1. Subs. by s. 12, ibid, for section 14 (w.e.f. 15-2-2013).
1The Central Government may, in consultation with the Reserve Bank of India, prescribe the procedure and the manner of maintaining and furnishing information by a reporting entity under 2[section 11A, sub-section (1) of section 12 and sub-section (1) of section 12AA] for the purpose of implementing the provisions of this Act.
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1. Subs. by s. 13, ibid, for section 15 (w.e.f. 15-2-2013).
2. Subs. by Act 23 of 2019, s. 196, for “sub-section (1) of section 12” (w.e.f. 1-8-2019).
(1) Notwithstanding anything contained in any other provisions of this Act, where an authority, on the basis of material in his possession, has reason to believe (the reasons for such belief to be recorded in writing) that an offence under section 3 has been committed, he may enter any place:
(ii) in respect of which he is authorised for the purposes of this section by such other authority, who is assigned the area within which such place is situated.
At which any act constituting the commission of such offence is carried on, and may require any proprietor, employee or any other person who may at that time and place be attending in any manner to, or helping in, such act so as to:
(i) afford him the necessary facility to inspect such records as he may require and which may be available at such place.
(ii)
(1) Where 1[the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section] on the basis of information in his possession, has reason to believe (the reason for such belief to be recorded in writing) that any person:
(ii) is in possession of any proceeds of crime involved in money-laundering.
(iii) is in possession of any records relating to money-laundering.2
2(iv) [is in possession of any property related to crime] then, subject to the rules made in this behalf, he may authorise any officer subordinate to him to:
(a) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such records or proceeds of crime are kept.
(b) break open the
(1) If an authority, authorised in this behalf by the Central Government by general or special order, has reason to believe (the reason for such belief to be recorded in writing) that any person has secreted about his person or in anything under his possession, ownership or control, any record or proceeds of crime which may be useful for or relevant to any proceedings under this Act, he may search that person and seize such record or property which may be useful for or relevant to any proceedings under this Act:
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(2) The authority, who has been authorised under sub-section (1) shall, immediately after search and seizure, forward a copy of the reasons so recorded along with material in his possession, referred to in that sub-section, to the Adjudicating Authority in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such reasons and material for such period, a
(1) If the Director, Deputy Director, Assistant Director or any other officer authorised in this behalf by the Central Government by general or special order, has on the basis of material in his possession, reason to believe (the reason for such belief to be recorded in writing) that any person has been guilty of an offence punishable under this Act, he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest.
(2) The Director, Deputy Director, Assistant Director or any other officer shall, immediately after arrest of such person under sub-section (1), forward a copy of the order along with the material in his possession, referred to in that sub-section, to the Adjudicating Authority in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such order and material for such period, as may be prescribed.
(3) Every person arrested under sub-sectio
Section 19 of the Prevention of Money-Laundering Act, 2002 (PMLA) delineates the powers and safeguards related to arresting a person suspected of money laundering. It is a critical provision ensuring that the arrest process aligns with constitutional protections and procedural safeguards, especially given the stringent nature of the offence and the potential for abuse.
Section 19 empowers designated officers of the Enforcement Directorate (ED) to arrest a person if they have "reason to believe" that the individual is involved in money laundering. The section mandates that:- Grounds for arrest must be recorded in writing.- The arrested person must be informed of these grounds as soon as possible.- The arrested individual must be produced before a magistrate within 24 hours.- A copy of the grounds of arrest, along with material in possession, must be forwarded to the adjudicating authority.
Section 19 of the PMLA is a carefully crafted provision balancing investigative powers with constitutional protections. The mandatory recording and communication of grounds, timely production before a magistrate, and forwarding of material are essential safeguards. Any deviation from these procedural requirements renders the arrest illegal, infringing upon fundamental rights and inviting judicial scrutiny. Courts have consistently emphasized strict compliance, ensuring that the exercise of powers under the Act remains within constitutional bounds and respects individual liberty.
Note: The references are based on the provided sources and are formatted as per the specified instructions.
1(1) Where any property has been seized under section 17 or section 18 or frozen under sub-section (1A) of section 17 and the officer authorised by the Director in this behalf has, on the basis of material in his possession, reason to believe (the reason for such belief to be recorded by him in writing) that such property is required to be retained for the purposes of adjudication under section 8, such property may, if seized, be retained or if frozen, may continue to remain frozen, for a period not exceeding one hundred and eighty days from the day on which such property was seized or frozen, as the case may be.
(2) The officer authorised by the Director shall, immediately after he has passed an order for retention or continuation of freezing of the property for purposes of adjudication under section 8, forward a copy of the order along with the material in his possession, referred to in sub-section (1), to the Adjudicating Authority
(1) Where any records have been seized, under section 17 or section 18 or frozen under sub-section (1A) of section 17 and the Investigating Officer or any other officer authorised by the Director in this behalf has reason to believe that any of such records are required to be retained for any inquiry under this Act, such records may if seized, be retained or if frozen, may continue to remain frozen, for a period not exceeding one hundred and eighty days from the day on which such records were seized or frozen, as the case may be.
(2) The person, from whom records seized or frozen, shall be entitled to obtain copies of records.
(3) On the expiry of the period specified under sub-section (1), the records shall be returned to the person from whom such records were seized or whose records were ordered to be frozen unless the Adjudicating Authority permits retention or continuation of freezing of such records beyond the said per
(1) Where any records or property are or is found in the possession or control of any person in the course of a survey or a search 1[or where any record or property is produced by any person or has been resumed or seized from the custody or control of any person or has been frozen under this Act or under any other law for the time being in force] it shall be presumed that:
(ii) the contents of such records are true.
(iii) the signature and every other part of such records which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person’s handwriting, and in the case of a record, stamped, executed or attested, that it was executed or attested by the person by whom it purports to have been so stamp
Where money-laundering involves two or more inter-connected transactions and one or more such transactions is or are proved to be involved in money-laundering, then for the purposes of adjudication or confiscation 1[under section 8 or for the trial of the money-laundering offence, it shall unless otherwise proved to the satisfaction of the Adjudicating Authority or the Special Court] be presumed that the remaining transactions from part of such interconnected transactions.
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1. Subs. by Act 2 of 2013, s.18, for certain words and figure (w.e.f. 15-2-2013).
1In any proceeding relating to proceeds of crime under this Act:
(b) in the case of any other person the Authority or Court, may presume that such proceeds of crime are involved in money-laundering.
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1. Subs. by s.19, ibid, for section 24 (w.e.f. 15-2-2013).
1The Appellate Tribunal constituted under sub-section (1) of section 12 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (13 of 1976) shall be the Appellate Tribunal for hearing appeals against the orders of the Adjudicating Authority and the other authorities under this Act.
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1. Subs. by Act 28 of 2016, s. 232, for section 25 (w.e.f. 1-6-2016).
(1) Save as otherwise provided in sub-section (3), the Director or any person aggrieved by an order made by the Adjudicating Authority under this Act, may prefer an appeal to the Appellate Tribunal.
(2) Any 1[reporting entity] aggrieved by any order of the Director made under sub-section (2) of section 13, may prefer an appeal to the Appellate Tribunal.
(3) Every appeal preferred under sub-section (1) or sub-section (2) shall be filed within a period of forty-five days from the date on which a copy of the order made by the Adjudicating Authority or Director is received and it shall be in such form and be accompanied by such fee as may be prescribed:
Provided that the Appellate Tribunal may, after giving an opportunity of being heard, entertain an appeal after the expiry of the said period of forty-five days if it is satisfied that there was sufficient cause for not filing it within that peri
Omitted by the Finance Act, 2016 (28 of 2016), s. 232 (w.e.f. 1-6-2016).
Omitted by s. 232, ibid. (w.e.f. 1-6-2016).
Omitted by the Prevention of Money-laundering (Amendment) Act, 2005 (20 of 2005), s. 4 (w.e.f. 1-7-2005).
Omitted by the Finance Act, 2016 (28 of 2016), s. 232 (w.e.f. 1-6-2016).
Omitted by s. 232, ibid. (w.e.f. 1-6-2016).
Omitted by s. 232, ibid. (w.e.f. 1-6-2016).
Omitted by s. 232, ibid. (w.e.f. 1-6-2016).
Omitted by s. 232, ibid. (w.e.f. 1-6-2016).
(1) The Appellate Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 (5 of 1908), but shall be guided by the principles of natural justice and, subject to the other Provisions of this Act, the Appellate Tribunal shall have powers to regulate its own procedure.
(2) The Appellate Tribunal shall have, for the purposes of discharging its functions under this Act, the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit, in respect of the following matters, namely:
(b) requiring the discovery and production of documents.
(c) receiving evidence on affidavits.
(d) subject to the provisions of sections 123 and 124 of the Indian Evidence Act, 1872 (1 of 1872), requisitioning any p
Where any Benches are constituted, the 1[Chairman] may, from time to time, by notification, make provisions as to the distribution of the business of the Appellate Tribunal amongst the Benches and also provide for the matters which may be dealt with by each Bench.
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1. Subs. by Act 28 of 2016, s. 232, for “Chairperson” (w.e.f. 1-6-2016).
On the application of any of the parties and after notice to the parties and after hearing such of them as he may desire to be heard, or on his own motion without such notice, the 1[Chairman] may transfer any case pending before one Bench, for disposal, to any other Bench.
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1. Subs. by Act 21 of 2009, s. 11, for “one or more of the other Members” (w.e.f. 1-6-2009).
If the Members of a Bench consisting of two Members differ in opinion on any point, they shall state the point or points on which they differ, and make a reference to the 1[Chairman] who shall either hear the point or points himself or refer the case for hearing on such point or points by 1[third Member] of the Appellate Tribunal and such point or points shall be decided according to the opinion of the majority of the Members of the Appellate Tribunal who have heard the case, including those who first heard it.
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1. Subs. by Act 21 of 2009, s. 11, for “one or more of the other Members” (w.e.f. 1-6-2009).
(1) A person preferring an appeal to the Appellate Tribunal under this Act may either appear in person or take the assistance of an authorised representative of his choice to present his case before the Appellate Tribunal.
Explanation: For the purposes of this sub-section, the expression “authorised representative” shall have the same meaning as assigned to it under sub-section (2) of section 288 of the Income-tax Act, 1961 (43 of 1961).
(2) The Central Government or the Director may authorise one or more authorised representatives or any of its officers to act as presenting officers and every person so authorised may present the case with respect to any appeal before the Appellate Tribunal.
The 1[Chairman], Members and other officers and employees of the Appellate Tribunal, the Adjudicating Authority, Director and the officers subordinate to him shall be deemed to be public servants within the meaning of section 21 of the Indian Penal Code (45 of 1860).
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1. Subs. by Act 21 of 2009, s. 11, for “one or more of the other Members” (w.e.f. 1-6-2009).
No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Director, an Adjudicating Authority or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act.
Any person aggrieved by any decision or order of the Appellate Tribunal may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal to him on any question of law or fact arising out of such order:
Provided that the High Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days.
Explanation: For the purposes of this section “High Court” means:
(ii) where the Central Government is the aggrieved party, the High Court within the jurisdiction of which the respondent, or in a case where there are more than one respondent, any
(1) The Central Government, in consultation with the Chief Justice of the High Court, shall, for trial of offence punishable under section 4, by notification, designate one or more Courts of Session as Special Court or Special Courts or such area or areas or for such case or class or group of cases as may be specified in the notification.
Explanation: In this sub-section “High Court” means the High Court of the State in which a Sessions Court designated as Special Court was functioning immediately before such designation.
(2) While trying an offence under this Act, a Special Court shall also try an offence, other than an offence referred to in sub-section (1), with which the accused may, under the Code of Criminal Procedure, 1973 (2 of 1974), be charged at the same trial.
Section 43 of the Prevention of Money-Laundering Act, 2002 (PMLA) establishes the framework for the constitution and jurisdiction of Special Courts to try offences under the Act. It is a pivotal provision that facilitates specialized adjudication of money laundering cases, ensuring expeditious and expert trial proceedings.
Section 43 empowers the Central Government, in consultation with the Chief Justice of the High Court, to notify and designate Courts of Session as Special Courts for the trial of offences punishable under Section 4 of the PMLA. It also provides that these Special Courts shall have jurisdiction to try not only offences under PMLA but also other offences that may be taken cognizance of under the Cr.P.C., including scheduled offences and related crimes.
While Section 43 itself does not prescribe punishments, offences under the PMLA, including those tried by Special Courts designated under Section 43, are punishable under Section 4 of the Act, which mandates rigorous imprisonment for a minimum of three years, extendable up to seven years, along with fine. The severity of punishment underscores the gravity of money laundering offences.
In summary, Section 43 of the PMLA provides a robust legal mechanism for establishing Special Courts, ensuring that offences relating to money laundering and connected crimes are tried by courts equipped with specialized jurisdiction and expertise. Its provisions aim to promote swift, efficient, and just adjudication, aligning with the broader objectives of the Act to combat financial crimes effectively.
Note: References are provided in square brackets as per the source material, corresponding to relevant judgments, orders, and legal interpretations.
(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974):
Provided that the Special Court, trying a scheduled offence before the commencement of this Act, shall continue to try such scheduled offence.
(b) a Special Court may 2*** upon a complaint made by an authority authorised in this behalf under this Act take 3[cognizance of offence under section 3, without the accused being committed to it for trial].
4Provided that after conclusion of investigation, if no offence of money-laundering is made out requiring filing of such complaint, the said authority shall submit a closure report bef
Section 44 of the Prevention of Money-Laundering Act, 2002 (PMLA) is a pivotal provision that delineates the jurisdiction and procedural framework for the trial of offences under the Act. It establishes the Special Courts as the exclusive forums for trying money-laundering offences and connected scheduled offences, operating with a non-obstante clause that overrides the Code of Criminal Procedure, 1973. This provision has undergone significant amendments through Act 2 of 2013 and the Finance (No. 2) Act, 2019, reflecting the evolving legislative intent to create a robust mechanism for combating money-laundering.
Section 44(1) of the PMLA, 2002 provides:
(a) An offence punishable under Section 4 (money-laundering) and any scheduled offence connected to it shall be triable by the Special Court constituted for the area in which the offence has been committed.
(b) A Special Court may, upon a complaint made by an authorized authority, take cognizance of the offence under Section 3 without the accused being committed to it for trial. After investigation, if no offence of money-laundering is made out, the authority shall submit a closure report before the Special Court.
(c) If the court which has taken cognizance of the scheduled offence is different from the Special Court taking cognizance of the money-laundering complaint, it shall, on an application by the authorized authority, commit the scheduled offence case to the Special Court.
(d) A Special Court while trying the scheduled offence or the offence of money-laundering shall hold trial in accordance with Cr.P.C. as it applies to a trial before a Court of Session.
The Explanation clarifies that:1. The Special Court's jurisdiction is not dependent upon orders passed in respect of the scheduled offence, and trial of both sets of offences by the same court shall not be construed as joint trial.2. The complaint includes any subsequent complaint regarding further investigation.
Section 44 itself does not prescribe punishment. The punishment for the offence of money-laundering is provided under Section 4 of the PMLA:- Rigorous imprisonment for a term not less than three years but which may extend to seven years, and shall also be liable to fine.- Where proceeds of crime relate to offences specified under paragraph 2 of Part A of the Schedule, imprisonment may extend to ten years [Satish Kumar VS Directorate of Enforcement, Government of India - 2022 0 Supreme(UK) 141].
Exclusive Jurisdiction - Section 44(1)(a) establishes that an offence punishable under Section 4 and any connected scheduled offence shall be triable exclusively by the Special Court constituted for the area where the offence has been committed, overriding Cr.P.C. provisions. [Harsha D. , S/O Late Doddananjaiha VS State by High Ground Police Station - 2022 0 Supreme(Kar) 408, Paras 353-355]
Independent Trial - Trials under PMLA and predicate offences are distinct and independent processes; simultaneous trials are not mandated by law, and there is no legal basis for delaying PMLA proceedings pending outcome of predicate offences. [M. Venkatesan VS Directorate of Enforcement - 2024 0 Supreme(Mad) 1929, Paras 6, 8, 10, 12, 16, 19]
Directory Nature - Section 44(1)(a) is directory in nature, and the Special Court may exercise judicial discretion on a case-to-case basis after examining all aspects of the matter; Section 44 is neither arbitrary nor unconstitutional. [Vijay Madanlal Choudhary VS Union of India - 2022 7 Supreme 193, Paras 104-114]
Cognizance Procedure - Upon a complaint filed under Section 44(1)(b), the Special Court must apply its mind to whether a prima facie case under Section 3 is made out; if not, it must exercise power under Section 203 Cr.P.C. to dismiss the complaint. [Yash Tuteja VS Union of India - 2024 3 Supreme 734, Paras 6-9]
No Consolidation Power - Once the legislature under Section 44 has not provided the power for consolidation of cases triable at two different places, courts cannot direct consolidation or consolidate cases themselves, as it would amount to judicial legislation. [Saurabh Jain VS Registrar General, High Court of Judicature at Allahabad - 2019 0 Supreme(All) 2529, Para Finding of Court]
Transfer of Scheduled Offences - Under Section 44(1)(c), if the court taking cognizance of the scheduled offence is different from the Special Court, it shall, on application by the authorized authority, commit the scheduled offence case to the Special Court. [Ranjit Singh Kothari VS State of West Bengal - 2023 0 Supreme(Cal) 1477, Paras 17-18]
Legislative Intent - The deletion of the word 'only' from the statute indicates discretion rather than compulsion in transferring cases to the Special Court, affirming that legislative intent was for one court to try both offences. [Ranjit Singh Kothari VS State of West Bengal - 2023 0 Supreme(Cal) 1477, Paras 4(i), 15]
Special Court Primacy - The Special Court has primacy in trying scheduled offences connected to money laundering; concerns about potential prejudice from being tried in a Special Court without being accused of money laundering are unfounded as the law allows for appropriate sentencing procedures. [Danish Khan vs State of U.P. Thru. Prin. Secy. Home Lko - 2025 0 Supreme(All) 2303, Paras 7, 9, 11, 12]
Complaint Procedure - The only mode by which cognizance of an offence under Section 3 (punishable under Section 4) can be taken by the Special Court is upon a complaint filed by an authorized authority; there is no provision in PMLA overriding Sections 200-204 of Cr.P.C. [Yash Tuteja VS Union of India - 2024 3 Supreme 734, Paras 6-7]
ECIR Independence - ECIR is born from FIR, but once ECIR is born, the umbilical cord connecting ECIR with FIR loses its relevance; ECIR becomes an independent document, and quashing of FIR does not warrant automatic quashing of ECIR. [Vijayraj Surana VS Assistant Director, Enforcement Directorate - Crimes (2024), Paras 27-28, 44-46]
Proceeds of Crime Prerequisite - Existence of proceeds of crime is a condition precedent for applicability of Section 3 of PMLA; if there are no proceeds of crime, the offence under Section 3 is not made out. [Yash Tuteja VS Union of India - 2024 3 Supreme 734, Paras 3-4]
Examination of Complainant - Under Section 44(1)(b) read with Section 223 of BNSS (corresponding to Section 200 Cr.P.C.), no cognizance shall be taken without giving the accused an opportunity of being heard. [Kushal Kumar Agarwal VS Directorate of Enforcement - 2025 5 Supreme 639, Paras 6, 7, 10, 12]
Discretionary Process - The legislative amendments indicate a discretionary approach for transferring cases to Special Courts; the intention was for the same court to try related offences to ensure comprehensive adjudication. [Ranjit Singh Kothari VS State of West Bengal - 2023 0 Supreme(Cal) 1477, Paras 17, 15]
No Jurisdictional Bar - Cases relating to scheduled offences punishable under the PC Act cannot be argued as not triable by Special Courts designated under PMLA for want of jurisdiction. [Upendra Rai VS Central Bureau of Investigation - 2021 0 Supreme(Del) 192, Para Finding of Court]
Summons vs. Warrant - While taking cognizance under Section 44(1)(b), the Special Court has discretion to issue either a summons or warrant; when an accused is on bail, the Special Court must issue only a summons. [Tarsem Lal VS Directorate of Enforcement Jalandhar Zonal Office - 2024 5 Supreme 30, Paras 7, 8, 10, 13, 15]
Arrest After Cognizance - Once cognizance is taken under Section 44(1)(b), ED and authorities under Section 19 are powerless to arrest accused named in the complaint; custody must be sought by applying to the Special Court. [Tarsem Lal VS Directorate of Enforcement Jalandhar Zonal Office - 2024 5 Supreme 30, Paras 20, 23]
Section 88 Cr.P.C. Applicability - Section 88 of Cr.P.C. (bond for appearance) is not inconsistent with PMLA provisions and will apply after filing of a complaint under Section 44(1)(b); accepting bonds does not amount to grant of bail. [Tarsem Lal VS Directorate of Enforcement Jalandhar Zonal Office - 2024 5 Supreme 30, Paras 7, 8]
Non-Obstante Clause Effect - Section 44 begins with a non-obstante clause, making it clear that the dispensation provided therein is notwithstanding anything contained in the 1973 Code regarding trials concerning offence of money-laundering. [Harsha D. , S/O Late Doddananjaiha VS State by High Ground Police Station - 2022 0 Supreme(Kar) 408, Para 354]
Jurisdictional Independence - The jurisdiction of the Special Court while dealing with the offence under PMLA during investigation, enquiry or trial shall not be dependent upon any orders passed in respect of the scheduled offence. [Harsha D. , S/O Late Doddananjaiha VS State by High Ground Police Station - 2022 0 Supreme(Kar) 408, Para 353, Explanation (i)]
Standalone Offence - Offence of money-laundering is an independent offence regarding process or activity connected with proceeds of crime; it has nothing to do with criminal activity relating to a scheduled offence except the proceeds derived therefrom. [Vijay Madanlal Choudhary VS Union of India - 2022 7 Supreme 193, Paras 37-55]
(1) 1Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), no person accused of an offence 2[under this Act] shall be released on bail or on his own bond unless:
(ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail:
Provided that a person, who, is under the age of sixteen years, or is a woman or is sick or infirm 3[or is accused either on his own or along with other co-accused of money-laundering a sum of less than one crore rupees] may be released on bail, if the Special Court so directs:
Provided further that the Special Court shall n
Section 45 of the Prevention of Money-Laundering Act, 2002 (PMLA) prescribes the conditions under which bail can be granted to accused persons charged with money laundering offences. It is a crucial provision that aims to balance the enforcement of anti-money laundering laws with the constitutional rights of individuals, especially in the context of serious economic offences.
Section 45 mandates that offences under the PMLA are cognizable and non-bailable. It specifies two mandatory conditions for grant of bail when the offence involves a scheduled offence punishable with more than three years of imprisonment:- The Public Prosecutor must be given an opportunity to oppose the application.- The Court must be satisfied that there are reasonable grounds for believing the accused is not guilty and that he is not likely to commit any offence while on bail.
Further, the section classifies offences based on the severity of punishment and the nature of the offence, with specific provisions for scheduled offences and related predicate offences.
In conclusion, Section 45 of the PMLA establishes a stringent framework for bail in economic offences related to money laundering, emphasizing the importance of judicial discretion, constitutional safeguards, and procedural fairness, while balancing the objectives of combating financial crimes. Judicial interpretation and legislative amendments have refined its application to uphold constitutional rights without undermining the efficacy of anti-money laundering measures.
(1) Save as otherwise provided in this Act, the provisions of the Code of Criminal Procedure, 1973 (2 of 1974) (including the provisions as to bails or bonds), shall apply to the proceedings before a Special Court and for the purposes of the said provisions, the Special Court shall be deemed to be a Court of Session and the persons conducting the prosecution before the Special Court, shall be deemed to be a Public Prosecutor:
Provided that the Central Government may also appoint for any case or class or group of cases a Special Public Prosecutor.
(2) A person shall not be qualified to be appointed as a Public Prosecutor or a Special Public Prosecutor under this section unless he has been in practice as an advocate for not less than seven years, under the Union or a State, requiring special knowledge of law.
(3) Every person appointed as a Public Prosecutor or a Special Public Prosecutor under this sect
Section 46 of the Prevention of Money-Laundering Act, 2002 (PMLA) deals with the application of the Criminal Procedure Code (Cr.P.C.) to proceedings before the Special Court and the qualification of Public Prosecutors in such cases. Given the comprehensive and specialized nature of the PMLA, this section plays a crucial role in defining procedural safeguards and prosecutorial standards within the framework of anti-money laundering measures.
Section 46 stipulates that the provisions of the Cr.P.C., 1973, including those related to bail and bonds, shall apply to proceedings before the Special Court, except where otherwise provided in the Act. It also specifies that the Special Court shall be deemed to be a Court of Session and that the persons conducting prosecution shall be deemed to be Public Prosecutors, subject to certain qualifications.
Application of Cr.P.C. - Section 46 ensures that general criminal procedural safeguards are applicable to proceedings before the Special Court, maintaining fairness in trial processes [Sources: ["Rana Ayyub VS Directorate of Enforcement through its Assistant Director"], ["Anoop Bartaria VS Dy Director, Enforcement Directorate, Jaipur"]].
Special Court as Court of Session - The deeming provision elevates the Special Court to the status of a Court of Session, ensuring it possesses the powers and procedural authority akin to Sessions Court [Sources: ["Rana Ayyub VS Directorate of Enforcement through its Assistant Director"], ["Anoop Bartaria VS Dy Director, Enforcement Directorate, Jaipur"]].
Qualification of Public Prosecutor - Section 46 mandates that persons conducting prosecution must be qualified as Public Prosecutors, i.e., advocates with minimum practice experience, to uphold the integrity of prosecution [Sources: ["Rana Ayyub VS Directorate of Enforcement through its Assistant Director"], ["Anoop Bartaria VS Dy Director, Enforcement Directorate, Jaipur"], ["Vikas Kalra VS State Rep. by The Assistant Director, Chennai"]].
Procedural Safeguards - The application of Cr.P.C. provisions covers essential safeguards like bail, bonds, and trial procedures, ensuring procedural fairness and adherence to constitutional rights [Sources: ["Rana Ayyub VS Directorate of Enforcement through its Assistant Director"], ["Anoop Bartaria VS Dy Director, Enforcement Directorate, Jaipur"]].
Exceptions in the Act - Where the PMLA expressly provides for different procedures or restrictions, those provisions override the general Cr.P.C. framework, aligning with the doctrine of implied repeal and special law principles [Sources: ["Rana Ayyub VS Directorate of Enforcement through its Assistant Director"], ["Anoop Bartaria VS Dy Director, Enforcement Directorate, Jaipur"]].
Role of Special Court - The deeming of the Special Court as a Court of Session grants it the authority for speedy and effective trial of offences under the Act, integrating criminal justice standards with specialized procedures [Sources: ["Rana Ayyub VS Directorate of Enforcement through its Assistant Director"], ["Anoop Bartaria VS Dy Director, Enforcement Directorate, Jaipur"]].
Qualification of Prosecutors - The criteria for Public Prosecutors under Section 46, including minimum practice experience, are designed to ensure competent prosecution and prevent abuse of process [Sources: ["Rana Ayyub VS Directorate of Enforcement through its Assistant Director"], ["Anoop Bartaria VS Dy Director, Enforcement Directorate, Jaipur"]].
Procedural Validity - Failure to adhere to the procedural safeguards prescribed under Section 46, such as appointing unqualified prosecutors or ignoring applicable Cr.P.C. provisions, can vitiate proceedings and lead to their quashing [Sources: ["Rana Ayyub VS Directorate of Enforcement through its Assistant Director"], ["Anoop Bartaria VS Dy Director, Enforcement Directorate, Jaipur"]].
Legal Hierarchy - The section reinforces the hierarchy of laws, with the PMLA's provisions taking precedence over general laws like the Cr.P.C., especially where explicit conflict exists [Sources: ["Rana Ayyub VS Directorate of Enforcement through its Assistant Director"], ["Anoop Bartaria VS Dy Director, Enforcement Directorate, Jaipur"]].
Judicial Oversight - Courts have the authority to examine whether proceedings before the Special Court comply with the procedural mandates of Section 46, including the qualification of prosecutors and application of Cr.P.C. provisions [Sources: ["Rana Ayyub VS Directorate of Enforcement through its Assistant Director"], ["Anoop Bartaria VS Dy Director, Enforcement Directorate, Jaipur"]].
Protection of Rights - The application of Cr.P.C. safeguards under Section 46 ensures that the rights of the accused, including the right to bail, fair trial, and proper representation, are preserved even in specialized proceedings [Sources: ["Rana Ayyub VS Directorate of Enforcement through its Assistant Director"], ["Anoop Bartaria VS Dy Director, Enforcement Directorate, Jaipur"]].
Legal Certainty - Section 46 provides legal certainty by aligning the procedural framework of the Special Court with established criminal procedures, thereby preventing arbitrary or unilateral actions [Sources: ["Rana Ayyub VS Directorate of Enforcement through its Assistant Director"], ["Anoop Bartaria VS Dy Director, Enforcement Directorate, Jaipur"]].
Procedural Challenges - Violations of the procedural provisions of Section 46, such as appointing unqualified prosecutors or bypassing Cr.P.C., can be grounds for challenge and judicial review [Sources: ["Rana Ayyub VS Directorate of Enforcement through its Assistant Director"], ["Anoop Bartaria VS Dy Director, Enforcement Directorate, Jaipur"]].
Scope of Judicial Review - Courts can scrutinize whether the procedural safeguards under Section 46 have been followed, especially concerning appointment of prosecutors and application of Cr.P.C. provisions [Sources: ["Rana Ayyub VS Directorate of Enforcement through its Assistant Director"], ["Anoop Bartaria VS Dy Director, Enforcement Directorate, Jaipur"]].
Implication for Fair Trial - The integration of Cr.P.C. safeguards under Section 46 is vital for ensuring the accused's right to a fair trial within the specialized regime of the PMLA [Sources: ["Rana Ayyub VS Directorate of Enforcement through its Assistant Director"], ["Anoop Bartaria VS Dy Director, Enforcement Directorate, Jaipur"]].
Legal Interpretation - The section should be interpreted harmoniously with the entire scheme of the PMLA, emphasizing that procedural safeguards are integral to the effective and just enforcement of anti-money laundering laws [Sources: ["Rana Ayyub VS Directorate of Enforcement through its Assistant Director"], ["Anoop Bartaria VS Dy Director, Enforcement Directorate, Jaipur"]].
Conclusion - Section 46 acts as a bridge ensuring that the procedural essence of criminal justice is maintained within the specialized framework of the PMLA, safeguarding constitutional rights and ensuring fair prosecution.
Note: The references are drawn from the provided sources, emphasizing judgments and legal provisions that interpret and reinforce the importance of procedural safeguards, qualification of prosecutors, and the application of Cr.P.C. in proceedings under the Prevention of Money-Laundering Act, 2002.
The High Court may exercise, so far as may be applicable, all the powers conferred by Chapter XXIX or Chapter XXX of the Code of Criminal Procedure, 1973 (2 of 1974), on a High Court, as if a Special Court within the local limits of the jurisdiction of the High Court were a Court of Session trying cases within the local limits of the jurisdiction of the High Court.
There shall be the following classes of authorities for the purposes of this Act, namely:
(b) Deputy Director.
(c) Assistant Director.
(d) Such other class of officers as may be appointed for the purposes of this Act.
(1) The Central Government may appoint such persons as it thinks fit to be authorities for the purposes of this Act.
(2) Without prejudice to the provisions of sub-section (1), the Central Government may authorise the Director or an Additional Director or a Joint Director or a Deputy Director or an Assistant Director appointed under that sub-section to appoint other authorities below the rank of an Assistant Director.
(3) Subject to such conditions and limitations as the Central Government may impose, an authority may exercise the powers and discharge the duties conferred or imposed on it under this Act.
(1) The Director shall, for the purposes of section 13, have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit in respect of the following matters, namely:
(b) enforcing the attendance of any person, including any officer of a 1[reporting entity] and examining him on oath.
(c) compelling the production of records.
(d) receiving evidence on affidavits.
(e) issuing commissions for examination of witnesses and documents.
(f) any other matter which may be prescribed.
(2) The Director, Additional Director, Joint Director, Deputy Director or Assistant Director shall have power to summon any person whose attendance he considers necessary whether to give evidence or to produce any records during the course
(1) The authorities shall exercise all or any of the powers and perform all or any of the functions conferred on, or, assigned, as the case may be, to such authorities by or under this Act or the rules framed thereunder in accordance with such directions as the Central Government may issue for the exercise of powers and performance of the functions by all or any of the authorities.
(2) In issuing the directions or orders referred to in sub-section (1), the Central Government may have regard to any one or more of the following criteria, namely:
(b) classes of persons.
(c) classes of cases.
(d) any other criterion specified by the Central Government in this behalf.
The Central Government may, from time to time, issue such orders, instructions and directions to the authorities as it may deem fit for the proper administration of this Act and such authorities and all other persons employed in execution of this Act shall observe and follow such orders, instructions and directions of the Central Government:
Provided that no such orders, instructions or directions shall be issued so as to:
(b) interfere with the discretion of the Adjudicating Authority in exercise of his functions.
The Central Government may, by a special or general order, empower an officer not below the rank of Director of the Central Government or of a State Government to act as an authority under this Act:
Provided that the Central Government may empower an officer below the rank of Director if the officer of the rank of the Director or above are not available in a particular area.
The following 1[officers and others] are hereby empowered and required to assist the authorities in the enforcement of this Act, namely:
(b) officers appointed under sub-section (1) of section 5 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985).
(c) income-tax authorities under sub-section (1) of section 117 of the Income-tax Act, 1961 (43 of 1961).
2(d) members of the recognised stock exchange referred to in clause (f) of section 2 and the officers of the stock exchanges recognised under section 4 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956).
(e) officers of the Reserve Bank of India constituted under sub-section (1) of section 3 of the Reserve Bank of India Act, 1934 (2 of 1934).
(f) officers of Police.
In this Chapter, unless the context otherwise requires:
(b) “identifying” includes establishment of a proof that the property was derived from, or used in the commission of an offence under section 3.
(c) “tracing” means determining the nature, source, disposition, movement, title or ownership of property.
Section 55 of the Prevention of Money-Laundering Act, 2002 (PMLA) plays a crucial role in defining the scope of terms used in the Act, especially those related to jurisdiction, international cooperation, and procedural aspects. It provides the legal framework for understanding the terminology that underpins the enforcement and procedural provisions of the Act, ensuring clarity and consistency in its application.
Section 55 primarily contains definitions of key terms used throughout the PMLA, including:- "Contracting State": Countries with which India has made arrangements for cooperation.- "Proceedings": Encompasses all investigations, inquiries, and proceedings under the Act.- "Property": Any property or assets, movable or immovable, tangible or intangible, including deeds and instruments evidencing title.- "Scheduled offence": Offences listed in Part A, B (if value exceeds INR 1 crore), or C of the Schedule.- "Proceeds of crime": Property derived or obtained directly or indirectly from criminal activities related to a scheduled offence.- "Money laundering": Activities involving concealment, possession, transfer, or claiming property as untainted, connected with proceeds of crime.
It also elaborates on the scope of cooperation with foreign states, the scope of investigations, and the legal implications of these definitions for enforcement actions.
Section 55 itself does not prescribe punishment but lays down definitions and procedural scope. Violations of the provisions, such as acting outside the defined scope or misusing the definitions, could lead to penalties under other sections of the Act, including fines and imprisonment for offences like money laundering (Section 4) or related offences.
This concise legal commentary underscores the importance of Section 55 in providing clarity, scope, and legal certainty to the provisions of the Prevention of Money-Laundering Act, 2002, thereby strengthening enforcement and compliance mechanisms.
(1) The Central Government may enter into an agreement with the Government of any country outside India for:
(b) exchange of information for the prevention of any offence under this Act or under the corresponding law in force in that country or investigation of cases relating to any offence under this Act and may, by notification in the Official Gazette, make such provisions as may be necessary for implementing the agreement.
(2) The Central Government may, by notification in the Official Gazette, direct that the application of this Chapter in relation to a contracting State with which reciprocal arrangements have been made, shall be subject to such conditions, exceptions or qualifications as are specified in the said notification.
(1) Notwithstanding anything contained in this Act or the Code of Criminal Procedure, 1973 (2 of 1974) if, in the course of an investigation into an offence or other proceedings under this Act, an application is made to a Special Court by the Investigating Officer or any officer superior in rank to the Investigating Officer that any evidence is required in connection with investigation into an offence or proceedings under this Act and he is of the opinion that such evidence may be available in any place in a contracting State, and the Special Court, on being satisfied that such evidence is required in connection with the investigation into an offence or proceedings under this Act, may issue a letter of request to a court or an authority in the contracting State competent to deal with such request to:
(ii) take such steps as the Special Court may specify in such letter of
Where a letter of request is received by the Central Government from a court or authority in a contracting State requesting for investigation into an offence or proceedings under this Act and forwarding to such court or authority any evidence connected therewith, the Central Government may forward such letter of request to the Special Court or to any authority under the Act as it thinks fit for execution of such request in accordance with the provisions of this Act or, as the case may be, any other law for the time being in force.
1Where on closure of the criminal case or conclusion of a trial in a criminal court outside India under the corresponding law of any other country, such court finds that the offence of money-laundering has not taken place or the property in India is not involved in money-laundering, the Special Court may, on an application moved by the concerned person or the Director, after notice to the other party, order release of such property to the person entitled to receive it.
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1. Ins. by Act 2 of 2013, s. 24 (w.e.f. 15-2-2013).
Where the trial under the corresponding law of any other country cannot be conducted by reason of the death of the accused or the accused being declared a proclaimed offender or for any other reason or having commenced but could not be concluded, the Central Government shall, on receipt of a letter of request from a court or authority in a contracting State requesting for confiscation or release of property, as the case may be, forward the same to the Director to move an application before the Special Court and upon such application the Special Court shall pass appropriate orders regarding confiscation or release of such property involved in the offence of money-laundering.
(1) Where a Special Court in relation to an offence punishable under section 4, desires that:
(b) a warrant for the arrest of an accused person.
(c) a summons to any person requiring him to attend and produce a document or other thing or to produce it.
(d) a search warrant.
Issued by it shall be served or executed at any place in any contracting State, it shall send such summons or warrant in duplicate in such form, to such Court, Judge or Magistrate through such authorities, as the Central Government may, by notification, specify in this behalf and that Court, Judge or Magistrate, as the case may be, shall cause the same to be executed.
(2) Where a Special Court, in relation to an offence punishable under section 4 has received for service or execution:
(1) Where the Director has made an order for attachment of any 1[property under section 5 or for freezing under sub-section (1A) of section 17 or where an Adjudicating Authority has made an order relating to a property under section 8 or where a Special Court has made an order of confiscation relating to a property under sub-section (5) or sub section (6) of section 8] and such property is suspected to be in a contracting State, the Special Court, on an application by the Director or the Administrator appointed under sub-section (1) of section 10, as the case may be, may issue a letter of request to a court or an authority in the contracting State for execution of such order.
(2) Where a letter of request is received by the Central Government from a court or an authority in a contracting State requesting 2[attachment, seizure, freezing or confiscation] of the property in India, derived or obtained, directly or indirectly, b
Every letter of request, summons or warrant, received by the Central Government from, and every letter of request, summons or warrant, to be transmitted to a contracting State under this Chapter shall be transmitted to a contracting State or, as the case may be, sent to the concerned Court in India and in such form and in such manner as the Central Government may, by notification, specify in this behalf.
Any authority or officer exercising powers under this Act or any rules made thereunder, who, without reasons recorded in writing:
(b) detains or searches or arrests any person, shall for every such offence be liable on conviction for imprisonment for a term which may extend to two years or fine which may extend to fifty thousand rupees or both.
(1) Any person willfully and maliciously giving false information and so causing an arrest or a search to be made under this Act shall on conviction be liable for imprisonment for a term which may extend to two years or with fine which may extend to fifty thousand rupees or both.
(2) If any person:
(b) refuses to sign any statement made by him in the course of any proceedings under this Act, which an authority may legally require to sign.
(c) to whom a summon is issued under section 50 either to attend to give evidence or produce books of account or other documents at a certain place and time, omits to attend or produce books of account or documents at the place or time, he shall
(1) No court shall take cognizance of any offence under section 62 or sub-section (1) of section 63 except with the previous sanction of the Central Government.
(2) The Central Government shall, by an order, either give sanction or refuse to give sanction within ninety days of the receipt of the request in this behalf.
The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) shall apply, in so far as they are not inconsistent with the provisions of this Act, to arrest, search and seizure, attachment, confiscation investigation, prosecution and all other proceedings under this Act.
1(1) The Director or any other authority specified by him by a general or special order in this behalf may furnish or cause to be furnished to:
(ii) such other officer, authority or body performing functions under any other law as the Central Government may, if in its opinion it is necessary so to do in the public interest, specify, by notification in the Official Gazette, in this behalf, any information received or obtained by such Director or any other authority, specified by him in the performance of their functions under this Act, as may, in the opinion of the Director or the other authority,
No suit shall be brought in any civil court to set aside or modify any proceeding taken or order made under this Act and no prosecution, suit or other proceeding shall lie against the Government or any officer of the Government for anything done or intended to be done in good faith under this Act.
No notice, summons, order, document or other proceeding, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of his Act shall be invalid, or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such notice, summons, order, document or other proceeding if such notice, summons, order, document or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act.
1Where any fine or penalty imposed on any person under section 13 or section 63 is not paid within six months from the day of imposition of fine or penalty, the Director or any other officer authorised by him in this behalf may proceed to recover the amount from the said person in the same manner as prescribed in Schedule II of the Income-tax Act, 1961 (43 of 1961) for the recovery of arrears and he or any officer authorised by him in this behalf shall have all the powers of the Tax Recovery Officer mentioned in the said Schedule for the said purpose.
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1. Subs. by Act 2 of 2013, s. 27, for section 69 (w.e.f. 15-2-2013).
(1) Where a person committing a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder is a company, every person who, at the time the contravention was committed, was in charge of and was responsible to the company, for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall render any such person liable to punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention.
(2) Notwithstanding anything contained in sub-section (1), where a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder has been committed by a company and it is proved that the contravention
The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force.
(1) Where:
(b) any appeal has been preferred to the Appellate Tribunal:
(i) in a case referred to in clause (a), such person dies or is adjudicated an insolvent before preferring an appeal to the Appellate Tribunal.
(ii) in a case referred to in clause (b), such person dies or is adjudicated an insolvent during the pendency of the appeal.
Then, it shall be lawful for the legal representatives of such person or the official assignee or the official receiver, as the case may be, to prefer an appeal to the Appellate Tribunal or as the case may be, to continue the appeal before the Appellate Tribunal, in place of such person and the provisions of section 26 shall, so far as may be, apply, or continue to apply, to suc
(1) The Central Government may, by notification, make rules for carrying out the provisions of this Act.
(2) In particular and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:
1(aa) the manner of provisional attachment of property under sub-section (1) of section 5.
(b) the manner in which the order and the material referred to in sub-section (2) of section 5 to be maintained.
(c) matters in respect of experience of Members under sub-section (3) of section 6.
(d) the salaries and allowances payable to and other terms and conditions of service of Members of the Adjudicating Authority under sub-section (9) of section 6.
(e) the salaries and allowance
Every rule made under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule.
(1) If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order, published in the Official Gazette, make such provisions not inconsistent with the provisions of this Act as may appear to be necessary for removing the difficulty:
Provided that no order shall be made under this section after the expiry of two years from the commencement of this Act.
(2) Every order made under this section shall be laid, as soon as may be after it is made, before each House of Parliament.
1[PART A]
PARAGRAPH 1
OFFENCES UNDER THE INDIAN PENAL CODE
(45 OF 1860)
| Section | Legal Comments
Note: The Bullet Points above synthesize the provided case-law summaries and statutory snippets to present concise legal insights about Section parameters, essential elements, and doctrinal interpretations of the Prevention of Money-Laundering Act, 2002, with references in square brackets as requested. |
1(1) Every Reporting Entity shall verify the identity of its clients and the beneficial owner, by:
(b) offline verification under the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 (18 of 2016).
(c) use of passport issued under section 4 of the Passports Act, 1967 (15 of 1967).
(d) use of any other officially valid document or modes of identification as may be notified by the Central Government in this behalf:
Provided that the Central Government may, if satisfied that a reporting entity other than banking company, complies with such the standards of privacy and security under the Aadhaar (Targeted Delivery of Fina
1(1) Every reporting entity shall, prior to the commencement of each specified transaction:
Provided that where verification requires authentication of a person who is not entitled to obtain an Aadhaar number under the provisions of the said Act, verification to authenticate the identity of the client undertaking such specified transaction shall be carried out by such other process or mode, as may be prescribed.
(b) take additional steps to examine the ownership and financial position, including sources of funds of the client, in such manner as may be prescribed.
(c) take additional steps
1The Central Government may, by notification, constitute an Inter-ministerial Co-ordination Committee for inter-departmental and inter-agency coordination for the following purposes, namely:
(b) policy co-operation and co-ordination across all relevant or competent authorities.
(c) such consultation among the concerned authorities, the financial sector and other sectors, as are appropriate and are related to anti money-laundering or countering the financing of terrorism laws, regulations and guidelines.
(d) development and implementing policies on anti money-laundering or countering the financing of terrorism.
(e) any other matter as the Central Government may, by notification, specify in this
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