Why this matters now
PMLA is the most-debated Act in Indian public discourse 2014-2024. Tested for the FATF compliance origin, ED powers (arrest under § 19, attachment under § 5), the Vijay Madanlal Choudhary 2022 verdict upholding ED powers, Section 45 twin bail conditions, and the political-misuse debate.
Genesis: FATF and the 2002 enactment
The Financial Action Task Force (FATF) — an intergovernmental body of G7 origin (Paris, 1989) — set 40 Recommendations on anti-money-laundering and 9 on terrorist financing. India had to enact a domestic AML law to be in compliance. PMLA was passed by Parliament on 17 January 2003 but came into force only on 1 July 2005 due to delays in framing rules. India became a full FATF member in 2010.
Key provisions
| Section | Provision |
|---|---|
| § 2(u) | Proceeds of crime — property derived directly or indirectly from a scheduled offence (predicate offence) listed in PMLA Schedule. |
| § 3 | Offence of money laundering — whoever directly or indirectly attempts to conceal, possess, acquire or use proceeds of crime. |
| § 4 | Punishment — 3 to 7 years rigorous imprisonment + fine; up to 10 years for narcotic-related cases. |
| § 5 | Provisional attachment of property by ED for 180 days (extendable). Adjudicating Authority confirms. |
| § 17, 18 | Search and seizure powers; survey under § 16. |
| § 19 | Arrest by ED officers on the basis of “reasons to believe”; supplied to the arrestee on demand. |
| § 24 | Reverse burden of proof — accused must prove that the property is not proceeds of crime. |
| § 45 | Twin bail conditions — (a) Public Prosecutor opposes, and (b) Court satisfied accused not guilty & unlikely to commit offence. Stricter than CrPC defaults. |
| § 50 | ED can summon, examine, record statements — admissible as evidence (unlike police statements which aren’t). |
| § 65, 66 | CrPC applies; ED can share info with police, intelligence agencies, IT department. |
Vijay Madanlal Choudhary v. Union of India (2022) — ED powers upheld
In Vijay Madanlal Choudhary v. Union of India (27 July 2022), a 3-judge SC bench (Justices Khanwilkar, Maheshwari, Trivedi) upheld the ED’s powers under PMLA including:
- Reverse burden of proof under Section 24.
- Statements under Section 50 being admissible.
- Twin conditions for bail under Section 45 (later struck down for women, minors & sick by amendment).
- Non-supply of ECIR (Enforcement Case Information Report) to the accused at arrest stage.
The judgment is widely criticised by civil-liberties advocates; review petitions have been filed and are pending. Subsequently in Pankaj Bansal v. Union of India (2023) the SC held that grounds of arrest must be supplied in writing at the time of arrest under PMLA.
UPSC angle
Know PMLA 2002 — enacted Jan 2003 in force 1 July 2005; FATF compliance (India FATF full member 2010); “proceeds of crime” from scheduled offence (predicate); offence in §3, punishment §4 = 3-7 yrs RI (10 for NDPS); §5 provisional attachment by ED; §19 ED arrest; §24 REVERSE BURDEN OF PROOF; §45 TWIN BAIL CONDITIONS; §50 ED statements admissible; Vijay Madanlal Choudhary v. Union of India (27 July 2022, Justices Khanwilkar/Maheshwari/Trivedi) UPHELD ED powers including §24 reverse burden & §45 twin bail conditions; Pankaj Bansal v. Union (2023) grounds of arrest must be supplied in writing.
Frequently asked questions
When did PMLA come into force?
1 July 2005 — though enacted on 17 January 2003.
What is “proceeds of crime” under PMLA?
Property derived directly or indirectly from a scheduled offence (predicate offence) listed in PMLA Schedule.
What did Vijay Madanlal Choudhary (2022) decide?
The SC upheld ED powers under PMLA including reverse burden of proof, Section 50 statement admissibility, and Section 45 twin bail conditions.
What is the “twin bail” condition under PMLA?
Under Section 45, bail can be granted only if (a) the Public Prosecutor has opposed it and (b) the Court is satisfied the accused is not guilty and unlikely to commit the offence.